By Tara Hoke
The case study in this column was selected in recognition of International Anti-Corruption Day (December 9), a global observance established by the U.N. General Assembly in December 2003 to raise awareness about the harmful impacts of corruption.
While publication of this column occurs after this annual observance has passed, it nevertheless aims to support the goal of calling attention to the personal, professional, and public costs of corruption and to remind engineering professionals of the need for constant vigilance against corrupt conduct.
Situation
News media from a major mid-Atlantic metropolitan region report on the indictment of two individuals in connection with an alleged bid-rigging scheme.
The first individual named in the indictment is a regional executive for a big-box retail chain, whose responsibilities included oversight of construction and major renovations for store locations throughout the region. The second is the owner of a construction company that provided general contracting services to the retailer. The indictment alleges that the two individuals conspired to steer contracts from the retail chain to the construction company, while creating the false impression that the selection was made through a competitive bidding process.
To facilitate this illusion, the conspirators submitted false bids in the names of other local companies without their knowledge or consent; these bids were naturally higher than the bid submitted by the colluding contractor. On occasion, the retail chain executive would also fraudulently alter legitimate bids submitted by a competitor to ensure that his co-conspirator’s bid was more attractive. In exchange for the executive’s complicity in this scheme, the contractor made regular payments to the executive of nearly $10,000 per month.
Over the four years that their actions remained undetected, this scheme resulted in the contractor’s receipt of contracts worth more than $25 million from the retail chain, while the executive himself netted nearly $500,000 in kickbacks.
Also mentioned in the indictment is the principal of a civil engineering firm who worked on several of the retail chain projects. Though the engineer is not under indictment due to his help in providing evidence against the main beneficiaries of this scheme, the indictment notes that the engineer had sometimes served as an intermediary in the submission of false bids and that he had also paid the executive to secure contracts for engineering work on these projects.
It further adds that the regional executive had “encouraged” the engineer to inflate his hourly fees on invoices to the retail chain in order to generate funds for his illicit payments.
Ultimately, the two conspirators plead guilty on multiple counts of mail fraud, wire fraud, and conspiracy to commit fraud. The executive is sentenced to 30 months in prison, while the construction contractor receives a three-year suspended sentence. The conspirators are also ordered to pay restitution to the retail chain of some $3 million, representing the court’s assessment of how much the chain overpaid for contract services as the result of the bid-rigging scheme.
Question
If the individuals in this case had been ASCE members, what provisions of the ASCE Code of Ethics would be violated by their actions?
Discussion
The ASCE code defines an engineer’s ethical obligations to a hierarchy of stakeholders, and in a case involving a flagrant violation of state or federal law, it should be no surprise that the conduct involves a long line of ethical violations as well.
First in the hierarchy of ethical obligations is the engineer’s duty to society at large, as articulated in section 1 of the code. Section 1d directs members to have “zero tolerance for bribery, fraud, and corruption in all forms,” reflecting the principle that this type of unlawful conduct inflicts significant harm on public health, safety, and welfare. While the public harm in this case may be less direct than fraud on a public client, whose projects are funded by public dollars and intended for public benefit, even fraud on a corporation inflicts a cost on the company’s employees, customers, investors, and other members of the public.
The engineer’s duty to the profession is outlined in section 3, including such language as 3d’s instruction to “reject practices of unfair competition” and 3a’s requirement to “uphold the honor, integrity, and dignity of the profession.” This section reflects an understanding that public trust in the engineering profession is eroded when members violate the law or the spirit of fair dealing.
Although ranking only fourth on the code’s hierarchy, perhaps no stakeholders are as directly connected to engineers’ daily work as are clients and employers. Section 4a of the code requires engineers to “act as faithful agents of their clients and employers with integrity and professionalism.” This ethical duty is often characterized as the duties of loyalty and care, meaning that the engineer is expected to advance the client’s or employer’s best interests through the provision of sound and competent service.
In the current case, none of the parties appears to have met their ethical obligations of faithful service, fair dealing, or professional integrity — not the executive who awarded contract work based on personal benefit instead of qualifications or value to his employer, nor the contractor or the engineer who overcharged a client, undermined the competitive bidding process, and obtained work through deception.
Thus, if this case had involved ASCE members, it is clear they would have violated sections 1, 3, and 4 of the code; but in fact, an argument could be made that the alleged conduct violated all five of the code’s stakeholder categories. Section 2’s obligations to the natural and built environment instruct engineers to “use resources wisely” (2d) and “mitigate adverse societal, environmental, and economic effects” (2c), principles that are hardly followed when infrastructure dollars are wrongfully funneled into personal accounts.
And while section 5’s obligations to peers are perhaps not designed to address the conduct described here, nevertheless, the requirements to exhibit “ethical behavior in all engagements with colleagues” (5d) and to “act with honesty and fairness on collaborative work efforts” (5e) would preclude inciting collusion in an illegal bid-rigging scheme.
It has been noted in this column that bribery, fraud, and corruption are among the most common ethical breaches reported in the engineering community, and the sheer size and cost of engineering and construction projects make them a tempting environment for this type of unethical conduct. The Global Infrastructure Anti-Corruption Centre, an international alliance of government agencies and non-government organizations aimed at combating corruption in infrastructure projects, has identified a number of factors that make this sector uniquely susceptible to corruption.
In addition to size and cost incentives, these factors include the uniqueness and complexity of projects, making it difficult for parties to compare cost or performance from one project to another; the multitude of contracts and government approvals, creating more opportunities and making it easier for parties to disguise illegitimate payments; and the complex, specialized, and often concealed nature of the work performed, allowing parties to cut corners or hide shoddy work or materials.
With these factors in mind, it is evident that zero tolerance must involve not only a passive decision not to engage in bribery, fraud, and corruption, but also an active effort to prevent others from engaging in fraudulent or corrupt activities in connection with the engineer’s professional services. While specific actions to take will depend on an individual engineer’s sphere of influence, engineers seeking to build a culture of zero tolerance in their workplaces can do so by delivering regular training on the ethical and legal risks of misconduct, establishing appropriate financial controls and safeguards, providing clear reporting mechanisms for concerns, and ensuring that ethical expectations are communicated and enforced at all steps and levels of project delivery.
Tara Hoke is ASCE’s general counsel and a contributing editor to Civil Engineering.
This article first appeared in the January/February 2025 issue of Civil Engineering as “Anti-Corruption in Action.”
