Digging Deeper – How OSINT and HUMINT Can Help Tackle Corruption in the Construction Industry

1. Introduction

The construction industry is an important economic engine in every nation's development. Its impact extends beyond the physical structures it creates, generating substantial employment opportunities and driving economic growth. When construction projects flourish, they deliver two crucial benefits: enhanced infrastructure that serves society's needs and widespread job creation that catalyses growth across the entire economy. However, organised crime groups are increasingly infiltrating this sector and recent research documents reveal the impact of this on both construction projects and the levels of construction-related investment.[i] [ii].

2. Overview

PwC has sponsored a new report, Global Construction 2030[iii], which forecasts that the volume of construction output will grow by 85% to $15.5 trillion worldwide by 2030. Three countries, China, the US, and India, will lead the way and account for 57% of all global growth. The benchmark global study, the fourth in a series from Global Construction Perspectives and Oxford Economics, shows average global construction growth of 3.9% pa to 2030, outpacing global GDP by over one percentage point. It is driven by developed countries recovering from economic instability and emerging countries continuing to industrialise.

On the other hand, such complexity and size make the industry an ideal target for corruption. According to a report published in the Multidisciplinary Digital Publishing Institute (MDPI)[iv], corruption[v], which also encompasses bribery and extortion, significantly threatens the successful completion of construction projects and sends ripples throughout developing and developed nations.

3. Corruption's Unique Challenges in Construction

The construction industry faces significant challenges from the pervasive impact of corruption, which complicates efforts to continue generating growth while addressing the sector’s environmental, economic, social, and governance (ESG) criteria. Large-scale construction projects are inherently vulnerable to ecological degradation, such as deforestation, greenhouse gas emissions, and biodiversity loss. These issues are often exacerbated by corrupt practices such as bribery, which can lead to improper permitting processes that bypass environmental regulations. For example, research indicates that corruption in the construction permit process can lead to unchecked ecological harm, undermine sustainability goals, and cause labour exploitation. This can manifest in unsafe working conditions and underpayment in supply chains, often due to weak oversight and corrupt practices.

The economic ramifications of ESG and corruption risks are severe and include fines, project delays, and reduced investor confidence, often stemming from unethical and corrupt practices.

Construction projects require extensive administrative needs, from permits to subcontracts, creating many opportunities for malpractice. The complexity of subcontracting chains often complicates oversight, amplifying the possibility of unethical practice. For instance, Hensel Phelps Construction Company paid $2.8 million in 2022 to settle allegations of improperly manipulating a federal subcontract designated for a service-disabled veteran business[vi].

Numerous global enforcement actions highlight how corruption seeps into all levels of the industry. For example, the Luxembourg-based steel pipe maker Tenaris faced a $78 million penalty for alleged bribery involving Brazilian officials[vii]. These cases make tangible the significant financial and reputational harm corruption causes businesses.

The following sections will explore how Open-Source Intelligence (OSINT) and Human Intelligence (HUMINT) can be leveraged to identify, investigate, and help manage the construction industry's corruption risk. Analysing the information identified through OSINT and HUMINT techniques can enhance transparency, improve oversight, and help mitigate the adverse effects of corruption on ESG criteria.

4. How OSINT and HUMINT Add Value

OSINT can be pivotal in enhancing the construction sector's investigative and compliance capabilities.[viii] By leveraging publicly available information, OSINT enables stakeholders to monitor global construction projects and industry-specific forums for red flags[ix]. For example, analysing online data trails, such as procurement irregularities or undeclared business relationships, can reveal patterns suggesting corrupt practices. Additionally, thoroughly examining public tender databases and social media activity could uncover discrepancies in contractor awards, signalling potential corruption before it escalates.

Consider also a scenario where a construction company is awarded a series of contracts in a region known for its high corruption risk. By employing OSINT methodologies, investigators could analyse the digital footprints[x] of the contractors involved, revealing connections to local officials or previous complaints by unsuccessful bidders. This proactive approach helps identify potential risks and empowers organisations to make informed decisions about whom to engage with in their projects.

On the other hand, HUMINT offers a different but complementary perspective by focusing on insights gathered directly from individuals and can deliver invaluable insights into corruption schemes[xi]. It could include, for example:

• Conducting confidential interviews with whistleblowers and former employees.

• Developing sources within organisations to uncover internal misconduct.

• Establishing informal intelligence networks in high-risk regions.

• Creating links with industry action groups.

• Identifying and speaking with complainants in civil cases where unfair contract awards are being legally challenged

HUMINT complements OSINT by adding nuanced, real-world perspectives to digital data, allowing investigators to contextualise potential risks. This combination of digital data and human insight creates a more comprehensive picture of the risks involved, enabling organisations to address potential issues before they escalate.

5. An Integrated Approach to Respond to Corruption

Proactive measures are essential for combating corruption. Initiatives such as the South African Infrastructure Built Anti-Corruption Forum (IBACF)[xii], exemplify how collaborative efforts can help identify and mitigate fraud within infrastructure projects.

Companies should develop robust investigative frameworks that combine the strengths of OSINT and HUMINT. This will help ensure a more thorough approach to risk management and enrich the intelligence flows and insights on which risk-based decisions can be made.

Training employees to recognise subtle corruption indicators, such as unusual procurement patterns or disproportional subcontractor relationships, can be a highly effective control as it increases the number of people criminal actors need to avoid and empowers the workforce to become an early warning system for corruption risk. Additionally, combining a risk-aware workforce with data analytical technologies configured to spot red flags in financial and procurement systems can be a game-changer in corruption detection and increase the likelihood of a corruption scheme being identified.

All of these initiatives should be underpinned by determined board-level efforts to encourage and develop a culture of transparency and ethical accountability. This includes implementing a whistleblowing management system, which should contain at least one channel independent of the management regime to help increase employee confidence in reporting anonymously.[xiii]

6. Investigating Allegations

When allegations of corruption arise, organisations must respond swiftly to help minimise legal and reputational impact. Effective investigations should:

• Adhere to core principles such as confidentiality, professionalism, and impartiality[xiv].

• Utilise forensic data analysis to secure electronic evidence and uncover irregularities[xv].

• Conduct detailed inquiries using OSINT for public domain research and HUMINT for direct insight. For example, in cases involving bribery allegations, OSINT tools can reveal historical procurement data discrepancies, while HUMINT can provide first-hand accounts of improper payments.

• Protect whistleblowers to encourage reporting, prevent retaliation, and respond to any disclosures professionally and in a timely manner. This includes ensuring that proper investigation procedures are in place and that employees have access to the required skills, experience, and tools.

7. The Role of External Expertise

If the required skills, experience and tools are unavailable in-house, professional consultancies specialising in OSINT and HUMINT can be engaged to provide insight into the investigative process. These specialists often use advanced analytic techniques and real-world insights to uncover the truth, recommend remediation measures, and assist in engaging regulators or law enforcement.

By proactively integrating these capabilities into their operations, construction companies can better mitigate corruption risks, ensure compliance with international standards, and safeguard their reputation in a competitive global market.

8. Conclusion

Integrating OSINT and HUMINT can significantly enhance corruption risk management. By embedding well-structured OSINT and HUMINT capabilities, organisations can proactively identify potential corruption before it escalates, safeguarding projects and reputations and helping to avoid costly legal and regulatory scrutiny. The insights gained from these intelligence methods not only improve transparency and oversight but also strengthen the overall integrity of the construction industry, paving the way for sustainable and ethical practices.

Authored by: The Coalition of Cyber Investigators

Paul Wright (United Kingdom) & Neal Ysart (Philippines)

© 2024 The Coalition of Cyber Investigators. All rights reserved.

The Coalition of Cyber Investigators is a collaboration between

Paul Wright (United Kingdom) - Experienced Cybercrime, Intelligence (OSINT & HUMINT) and Digital Forensics Investigator; and

Neal Ysart (Philippines) - Elite Investigator & Strategic Risk Advisor, Ex-Big 4 Forensic Leader.

With over 80 years of combined hands-on experience, Paul and Neal remain actively engaged in their field.

They established the Coalition to provide a platform to collaborate and share their expertise and analysis of topical issues in the converging domains of investigations, digital forensics and OSINT. Recognising that this convergence has created grey areas around critical topics, including the admissibility of evidence, process integrity, ethics, contextual analysis and validation, the coalition is Paul and Neal’s way of contributing to a discussion that is essential if the unresolved issues around OSINT derived evidence are to be addressed effectively. Please feel free to share this article and contribute your views.

[i] Inclusive Society Institute. (2024, January 24). Overview of the construction mafia crisis in South Africa. ISI. https://www.inclusivesociety.org.za/post/overview-of-the-construction-mafia-crisis-in-south-africa (Accessed November 24, 2024)

[ii] LetsBuild. (2023b, October 18). Why is Construction so Prone to Corruption? Letsbuild. https://www.letsbuild.com/blog/construction-prone-corruption (Accessed November 24, 2024)

[iii] PricewaterhouseCoopers. (n.d.). Global Construction 2030: a global forecast for the construction industry to 2030. PwC. https://www.pwc.com.tr/en/hizmetlerimiz/altyapi-yatirimlari/yayinlar/pwc-global-construction-2030.html#:~:text= (Accessed November 24, 2024)

[iv] Zhai, Z., Shan, M., Darko, A., & Chan, A. P. C. (2021). Corruption in construction Projects: Bibliometric Analysis of Global research. Sustainability, 13(8), 4400. https://doi.org/10.3390/su13084400 (Accessed November 24, 2024)

[v] What is corruption – GIACC. (n.d.). https://giaccentre.org/what-is-corruption/ (Accessed November 24, 2024)

[vi] https://media.defense.gov/2022/Jun/01/2003009356/-1/-1/1/220512_CONSTRUCTIONCOMPANYAGREESTOPAY2.8MILLIONTO_FINAL_20220519_508.PDF (Accessed November 24, 2024)

[vii] https://www.davispolk.com/insights/client-update/tenaris-reaches-78-million-fcpa-resolution-sec#:~:text= (Accessed November 24, 2024)

[viii] The importance of OSINT investigative strategy. (n.d.). https://www.osint.uk/content/the-importance-of-osint-investigative-strategy( Accessed November 24, 2024)

[ix] The Corporate Governance Institute. (2023, July 11). What are red flags? - The Corporate Governance Institute. https://www.thecorporategovernanceinstitute.com/insights/guides/what-are-red-flags/#:~:text= (Accessed November 24, 2024)

[x] Brunet, F. (2024, March 26). Essential tips to verify a subcontractor effectively. Finotor - Accounting, Financial and Entrepreneurial Solutions. https://finotor.com/essential-tips-to-verify-a-subcontractor-effectively/ Accessed November 24, 2024)

[xi] Sadulski, J. (2024, August 6). What is HUMINT and how is it used in the intelligence field? American Public University. https://www.apu.apus.edu/area-of-study/intelligence/resources/what-is-humint-and-how-is-it-used-in-the-intelligence-field/ (Accessed November 24, 2024)

[xii] https://www.siu.org.za/south-africas-infrastructure-built-anti-corruption-forum-ibacf-welcomes-saps-progress-in-tackling-construction-mafia/ (Accessed November 24,2024)

[xiii] ISO 37002:2021. (n.d.). ISO. https://www.iso.org/standard/65035.html (Accessed November 28, 2024)

[xiv] Harris, R. (2024, June 17). Workplace investigations: What should they include? Trusted HR Ltd. https://trustedhr.co.uk/workplace-investigations-what-should-they-include/ (Accessed November 24, 2024)

[xv] Selim, Aybeyan & Ali, Ilker. (2024). The Role of Digital Forensic Analysis in Modern Investigations. Journal of Emerging Computer Technologies. 4. 1-5. 10.57020/ject.1445625. (Accessed November 24, 2024)