Home Property Australia Large infrastructure spending may open door to fraud and corruption

Large infrastructure spending may open door to fraud and corruption

  • November 15, 2023
  • by Sponsored
Large infrastructure projects are 'intensifying' risk challenges

In the fast-paced world of property, where multimillion-dollar projects meet tight deadlines and complex supply chains, the sector faces an ever-increasing threat: fraud and corruption.

With major infrastructure projects such as Victoria’s Big Build and Queensland’s upcoming Olympic Games, there are more opportunities than ever for investment, but also more risks looming around the corner.

As Chris Watson, a Partner in Risk Consulting, Brisbane, at Grant Thornton pointed out, these issues have always been present. However, the recent surge in large-scale infrastructure projects and supply chain logistics, exacerbated by the COVID-19 pandemic, has intensified these challenges.

For instance, Mr Watson said reports have revealed incidents of duplications in worker payments, with timesheets showing simultaneous work across multiple sites – a clear example of fraudulent activities.

Mr Watson said while the property sector has access to the technology and data to look for these patterns, they simply are not using them.

“I don’t think that situation has changed much, and I think it’s probably one of the more frustrating things because in using or better use of the technology at hand, construction organisations could be so much better at that whole monitoring and detection side of things, for sure,” he said.

He said however, you can have the data and not know what to do with it, which is where expertise comes into play.

These large infrastructure projects are also increasing the cybersecurity risk, according to Mr Watson.

“The Olympics brings with it a whole heap of global focus and attention, there is no doubt that as a result of this increased visibility, businesses, not only locally in Queensland, but I think right across Australia will become more attractive targets,” he said.

“What I would suggest is that whole notion of understand your environment, do a risk assessment. What is your visibility, what’s the likelihood of, what is the risk to your organisation if you succumb to this? And to start addressing those from a cyber perspective as well.”

In light of the forthcoming Anti-Money Laundering regulations, Neil Jeans, a Partner in Risk Consulting at Grant Thornton, noted that the origins of capital have become increasingly intricate and diverse, providing opportunities for illicit actors to exploit these funding channels for money laundering.

“I don’t think the existing risks have got any smaller. I think we’ve got a wider suite of risks that the real estate professional and the construction professional needs to understand and think about,” he said.

“So, it’s not really only, okay, how am I going to get the funding? It’s where’s that funding coming from? Is that going to create a problem? Am I going to be exposed to proceeds of crime, potentially, if I take that funding? So, there’s a lot of things to consider now which to a certain degree, weren’t on the agenda two or three years ago.”

Facing these complex challenges, real estate and construction firms should proactively take measures to protect their interests, as advised by the experts at Grant Thornton.

Leverage Technology: Leverage technology to monitor, identify patterns and deter fraudulent activities.

Supplier Vetting Framework: Establish a strong supplier assessment framework to guarantee that suppliers conform to ethical guidelines and meet modern slavery regulations.

Prepare for Regulatory Changes: Stay ahead of legislative and regulatory changes by conducting risk evaluations and comprehending their potential impact on your organisation.

Cultivate a Culture of Compliance: Cultivate an organisational culture rooted in compliance, integrity and ethical conduct while promoting transparency, accountability and the deterrence of unethical behaviours.

Cybersecurity Readiness: Enhance your cybersecurity protocols to shield against cyber threats.

To learn more about risk and financial crime in the property and construction industry, listen to Grant Thornton’s latest piece here: Rising risk and financial crime impacting Real Estate and Construction | Grant Thornton Australia