Construction Corruption in NYC


Throughout my forty year career in the design and construction community I have been called upon often by owners how best to address the 900 lb. gorilla that hovers over the industry: the existence and persistence of corruption in how buildings are designed and constructed.

Make no mistake about the nature of the problem. There have been regular reports that corruption is not solely limited to the construction world’s tendency among some to hide the true cost of construction; to create two sets of books for a project and make sure the owner only sees the set with higher costs; and the use of many workers who are shown as needed for a project who are, in fact, no-shows and reap unwarranted profits for construction executives.

But the problem often extends to complicit architects, interior designers, commercial real estate brokers and project managers all have been caught up by prosecutors in New York City for their roles in leading to bilking corporations, institutions and developers — as well as private owners — of hundreds of millions of dollars.

The article, "The anatomy of construction corruption: How bribery and overbilling schemes have become commonplace in the world of real estate’s middlemen", that recently appeared in The Real Deal, and which liberally quoted me on the subject, highlights the latest round up of contractors who were prosecuted for such heinous behavior. []. Ultimately, we find that fines and penalties are imposed to recoup the monies wrongfully taken from their clients. Occasionally, a few executives of these companies are jailed. But, curiously, most of the largest culprits have paid their fines only to see their businesses continue to grow and prosper and treat their wrongdoing as a cost of doing business.

Inevitably, if our city, state and federal governments want to eliminate this kind of behavior our officials will need to become more serious about ending this type of unacceptable behavior. Setting boundaries going forward should include automatic jail sentences for those within each company who play a role in the setting of these payments and subcontractors who are complicit must also be penalized.

Finally, there should be one, two or five year suspensions of the licenses given to contractors to conduct business to emphasize the seriousness of this type of behavior. That will send the true level of the message we need to end this kind of virulent behavior for all time.

As always, please let me have your comments.