Construction Fraud in the Netherlands

Framework Analysis & Review
As is also noted in the methodology of this report, the overall basis and goal of this report is to assess the widespread and national-level Dutch construction fraud scandal that erupted and came into full bloom in 2001. As will become clear throughout this framework and paradigm analysis, the presence of fraud within the Dutch construction industry and environment is without question and this was especially true in 2001 and the immediately preceding years running up to the same. Even if the amount of fraud, graft and collusion has tapered off and been regulated out of the system since then, it is still a very real issue and one that authorities and industry executives must remain vigilant about. Indeed, the amount of results found in a swath of academic databases with the search string “Dutch construction fraud” numbers nearly ten thousand and that is just academic and peer-reviewed journals. As one might expect, a great majority of the applicable studies and articles pertain to the 2001 scandal as well as the related and preceding ones in the 1990’s that were dealt with rather unsuccessfully, thus necessitating a firmer and more complete response after the 2001 iteration.
One substantial study about the Dutch construction paradigm and the problems it has was published in 2005. At that time, the fraud in the construction industry was perceived as being pervasive and obvious due to what came to light just a few years prior. Due to these revelations, there was predictably an inquiry and investigation completed by the Dutch Parliament as it related to the scandal. It was apparently caused by the rampant and obvious amount of collusion and corruption that was going on at the time. It created a huge concern about the blend of state and corporate crime. Thus, there was a perceived need to investigate the matter and thus find ways to reduce the problem as an issue. The Royal Commission was put into motion in 2002. An ensuing document was published which was known as Irregularities in the Dutch Construction Industry. The hearings that surrounded all of the above were done in public view and they generated a lot of activity and reactions from the public. The major finding of the report reflected that there was a “long-lasting structural interrelation between these three types with a special role for the twining between collusion and corruption” (Van Den Heuvel, 2006).
More to the point, the collusion was so substantial and entrenched that it had actually become a stable network unto its own. The implications for this would mean that individualized or customized efforts via legislation to deal with the problem would quite likely not be successful. Thus, it is obvious and apparent to many experts that more extensive and wide-ranging systems are needed to truly needed to stem the collusion and corruption that existed up until that point. Specific methods and tactics that were clearly in use included double-entry bookkeeping, slush funds, forced-up prices, fraud, bribery, cartelization, illegal consultation in advance and violation of the law and so forth. Upon completion of the proper due diligence and investigation, it came out in the news media that the Public Prosecutor’s Office had reached agreements with three large construction firms so as to avoid prosecution for fraud in connection with clear cases of graft and other illegal behavior. As part of that deal, each of the firms had to pay a fine of one million Euros. Beyond that, they were required to pay back a client by the name of Dutch Rail in the amount of five million Euros each. In addition, Dutch Rail had to pay back about 25 million Euros to the Dutch Ministry of Transport, the Public Works Department and the Water Management department. These latter payouts were due to the reception of subsidies that should not have been given along. Even with the finding out of the problems and the repaying of the funds, there was obviously a “disconcerting picture” painted for those involved. During the public hearings mentioned before, there were more than five dozen witnesses. The final report, as alluded to before, came out in December 2002 (Van Den Heuvel, 2006).
One of the projects that was involved when it came to all of the fraud was the Schiphol Tunnel. The three construction companies that were just mentioned as being fraudsters forged a total of 189 invoices for the purpose of helping secure favorable business results for everyone involved. The three firms were KSS, Strukton and HBW. The scheme was about taking an actual profit of roughly 42 million Euros and artificially bringing it down to $13 million Euros, not even three fourths as much as the original total. There were suspicions before all of the fraud came to light. In fact, at least one of the subsidies was almost not issued due to suspicions about the soundness of the agreement and its structure. What was already obvious and apparent was just what was on the surface as there were many other layers and facets to the fraud including shadow accounts and the creation of cartels. Conflicts of interest and other ethical flaws came to light over the course of the investigation. Due to the aforementioned public/private blend of the business involved, there was obvious a staggering amount of incompetence or illegal/unethical behavior in both the public and private sectors. Indeed, there were cases of collusion found between the companies themselves and there were also the same sorts of things found between the companies and some of the public authorities that were involved. The situation was so complex and nebulous that there were even emergences of things like self-justifications, neutralizations, damage and defining who the victims really were. The only clear and obvious victim would be the taxpaying public that was not in any involved in the project. Anyone else would be at least partially responsible for encouraging or allowing the fraud to occur (Van Den Heuvel, 2006).
Doree (2004) offers a similar perspective and that author’s line of reasoning and analysis came out at roughly the same time as Van Den Heuvel. The Schiphol tunnel was just of many projects and patterns that were discovered during the 2001 scandal. Similar to Van Den Heuvel, Doree notes that corruption and graft is to the extent that the reputation of everyone involved is damaged both with the clients of the construction firms as well as the general public. A series of parliamentary inquiries from the government of the Netherlands found what was mentioned in the last source as well as many others. These include massive violation of antitrust rules, the use of cartels and the rigging of bids on a structural and widespread level. Just as the corruption was structural in level, the same would be true of any solutions. For example, there are new methods that are suggested by the inquiry committee that relate to procurement. These are structured in a way so as to restore proper market function. The increased competition that will be garnered from these revised methods will steer the process towards traditional procurement strategies and approaches and thus reduce the illegality that is described above (Doree, 2004).
An issue that arose during the 2001 scandal was cost overruns. These cost overruns can happen even when there is good faith and legal behavior. Regardless, they still happen and the actual genesis of these overruns, regardless of what they are, need to be figured out so that they can be prevented in the future. At the very least, it can serve as a recitation of what happened in case there are people concerned about the extra costs. The thing about cost overruns in the Dutch construction industry is that they are actually about as common as cost underruns. Regardless of whether there are cost overruns or cost underruns, the same overall method should be used to capture what the costs really are so that there is consistency in all measured values. Apparently, this is an item of concern within the Dutch construction industry as not all firms use the same method and/or they do not use the same method every single time and in all situations. If and when there are situations where there is not consistency in reviews being done or being the same way, this can be an indication of manipulation and deceit. Such was obviously the case in the 2001 Dutch construction scandal (Cantarelli, Molin, Van Wee & Flybjerg, 2012).
The roots and genesis of the 2001 fraud, with the above in mind, actually varied quite a bit. What is without question is that fraud is global and widespread in nature but the identification of the same is rather infant-like in nature by comparison and this was certainly the case in the Netherlands in 2001, it would seem. However, there are many people and sources that are trying to change all of this. A common suggestion that exists is to build a new and integrative model so as to catch fraud in its early days and before it becomes massive rather than only seeing things in motion when they are impossible to miss or ignore. Something that is already widely known is that there are two major levels of committing fraud. Those two level are the micro-level and the macrolevel. The two levels consistently and constantly interact with each other. They tend to form a dynamic and efficient system. The micro-level factors involved personality organization, the so-called triangle of fraud and social competence. The macro-level refers to things like social network organization and social engineering. A linchpin to controlling and preventing fraud is that one needs to consider both the person and the organization, not to mention the environment that the both of them operate in. With that in mind, both micro-level and macro-level types of fraud can be considered and processed (Leistedt & Linkowski, 2016).
When it comes to changing behavior and business patterns, a big part of that would be changing the practices and manners in which people collaborate and work together. This is something that could and should be done in light of the 2001 scandal as there was clearly a need for a cultural and business practice shift at that point in time. A key dimension to keep in mind when it comes to considering all of this is culture. Not only just culture be considered, it should also be part of the interventions and measures that are taken in response to what is found and changed. With that in mind, the interventions that could and should be put into place include organizing personal networks between clients and contractors, establishing a proper competitive dialog procedure and installing a right of withdrawal. These three interventions are just the start and should be referred to as “first order” practices. These new methods create the right “entanglement” of power in a new paradigm and thus make it harder and more difficult to create continued or new forms of fraud. All of the above has been defined and established based on longitudinal studies that look at the complex relationships that exist between public and private parties, which is something that is extensive and pervasive when it comes to construction (Van Marrwijk, Veenswijk & Clegg, 2014).
Some of the fraud during the run-up to the 2001 construction fraud scandal was surely hard to detect, at least at the onset and when it is still small-scale. A way in which the 2001 scandal could have been rooted out earlier would have been to go “undercover” to see what happens in real-world practice, or at least go “behind the scenes” when it comes to the public and private construction-related practice. It is important to do the learning in some manner because the public commissioning process is rather foreign to some people. For those that deign to regulate, control and enforce these markets, this cannot be allowed to persist and continue. For example, if a person is charged with regulating network security, they should know a thing or two about routers, networks and computers in general (Hermans & Eisma, 2015). Another effort that Dutch authorities could have used in the 1990’s before the 2001 scandal was to make use of ustainable technologies and methods. These can be implemented in a way that is effective and proper. However, the construction industry needs to be monitored and guided in its evolution so that no fraud or incorrect procedure is allowed to take hold (Den Uyl & Dreissen, 2015). When it comes to behaviors that are never legal, there are ways to season and improve the system in that regard as well. For example, the bid-rigging that was discovered during the 2001 could have been detected early and in advance via what is called a core-periphery model. This model allows the proper tracking of bidding and thus it can be found out whether there are improper bidding structures occurring. These bid-rigging finding tools can be used to fetter out all forms of corruption, bribery and other common forms of bid-rigging. The data that underpins this model is voluminous as one study along compiled information from 7,000 different construction firms and looked at projects from 1966 to 2013 (Reeves-Latour & Morselli, 2016).
Even though it was difficult, the fraud and graft of the 2001 scandal could have been caught from outside review and study much earlier than what ended up happening. One particular form that would be findable would be improper collusion between the parties involved in a contract or project. Collusion itself is rather widespread in the Dutch construction industry. One source on the matter refers to its presence as “insidious”. It is pervasive and obvious within the industry even though it is specifically illegal and unethical. Just one way all of this fraud and graft can be detected is to look at historical patterns when it comes to projects and the behavior of certain firms. When there is a clear deviance from one like situation to another for no apparent reason, this is a red flag that needs to be investigated and assessed. For example, there was a real situation that occurred whereby a scant five of the 80 bidders in a given project bid situation undertook nearly three fourths (72 percent) of the aggregate contracts awarded by the public agency in question. Two of the six bidders that were obviously involved in a cartel bid situation were identified as being investigated for fraud. Even if there is no charges pressed or convictions garnered, this is still a sign that the industry is entirely too full of parties that should not be allowed to take care of and spend public dollars (Chotibhongs & Arditi, 2012).
Another important part of making the Dutch construction industry more pure and free from fraud in light of the 2001 scandal is more transparency. Especially when it comes to any project that involves public dollars or interests, such transparency would actually be expected and demanded. This is important in the Dutch industry due to the scandals mentioned before. Other scandals that have occurred include illegal price agreements and the like. Those bad deeds have led to a renewed commitment among the good actors involved to start a transition process that moves everyone involved towards more professional and transparent commercial relations. Transparency is so important that it serves as a precondition for things to truly function as they could and should be. However, there are clear disadvantages that come up when it comes to the pursuit of transparency. One of them would be information overload. Just because the information is released does not mean that anyone or everyone involved can process and interpret the information in the right way. Beyond that, there are increased risks and costs when it comes to assembling and disseminating that information. Beyond that, there are many situations and paradigms that involve implicit contracts. However, even implicit contracts can be exceedingly complex and this includes the reputation mechanism that is involved. Even with the complexity, there needs to be a way to meld them in a way that upholds the integrity of the partners involved and in a way that can be communicated and conveyed to the stakeholders involved, including the public (Graafland & Nijhof, 2007).
The implications of the widespread fraud in the Dutch construction industry that was revealed in 2001 and the years immediately following cannot be understated. For example, roughly seven percent of all employment in the Netherlands is in the construction sector. Of all of the companies that exist in the Netherlands, nearly a tenth (nine percent) are construction companies. Of all of the bankruptcies that occur in the Netherland, just over a tenth (12 percent) are from those building companies. This, by itself, points to the fact that the construction industry is generally more vulnerable than other sectors in the Netherlands. In 1999, the overall rate of return for construction companies was about seventeen percent. This compares unfavorably with other sectors in the Netherlands. Roughly nine in ten construction companies in the Netherlands have less than ten employees. A vast majority of the other ten percent are medium size firms that have between ten and one hundred employees. Only one half of one percent (0.5% have more than one hundred employees. In total, only 45 companies in all of the Netherlands have more than five hundred employees. When comparing and contrasting the building versus the infrastructure sectors, there are even more traits and statistics that need to be stated. In the building sector, employers with more than 100 employees have a market share of more than forty percent. For the same size employers in the infrastructure sector, the market share would be sixty percent. Of all of the turnover that occurs, nearly two thirds (60 perdcent) is government officials. A little more than third (36 percent) of that government turnover is decentralized government employees and 24 percent is from the national government. The government is also heavily involved in that they happen to be the client roughly ninety percent of the time. Even when fraud and other issues exist, there is a craving for a measuring stick that seeks to avoid a presence of impropriety. Avoiding nepotism is commonly done and the way to avoid the appearance of problems is to use price as the main way to choose a bid winner (Priemus, 2004).
Another primary way via which fraud was propagated prior to the 2001 revelations and also one of the ways it is detected is through the financial statements. Whether it be the statements for the projects themselves or for the companies or government groups that are involved, there is going to be some financial reporting involved and it can be figured out when trickery is afoot if one knows where to look and why. The general presence of both government and business-related misreporting is nothing new and there have been numerous frauds and scams that have been spotted as a result of problems being found in said reporting. Reporting has been adjusted for since then so as to provide a “best fit” whilst catering to the interests of the various stakeholders involved (Minhas, Mishra & Swami, 2017).
Not properly managing and catering to stakeholders, fraud or no fraud, is a horrible thing to have happen or to allow to happen more than is needed or avoidable. This was something that was on full display in the aftermath of the 2001 construction fraud scandal due in large part to the fact that the public themselves were among the victims A good thing that exists for stakeholders is that a more stakeholder-driven approach has gained more and more acceptance in more recent decades. From the mid-1990’s to the mid 2000’s alone, there was a clear shift in this regard. However, there were some things that have been missed. Some progress has been made but more needs to be done, at least as of ten years ago. Just a few things that need quicker updates and progress would be the consideration of motivations, consideration of processes used by businesses and how both of those can be used to prevent businesses from avoiding or neglecting stakeholders in the first place. All of this folds into and is part of the greater corporate social responsibility paradigm that has emerged through 2006, let alone since then. To truly get all of this going well, there is a strategy suggested whereby setting up industry-wide structures is done. These structures are to be used to manage relationships with all of the relevant stakeholders and this revised structure can be used to help create and support continuity (Kolk & Pinske, 2006).
Despite the fact that the fraud and graft was so present in the Dutch construction sphere through 2001, there was an eerie silence that pervades the situation. After all, any fraud of this size is clearly known about by enough people to help prevent the problem from mushroom. Further, the only reason this fraud is able to get even bigger is that enough people are unwilling to state what is really going on. As partially noted before, a huge part of the reason for all of this is that supervising agencies that should be exerting the right amount of command and control on these entities are simply not doing so. Put another way, they are simply failing in their abilities and duties. It is to the extent that the same level of incompetence and other problems that are present in the Dutch construction sphere were also present prior to the downfall of Bernard Madoff and his billion-dollar Ponzi scheme in the United States. Even if that were not a problem, the obvious and clear cone of silence that occurs in the social situations that involves the regulators and the perpetrators of the fraud is very concerning to say the least. What all of this means is that there has to be a confluence of reducing that silence and increasing the amount and quality of regulation. Any efforts that do not include both of these methods is likely to fail, or at least not be as effective as it could or should be. There has to be incentives for people that know the truth to tell the truth (Van De Bunt, 2010).
In the wake of the spate of construction scandals in the late 1990’s and early 2000’s, there was a television documentary that was produced and aired. It shared and revealed a lot of the secrets and facts about all of the scandals that did occur. The strong suggestion from that that documentary was all of the major construction firms in the Netherlands were involved in fraud, collusion or bid-rigging of some sort. The investigations and other movements from the government were in large part incurred and created as a result of this scathing documentary. Even with the round of investigations and fines that occurred in the early 2000’s, this was not the first time that there were fines, punishments or changes to the rules. Indeed, there was a clearing system in place as of 1992 that was banned by the European Commission. There were further restrictions placed by the 1998 Dutch Competition Act. Even with both of those actions, many Dutch construction firms continued engaging in their malfeasance and bad behavior anyway. It was as if nothing had changed from before even with the clear changes in the law and expectations of the construction industry that would presumably result. Many studies are wont to look at the lack of compliance with antitrust law. However, taking a more constitutive approach might be necessary since it can focus on the law as people understand, comprehend and react to the law as it exists. Rather than ask whether the law matters, it should instead be asked how antitrust law matters in the Dutch construction industry (Hertogh, 2010).
Another study relating to the Dutch construction fraud paradigm refers to the aforementioned cone of silence as the “elephant in the room”. This was something that was on ominous display in the late 1990’s and very early 2000’s. After all, there is an extreme and obviously relevance of corruption when it comes to project selection, planning, delivery and project management literature. However, the aggregate attention paid to the fraud in the construction industry is relatively small. Locatelli et al (2017) notes that “corruption is particularly relevant for large and uncommon projects where the public-sector acts as client/owner or even as the main contractor”. Further, that same study says very large and/or unique projects where public actors are playing a key role are much more likely to be full of corruption due to their unique nature and their overall size. To state the obvious, corruption is a drag on both cost and the time it takes to complete a project. Further, the benefits that are delivered tend to be less than they could or should be. However, lessons can be learned from both Dutch corruption examples as well as from other countries such as the Italian high-speed railways and the problems with corruption that those projects had (Locatelli, Mariana, Sainati & Greco, 2017). Just a few specific examples that prove that the corruption was obvious include 486 leniency applications where the accounts were completely and obviously secret in nature. There was a clear confluence between that and prior analysis of the corruption that clearly was defective in nature. More modern and complete methods make use of both theoretical and economic forensics in a way that crates value for antitrust authorities and thus helps assist in detection of antitrust violations in a direct fashion. At the very least, it can be asked (and answered) where the correct place to look for evidence happens to be (Van Bergeijk, 2008).
One thing that is important to remember about government regulation is that it should not be seen as a hindrance or annoyance. Indeed, it was obviously necessary to increase the presence of governmental intervention and oversight in light of the 2001 scandal. It is obviously needed for firms and situations where corruption and bid problems are happening. However, it can be something that is seen as unnecessary and improper for firms that are not doing anything wrong per the law or common ethics. Indeed, Beerepoot and Beerepoot (2007) insist that the presence of government regulation can be a catalyst for innovation. For example, energy consumption is a huge concern when it comes to climate change, affordability and so forth. This would obviously involve the construction agency as they would be the ones installing the electrical infrastructure. For example, if they are installing LED lights instead of halogen lights or other more energy-efficient items, that would be a boon to the energy consumption involved. There could still be fraud and other problems when it comes to these energies and such. However, the increased presence of the government in a consultative and collaborative rule would lead to less chance of that happening. So long as the presence of the government is seen as a symbiotic and mutually beneficial partnership rather htan an annoyance, it can work well for everyone involved (Beerepoot & Beerepoot, 2007).
In addition to striking the right tone of partnership and working together, there should also be other avenues and efforts made to make the government work with the private firms rather than against them. Rather than the sordid and improper relationships that flourished up until 2001 in the Dutch construction industry, there should indeed be ethical and positive relationships. The regulations that are passed and present should indeed be based on performance. Performance should be the basis for building regulations and properly structuring procurement in a way that squelches fraud and waste. This was attempted by the government in 1991. Per the scandals and poor laws that were done later in the 1990’s, that obviously did not work out too well. However, a new approach was brought about per a new performance-based document that was published in 2001, around the same time as the second wave of construction scandals. One major facet of this revised framework is to use a “continuous effort” that paralleled the performance-related regulations just mentioned. The two waves of scandals and problems le to a lot of agreement among the stakeholders that a paradigm shift was necessary with the industry. The “radical” changes needed were of multiple types including economic, social performance and so forth within the building and construction sectors. This new national program came to be known as the Process and System Innovation in Building, or PSIB. All of this was actually blended with a concurrent deregulation initiative. The overall gist, of course, is to regulate and control what is being abused and loosening up what does not need to be micromanaged and overly controlled (Ang, Groosman & Scholten, 2005).
When it comes to the reforms that are necessary as a result of the 2001 scandal (or others like them), there is one archetype or subset of laws that cannot be relaxed too much is that which relates to consent. Indeed, there are many that have found that the civil codes and rules relating to consent were designed in a time when the current formulation and presence of consumer law just really did not exist at all. Another facet of the market that has clearly changed quite a bit would be that the pre-contractual stage of the process was not something that was deemed worthy of control and regulation. That has obviously changed in the years since those civil codes were put into place. The outdated nature of these laws is a problem because it really does prevent truly egregious actions from being punished for the way they should be. For example, the applicability of the current codes when it comes to things like fraudulent misrepresentation are in drastic need of an update per the opinion of many legal scholars that are also experts on construction partnerships and other public/private arrangements. Another item that is need of a modernization is when it comes to defect consent. In their current form, there is the argument that consent theories and will theories cannot provide the precise criteria needed to legally define when they could and should be void, at least based on the modern standards that could and should exist. On possible solution, even if it is rather interim and partial in nature, is substitution of rules on fraud with a set of remedies for violation of information duties (Patti, 2016).
Another legal avenue that needs to be addressed is when it comes to the post-2001 Dutch construction industry is when there is more than one nation involved. More than one nation means more than one set of laws. Even when both of the nations are within the same collective (e.g. the European Union), there can still be complications. When the nations are not in the same collective, the relationships and situations can be very complex. One example would be the case that has come to be known as Kiobel v. Royal Dutch Petroleum. The latter is now known as Royal Dutch Shell and is partially owned by both the Dutch (where it is currently headquartered) and the British (where it was originally incorporated). The case just referenced was actually decided in the United States Supreme Court. The presence and prevalence of fraud would just take that very complex situation and make it all the more complex to decipher and resolve when said fraud happens. The Schiphol tunnel situation did not involve international borders. However, if it did, it would have created an even larger legal mess (Stengel, Pieper & Trautmann, 2016). In any event, it should be noted that the outcome of the case found that the relevant law in the United States, that being the Alien Tort Claims Act, does not apply in an extraterritorial application. This was due to the fact that even though it involved an interest from the Untied State, it did not actually occur in the United States and thus the United States did not have jurisdiction (Johnson, 2014).
Something that has happened in more modern times that has absolutely been for the better would be the emergence of information services and Big Data analytics. These were present during the 2001 fraud scandals within the Dutch construction industry and they have been even more omnipresent in the generation since. A subset of construction and infrastructure where there has been great success is the telecommunications arena. Because there is a clear relation between the quality of construction and the performance from those same networks are related. By extension, the same would be true of the construction and assembly of other projects and systems that Dutch and other construction firms put into place. Just like is present and effective with telecommunication networks, the proper analysis, analytics, planning and preparation can be used to maximize the efficiency and outcomes of all construction projects (Oskarsdottir et al, 2017). Something else that needs to be modernized, both on a domestic level to one country as well as transnational situations, would be what happens when construction projects are terminated early. A case study for such situation can be found in China, but could easily be applied to the Dutch construction paradigm as well. The main factor, of course, would be compensation. A good faith calculation and overall amount of compensation needs to be put in place and there also needs to be a prevention of anyone gaming the system while it is going on, which would obviously be part of the construction fraud problem that is the main topic of this report (Song, Jin, Zhao & Hu, 2016).
There are other issues that need to be addressed within the Dutch construction industry that transcend time and that have always existed on some level, even if the manifestations change over time. In the last two decades or so, there is clear the presence of fraud in the Dutch construction industry, especially in the late 1990’s and up until at least 2001. This is part of the environment and pattern whereby people existing in that industry are clearly fed up with the amount of fraud, collusion and unfairness in the industry. When it comes to unfairness in particular, the perceptions of the same are created by a number of fraud-related antecedents such as bid-shopping, corruption, conflict, confrontation, supply chain exploitation and so forth. These phenomena have been documented for a number of decades and in a number of different countries, obviously including the Dutch. The improvements that need to be made have to occur in many forms and at many levels including contractors, subcontractors, large companies, small companies and so forth. Prior efforts have been somewhat productive but the more recent paradigms indicate the need to do further changes is very much present. As explained by Loosemore and Lim (2015), “more can be done to improve levels of procedural and distributive justice, particular in relation to subcontractors and suppliers in the construction supply chain” (Loosemore & Lim, 2015). It should be noted that the primary findings were from Australia but that the findings could obviously be applied to other countries including the Netherlands (Loosemore & Lim, 2015).
Another dimension to consider and keep in mind is what to do when some a rampant amount of fraud and other misdeeds are going on. Obvoiusly, a lot of people were doing very much the wrong thing in the several years or so running up to 2001. Whistleblower Ad Bos was talking to anyone that would listen for the better part of two years and no one would listen. Indeed, not all of the people that are witness to and that are aware of a fraud are actively involved. However, the happenstance of these people becoming or remaining silent is what is commonly referred to as a moral breakdown. The fraud and graft in question as well as the moral breakdowns that sometimes accompany the same can happen at all sorts of firms. Indeed, there was a family-owned stockbroking firm that had been present since 1898 that ran into such a moral breakdown. The key to avoiding this, per many experts, is to make sure that work identification and roles within the construction and government paradigm are fully identified and explained. Once they are defined, they need to executed and done with consistence. As mentioned before, only a true lack of this consistence and execution truly allows a widespread system of fraud to emerge and continue, in addition to the moral breakdowns and cone of silence that were mentioned before in other sources (O’Leary, 2015).
Even if there is some moral burden for not reporting what is obviously going on, at least one reason for the moral breakdowns and lack of reporting the problem could be due to the retaliation and other negative attention that is commonly paid to whistleblowers. Indeed, the aforementioned Ad Bos surely had some blowback sent his way when he was trying to sound the alarm. The whistleblowers themselves obviously have to follow the proper ethics and standards. However, they should be protected when they do the right thing and say what has really happened or that is still happening. These good faith whistleblowers need to be protected, however, since they play a very important role in the disclosure of cover governmental behavior (good and bad), private sector economic offenses and so forth. They have also led to the positive redesigning of risk management strategies. There is an effort in the Netherlands in particular to create an institution for whistleblowers that know things about fraud or even things like known design failures and flaws (Moll, 2014)
One other thing that should be understood and properly reacted to would be the fact that some subsets of construction and government have their own specific idiosyncrasies and problems. One such example would be the Dutch housing industry. Attempts have been made to keep that system in check since the 1980’s and beyond and there was indeed some housing projects that were ensnared and involved in the 2001 scandal that is the case study for this report. However, incremental changes have been needed since then to react to changes in the economy, housing needs, the construction industry and the part they play in all of the above and avoidance of fraud and waste across the board. Just one major issue that has continued to be an issue include the Dutch social housing model and how it changes as well as the function of guaranties and revolving funds (Boelhouwer, 2011). A different issue in the housing industry and the construction of the structures pertaining to and involving the same would be issues like racism and other bigotry such as against people of lesser socioeconomic status. This much the same thing that goes on with the larger and non-minority builders and contractors in the Dutch industry and the improperness of this being what it is should be called what it is (Schinkel & Van Den Berg, 2011). Another realm of building and construction that can quite easily lead to (or aggravate) problems would be the casino industry. The Dutch casino space is apparently rife with corruption and this could and would obviously extend to who is building the casinos, and that would be the same construction firms mentioned throughout this report. There is obviously an entertainment and enjoyment aspect to the building and frequenting of casinos. However, there are also a lot of losers to go with all of the winners that go in and out of the casino. Thus, the ethics involved are challenging and they ensnare a lot of people including the casino owners/operators, the people who build the casinos and the governments that permit and regulate the casinos. The same fraud and graft that pervades the building industry as a whole is surely more likely and concentrated when it comes to high-revenue industries like casinos.



Methodology
The overall approach to this review of corruption, graft and fraud focus on the systemic scandal that was revealed within the Dutch construction industry circa 2001. Everything that follows in this report will either be a direct reporting of what happened both leading up to and during that scandal or it will be a post-mortem or critique of what was done wrong, what should have been done and what could have been done better. Rather than taking a dual approach that involves both qualitative and quantitative research, this study will instead be driven by a case study and thorough review of the scandal mentioned above. Quantitative research could be useful in the case of fraud in the Dutch construction industry in terms of the what could be analyzed from a statistical or numerical standpoint. However, the best and most applicable minutia to be revealed from what went wrong in 2001 and the years prior will center much more on why things were done the way they were, why there was so much inaction and silence even when it was obvious even to bystanders what was going on and so forth. Indeed, one of the major downsides when it comes to quantitative data is that it is often more about the “what” rather than the “how” or the “why”. This is where the qualitative data comes in and that is why that this will be the data type of choice in this rigorous review and study. The data that is collected in the form of opinions, focus groups, surveys and other reviews and details that are directly related to the incident at hand or that can be related to the same. All of the primary and secondary sources will be scholarly, governmental and/or peer-reviewed in nature rather than being lacking in any academic or scientific integrity. As one might expect, direct reporting and summary based on the governmental review and reaction to the scandal will be held up as being the best source of data and analysis as it relates to the problem and case study under review.

There will not be any wild or strung out conclusions or results from this review. Rather, this is just an assembly of the listing of events, outcomes, prosecutions and so forth that occurred as well as a post-mortem of what could have or should have been done, directly or indirectly, to head off the 2001 scandal earlier or even stop it in the first place. Regardless of the data that is used for any given conclusion, there needs to be a firm focus on both validity and reliability. Validity would refer to the fact that the conclusions drawn are based on the data as it truly exists. This would mean that the data does not indicate another answer and it would also mean that the data is not inconclusive, at least based on what is being spoken of. On the other hand, reliability is about the idea that other researchers using the same method and the same data will come up with the same results at least a majority of the time.
The final methodology item to mention would be that of ethics. The ethical implications are not massive in this case. The researcher completing this study is not rife with any complications or conflicts of interest. Even so, the author of this report still asserts that there is no bias when it comes to the results before they come. The results and findings stated at the completion of this report will be based on the data as it truly exists and what it represents. If there is a lack of certainty when it comes to any result, it will not be stated. If a finding is not supported, it will either not be mentioned or it will be explicitly noted that the conclusion is not supported and what evidence or patterns suggest the same.





Conclusion
Even if it is extremely unfortunate, fraud is just something that seems to happen in all aspects of the public and private sectors. Of course, the construction realm of any economy is often a blend of private and public interests whereby the public needs roads and bridges (or other things) worked on and they contract with the private firms to get it done. There is also a great amount of private-to-private partnerships that occur. However, there is always some involvement with the public authorities in the form of licenses and other such things. Fraud can and does happen regardless of the pathways involved. The best way to prevent and deal with fraud is to find out how it starts, how it is executed and the people that are involved. This allows for the proper controls, prevention tools and enforcement mechanisms to be put into place so as to limit the fraud in the future. There is probably no way to prevent all fraud as there will always be people in power that do the wrong thing. However, that should still be the desired end-result.











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