Dive Brief:
- The U.S. Attorney for the Northern District of Georgia has charged a prominent Atlanta contractor with bribery and money laundering in connection with an alleged $1 million scheme to acquire city construction contracts, according to the Atlanta Journal-Constitution.
- Federal prosecutors claim that Elvin Mitchell Jr., owner of E.R. Mitchell Construction Company, paid more than $1 million to an unidentified city official, who then allegedly passed some of that money on to other officials in an effort to influence their contract award decisions in favor of Mitchell.
- Authorities said that another unnamed individual in the construction industry also took part in the plot and that Mitchell is expected to plead guilty later in January.
Dive Insight:
Mitchell's construction business was founded by his grandfather in 1960 and has since risen to be one of the largest minority-owned contractors in Atlanta, working on such high-profile projects as Hartsfield-Jackson International Airport, according to the Journal-Constitution.
The 2016 Kroll Annual Global Fraud and Risk Report, released earlier this week, found that 5% fewer construction industry executives reported fraud incidents in 2016 than in 2015, at 70% last year. Survey respondents said the most common type of industry fraud involved vendors and suppliers (28%), but bribery and corruption, as alleged in the Mitchell case, clocked in at 19%. Last year, Kroll reported that bribery-related fraud made up only 11% of all cases.
High-profile corruption cases continue to plague the construction industry. In August, federal officials fined architecture firm CannonDesign $12 million to settle charges that company employees bribed a U.S. Department of Veterans Affairs official for information that would help them win VA projects. Courts sentenced a CannonDesign employee and the VA official to prison, and the company also committed to making at least $2.5 million in internal policy changes aimed at preventing future fraud.
Bribery and corruption in the construction industry expands well beyond the U.S. Last month, one of the biggest contractors in South America, Brazilian company Odebrecht, paid $4.5 billion for what The Wall Street Journal called "the largest anticorruption settlement in history." Prosecutors charged top executives with intentionally overbilling state oil company Petrobras more than $3 billion and then paying Petrobras and government officials a total of $800 million to look the other way.
