Reputation Management in the AEC-industry after Work-related Crime

Construction companies can be difficult to manage because of complex supply chains, autonomous project managers aiming to maximize net profit, heavy emphasis on price, etc. Another particularity, namely the construction companies' vulnerability for workrelated crime, does not receive sufficient attention in the project management literature. In order to study how two major Norwegian contractors managed to safeguard their reputation in the aftermath of the discovery of tax crime and money laundering within their projects, this paper investigates the following research questions: 1) What are the main challenges regarding work-related crime? and 2) How do contractors manage their professional reputation and public image in the aftermath of exposed work-related crime? This is an exploratory study starting with a literature review, followed by a case study consisting of a document study and 12 semistructured in-depth interviews with representatives on the strategic level. Work-related crime could have a devastating effect on a contractor's reputation. Reputation is perceived to be a vital catalyst for contractors that want to continue in business and conduct projects for reputable clients. Therefore, the most important measure will be to deliver projects according to the agreed price and quality, within the scheduled time, while not compromising either the contract, all the legal jurisdictions aspects or ethical standards. In these particular cases, the contractors perceived their reputation as remaining untarnished due to their successful ad-hoc reputation management. However, the contractors have to do more than just distancing themselves. They must actively prevent criminal actors from entering their projects. This paper is a revised version of the paper (study) published earlier in the proceedings of the Creative Construction Conference 2018 (Engebø et al., 2018).


Introduction
Construction companies can be difficult to manage because of complex supply chains, autonomous project managers set on increasing net profit, heavy emphasis on price, etc. Another particularity, namely the construction companies' vulnerability to work-related crime, does not receive sufficient attention in the project management literature. In March 2014, the Norwegian newspaper Aftenposten released the first of 45 articles concerning the shadow economy of the Norwegian construction industry (Haakaas and Gedde-dahl, 2014). This paper attempts to present an insight into a major scandal that emerged within the Norwegian construction industry, and how two involved contractors handled the aftermath of the scandal.
Very little research seems to have been undertaken concerning the question of how organisations faced with challenges gravely threatening their public image (caused by illicit activities) have (or ought to have) reacted. The characteristics of the scandal revealed by Aftenpostenhereby referred to as "the case" -is outlined in the following below (Haakaas and Gedde-dahl, 2014). The case emerged during 2014 and consisted of a criminal network with involving a manager who systematically conducted tax-related crimes and money laundering in the construction industry in the area of Oslo, Norway. The criminal network involved 37 subcontractors that consistently colluded with each other for almost a decade. The manager of the criminal network established and ran the main company with the purpose of acting as an intermediary between the major contractors and the sub-contractors. The main company contracted so-called mailbox (i.e. fake straw) companies to perform the job. The mailbox companies' only purpose was to bill the main company so it appeared that VAT had been paid. The contracted mailbox company then withdrew the money that came into their account, but without paying VAT to the state. Then the cash amount was returned to the main company, which in turn could pay out salaries to its unofficial employees. The manager alone embezzled NOK 41 million (app. € 4.25 mill) through such operations. Two well-known major contractors with a decent reputation, contractor A, and contractor B, were affected since they had contracted sub-contractors related to the network.
The Police investigations revealed that out of the 37 subcontractors in the network, 34 were mailbox companies. Eight were created by using false identities, and as many as 24 of them had no registered employees. In reality, the manager controlled all of the 37 sub-contractors. However, in the public registry, there were a variety of persons who appeared as owners. For example, the manager's spouse was listed as the CEO in one of the companies. In the other companies, the manager had used stolen identities. The investigation revealed, among other things, that one person was behind four different identities figuring in four different companies over several years. The manager had acquired false documentation, green cards and Norwegian bank accounts for his unofficial employees. The manager also acquired a D-number for his employees, which is required for all foreigners working in Norway for less than 6 months. Overall, the manager of the network arranged all practicalities for those who worked for him, from picking them up at the airport to accommodating housing. The manager was eventually sentenced to prison for 5 years and received a penalty of NOK 14 million from the state. Furthermore, he was permanently denied the right to pursue any further independent business activity.
The revelation proved the possibility to operate outside jurisdiction for quite a long time without being compromised by the Police, or even by the major contractors. Those who contracted the company profited, as the criminals actually showed up on time, cost less than their legally operating competitors' would have charged, and did a proper job received any complaints on the quality of their work. The Government lost its VAT, so the society as a whole did not derive any benefit from it, however.
As for the two major contractors that had contracted sub-contractors from the criminal network, they risked a damaged reputation when the Aftenposten revealed their involvement. This paper sets out to investigate the following research questions: 1. What are the main challenges regarding work-related crime? 2. How do contractors manage their reputation in the aftermath of work-related crimes executed by subcontractors?
This paper is the revised version of the paper that has been published in the proceedings of the Creative Construction Conference 2018 (Engebø et al., 2018). The extension includes an addition to the literature review dedicated to crime in the construction industry as well as a more in-depth look on crime in the Norwegian context. Furthermore, the extension includes a revised conclusion.

Methodology
This exploratory case study provides an empirical insight into the particularities of organized crime in construction and how the actors handled the aftermath. According to Yin interviews is one of the most important sources for acquiring knowledge and information in case studies (Yin, 2014). Semi-structured interviews allows the interviewee to elaborate, even though the questions are set up in advance (Ryen, 2002). Furthermore, it permits asking relevant follow-up questions that may enrich the empirical data. The topic of the study is of such nature that it is a possibility that the answers the given were not completely honest, or not detailed enough. Therefore, the opportunity to ask follow-up questions was seen as a necessary advantage in this study. Furthermore, the interviews was conducted with four different groups, which creates data triangulation (Dalen, 2011;Yin, 2014). Table 1 shows the roles of the in total 12 interviewed actors, who all come from a strategic level.
The interviews lasted between 20 and 45 minutes and were conducted with the use of an audio recorder. The use of a recorder was considered convenient in order to interact more freely with the interviewees. A possible source of error using a recorder is the possibility that the interviewees withhold information. All interviews were transcribed and the resume was sent to the interviewees for acceptance. Because of the nature of the study, it was considered necessary to keep the interviewees anonymous. This decision was made in order to extract the necessary data while avoiding potential negative consequences for the interviewees.
As a supplement to the interviews, the research consisted of a document study. The studied documents were both case-specific and non-case specific. The case papers consisted of a comprehensive description of the whole course of the case and the course of action, and thus a study of these has been indispensable in order to gain an underlying understanding. In the investigated case, information about the case primarily derived from case-specific documents (27,061 pages). The case-specific documents were supplemented with the experiences of the police investigator and the Aftenposten article series "The grey Economy". Information obtained from Aftenposten has been checked against criminal records. The Aftenposten paper edition contained 45 Articles from March 26, 2014 to April 7, 2015. The verdict is published without restriction in a public data base of Lovdata (2016).

Literature review
The literature review carried out in preparing this article revealed that crime in the AEC-industry typically has been examined according to specific perspectives, notably corruption research (Locatelli et al., 2017;Owusu et al., 2017), research on workplace related crime (CIOB, 2009;Golden and Skibniewski, 2010;Zhang et al., 2014;Zitkiene et al., 2016), so-called social dumping (Bengtsson, 2014;Bernaciak, 2016;Fromentin, 2016) and tax evasion schemes (Barth et al., 2008;Behling and Harvey, 2015). A notable exception to this is the momentous work of Williams et al. (Williams, 2005;2008;2009a;b;Williams and Nadin, 2012;Williams and Horodnic, 2015), who through a long series of publications have scrutinized what can be called grey zones, that is, patterns of action where criminal and legal activities intertwine.
These analyses illustrate that the phenomena generally covered under the name "crime" within the industry is not as clear-cut as might be expected. Further, as illustrated in Drevland and Lohne (2015); Lohne et al. (2017a;; Svalestuen et al. (2015) and Drevland et al. (2017), considerable ethical challenges arise from the patterns of action of industry actors within the Norwegian context even though these might not directly punishable according to criminal law. Furthermore, for the Norwegian construction industry, problems related to work-related crime and counterfeit construction materials exist, but are not very much discussed (Engebø et al., 2016;Kjesbu et al., 2017a;b;Skovly et al., 2017).
Apparently, many different improprieties can occur in the construction industry. A considerable concern is the ethical challenges occurring, especially from operating in "grey areas" where it is difficult to categorise the actions as either lawful / unlawful, and where the line between ethical / unethical is fuzzy, see Fig. 1 Vee and Skitmore, 2003). Furthermore,  revealed that surprisingly few contractors have ethical frameworks that differ between "grey areas" and illegal practices.
Within the category of corruption in construction, Le et al. (2014) offers a comprehensive review. Two prominent categories of corruption in construction is "fraud" and "collusion", with "fraud" being misconduct in form of misinformation, deceit and theft, and "collusion" being forms of secret agreements with a fraudulent or deceitful purpose (Le et al., 2014). Another concern identified in the literature is the forging-and altering of invoices and money laundering (Van Den Heuvel, 2005;Zou, 2006;de Jong et al., 2009;Bowen et al., 2012). Furthermore, such fraud can occur during every phase of a construction project (Sohail and Cavill, 2008). In the case investigated in this study, both forging-and altering of invoices as well as money laundering was featured. Jefferies et al. (2002) identified reputation as a critical success factor in winning project bids and that a trustbased owner-contractor relationship is a necessary contributor to successful projects. Brønn et al. (2009) argue that in order to understand reputation one must first understand the concepts of "identity" and "image". Identity is an Fig. 1 The fuzzy line between ethical and unethical behavior b) internally oriented term describing the profile-and values communicated by an organization, and employees' views on this (Brønn et al., 2009). "Identity" is, according to Kvåle and Waeraas (2006), ideas and concepts that give an understanding of reality. When a business communicate with its surroundings, they communicate their identity to stakeholders (Brønn et al., 2009). Therefore, understanding their identity enables businesses to gain insight into how they are perceived by others. This impression forms the basis for the business's image. Image is "the immediate impression the environment has of the organization" (Brønn et al., 2009).
To understand what the stakeholders really think about a business, one must look at reputation. In this context Freeman (1984) describes stakeholders as "a group or an individual who can work on or influenced by organizational actions". There is a lack of consensus in the definition of the term reputation, various academic disciplines such as Psychology, Economics, Strategy, Accounting, Marketing, Communication, organizational theory and sociology all have their own understanding of the term (Fombrun, 1996;Fombrun and Van Riel, 2004;Van Riel and Fombrun, 2007). All businesses establish an identity and an image, but their reputation is something that is archived and earned (Brønn et al., 2009). Despite the variance regarding the concept of reputation, most agree that reputation is something that is constructed over time and affected by all actions of the company (Balmer and Greyser, 2003). The purpose of upholding a respectable reputation is important for a widespread range of reasons. Regardless, the relative essence is that a respectable reputation affects the strategic position of the business (Fombrun and Van Riel, 2004). The impressions the businesses provide over time creates "reputational capital" that can strengthen the competitiveness of the business over time (Brønn et al., 2009). Reputation is often determined by external factors outside the business' control. It is therefore both challenging and time consuming to build reputation while at the same time avoiding risks that can lead to a negative effect on the reputation (Gotsi and Wilson, 2001;Brønn et al., 2009). Fombrun (1996 points out that one must both build and maintain relationships in order to achieve positive reputation: "A reputation that is positive, lasting and robust requires huge investment in building and maintain good relationships with the organization's environment". The reputation of a business may be greatly affected by media coverage (Bromley, 2000). According to Waldahl (1999) and Bryant and Oliver (2009), the media's impact has been a key research area for media science. Today, the media is viewed as a powerful force. The term "agenda" is relevant to the importance of media reputation. The leading hypothesis about the media's "agenda function" states that a subject given intensive media coverage causes the topic to be prioritized and discussed (McCombs and Shaw, 1972;McCombs, 2014). In addition, the "agenda function" of the media demonstrates how media influences the perceptions associated with the given subject. The subject is thus often being linked and associated with the businesses involved (Carroll and McCombs, 2003;McCombs, 2014). This paper uses the following definition of reputation; "reputation is the surrounding's perception of an organization over time" (Brønn et al., 2009). Thus, a good reputation is formed by a positive image over time. Furthermore, the perception of an organization changes for the better or the worse over time. Money laundering and altering of invoices are just some examples of activities that will alter it for the worse.

Result and discussion
In order to study how two Norwegian major contractors managed to safeguard their reputation in the aftermath of the discovery of tax crime and money laundering within their projects, this paper investigates the main challenges regarding work-related crime and how contractors manage their reputation in the aftermath of work-related crime.
In the Norwegian construction industry, the term "unserious actor" is widely used to describe companies acting criminal. This term gives associations towards non-professionals, but not necessarily criminal actors. This may imply that parts of the industry do not fully grasp or understand the severity of organized crime and money laundering. Consequently, the actors do not enact the problem truly and the construction industry does not fully comprehend that criminals infiltrate the construction industry. Thus, they are creating favourable market-conditions in order for criminals to get a better foothold in the legitimate part of the construction industry. As long as the construction industry does not take the problem seriously, the criminals will succeed with work-related crime. Another explanation for the term "unserious actors" relates to the challenge of identifying a company as criminal when not convicted. It can take years from an initial claim regarding criminal actions until a final verdict. This might be problematic for public clients that operate under the Public Procurement Act that prevents them from excluding companies not yet convicted.
The media attention initiated-and enhanced the climate for dialogue between industry, law-enforcers, and authorities. Still, communication between the law-enforcers and the industry was identified as a challenging area. Some interviewees specified the challenge associated with ongoing investigations and confidential information: "It is a challenge that the authorities know many things that we do not know" (quote, anonymised respondent). Law-enforcers cannot inform the industry on their progress, which again leads the industry to believe that the police do not prioritise. Another major challenge is that the distribution of responsibilities is perceived to be unclear. It is a possibility that the contractors do not fulfil their supervisory duty accordingly; this is something the industry should improve. It is relatively evident that it exists a grey zone where criminal actors might strive within the industry's supervisory duty. Only clear and tidy communication between the industry and the official agencies will remove this grey zone.
One of the biggest challenges regarding organised crime is to uncover the existence and extent of the matter. The task of uncovering whether a sub-contractor operates within the regulations of the law is perceived to be demanding. Furthermore, it is proven to be challenging to get contractors in the industry to understand the seriousness of organised crime. Some interviewees remarked that it is demanding to distinguish the criminals from the law-abiding, in both the procurement phase and the construction phase. An important challenge that can prevent crime is to work for increased motivation to perform the supervisory duty more accurately. According to the police, a major challenge for the main contractors is to discover whether an invoice is fictitious or not. The same goes for uncovering false or stolen identity papers. In order to address future challenges, the findings suggest that clients should not transfer the responsibility for revealing work-related crime to the contractor. If irregularities occur on a project, the client will have responsibility independent of whether the major contractor knew about it or not. The client has responsibility for everything that is going on their projects according to Norwegian legislation. The media exposed that major contractors used criminal actors on their projects at the expense of reputable actors. Thus, the reputable actors were excluded from the market because they were not able to compete on price. The extensive coverage of the emerged case placed the problem on the agenda for the construction industry. The relatively massive coverage facilitated further discussions within the construction industry. Furthermore, several public agencies aired their opinions. This corresponds well with the hypothesis of McCombs that intensive media coverage leads to increased prioritising (McCombs and Shaw, 1972;McCombs, 2014). The media did not just put the issue on the agenda; they made lasting changes by making the industry more receptive to the Police and the authorities. This confirms the hypothesis on media influence the perceptions associated with the topic (Carroll and McCombs, 2003).
When asked how the case affected the reputation of contractor A and B, both the contractor-and client representatives agreed that this potentially affected the reputation. Eleven of the interviewees, from all segments, emphasized that decent reputation is important for the business. A client stated that it would weaken the reputation of the contractor if the contractor were "exposed to criminal acts repeatedly during a relatively short time" (quote, anonymised respondent). Furthermore, the majority of the clients stated that it was critical for the contractor to distance themselves from the criminals and the criminal actions. Regardless, the contractor still had to take responsibility-and demonstrate their ability to correct the situation. The interviewees were asked how they responded when it came to their knowledge that criminal actors operate in the construction industry. One of the clients believed that this case was a huge setback for the whole industry's reputation. The emerging media attention affected how the entire construction industry appeared. The general view of the interviewees was that the most important measure for the construction industry actors in order to influence their reputation was to develop and educate their own employees, as they represent the company externally. A client representative stated that good reputation increases competitiveness over time. Furthermore, the interviewees considered reputation as a necessary ingredient in building an ethical and lawful culture.
Both the client and contractor representatives were asked about the importance of the media. The majority pointed out the media's importance when it comes to setting work-related crime in the construction industry on the agenda. The newspaper articles on work-related crime in the construction industry were regarded as vital for understanding the extent of the crime. Both clients and contractor representatives agreed upon this. The media consequently put work-related crime on the agenda. One representative stated the following: "I want to say that this is a good example of the media as an effective arena for setting the agenda" (quote, anonymised respondent). Furthermore, several interviewees emphasized that media put a focus on challenges not given sufficient attention within the construction industry. On the contrary, one client representative thought the media did not have enough knowledge about the conditions and the context of the industry in order to conduct such critical evaluations. Several interviewees emphasizes that the media attention made contractors more responsive to both the police and authorities. Both the police and the authorities had previously tried to set the agenda on work-related crime, but only after the emerging of the actual case, the industry took it seriously. In this particular case, the two contractors involved had a decent opportunity to manage how the media perceived them due to their information advantage. An advantage they successfully utilized. Smaller companies involved had much less impact than the major contractors did.
When the clients were asked how the contractors worked in order to manage their reputation, several characteristics emerged. The most fundamental principle of building a good reputation was perceived to be the ability to deliver good projects. That is, the contractors deliver the right quality, following the schedule, at the agreed price. Furthermore, the clients emphasized that some deviations occur in all projects, often in form of contractual deviations. In this specific case, the subcontractors did not pay taxes and fees in accordance with the Norwegian Tax Payment Act. Thus, the interviewees emphasized the importance of handling such contractual deviation in a professional and open manner, especially vis-à-vis the client. An interviewee from one of the contractors stressed the importance of handling such deviations in a professional matter to ensure future contractual agreements with the same client. As an interviewee stated: "If you deliver a good project for the client, the quality is good, keeping price and progress as well as all that we agreed on, then the customer often returns" (quote, anonymised respondent). In connection with the scandal, both contractors A and B emerged as good examples for others in the industry through being open in the media and taking responsibility for the circumstances on their projects. They showed corporate responsibility beyond minimum requirements set in laws-and regulation. Both realized quickly that their control routines were insufficient and thus gave clear signals that they would have to improve their current practice. When it comes to the reputation of the contractors, the client representatives agreed upon that the contractors' open attitude and willingness to improve their procedures and culture led to an overall increased positive reputation for the contractors. Through their openness, the contractors made the impression that they did not hide information and that they were not deliberately involved in criminal matters.
Both contractors expressed the need for redeeming themselves after the discovery of criminal activities on their construction sites. From the clients' perspective, it is important for contractors to deliver according to the contract and operate in accordance with laws and regulations. The consensus among clients was that the contractors' openness and willingness to rectify the situation helped the contractors and mitigated the potential demise of reputation. Several of the client representatives stated that the handling of both contractors A and B in the aftermath was upright. One client thought that the case did not affect the reputation of contractors B at all. Some of the clients pointed out that the contractors effectively-and in a proactive matter affected others' perception by being transparent and honest. Both contractor A and B acted with haste to denounce their affiliation with the criminal actors when the scandal emerged in the media. Both remained clear that they did not want to associate with criminal actors. By doing so, they gave their clients a robust indication that such actors were not be allowed to enter their construction sites.
The media's impact on the reputation of a contractor can be massive when revealing crime in their projects. In such cases, the interviewed contractors pointed out the importance of being transparent and presenting all the known facts involving criminal subcontractors. Simultaneously, both contractors emphasized that their main motivation to counteract the criminal actors was that such actors challenged their business values. One of the contractors mentioned they felt a loss in prestige when media uncovered criminal actors on their construction site before they discovered it themselves.
Both contractors realized quickly that the criminals had to be excluded from the market. A major reason for the contractors to initiate such processes was due to the damage the scandal had on their reputation. Their immediate action is, in retrospect, viewed as an advantage. If they had hesitated, the industry might have changed their perception of them permanently to the worse. As seen in this case, being an already large and reputable contractor spawned yet another advantage as they had the resources to counteract. While the act of quickly distancing themselves from the case was a necessary act of damage control, it also poses one possible disadvantage. By quickly revealing their awareness, they also provided criminals a chance to alter their routines and adapt to the new market environment.
The case study highlighted several countermeasures, summarized in Table 2. The measures were implemented in order to safeguard the reputation of the contractors affected by the case. The results show that the serious work conducted by contractor A and B in the aftermath of the scandal in order to counter criminal actors, strengthened their prospect to mitigate future incidents both during contracting-and execution of projects.
Other contractors may learn from how the contractors handled the scandal and how they have worked for it not to happen again.

Conclusion
The purpose of this case study was to identify the main challenges regarding work-related crime and explain how the involved contractors handled reputation in the aftermath. In particular, the case revealed that the main challenge for the contractors regarding the work-related crime is that reputation is perceived to be a vital catalyst for contractors that want to stay in business and conduct projects for reputable clients. The reputation of contractors that repeatedly experience criminal actors during a relatively short time weakens. While reputation takes a long time to build, one incident can pulverize it. However, this case seems to prove that large and already reputable actors profit on the concept of "benefit of the doubt". Furthermore, the case study supports arguments stated in preceding literature that a (seemingly) decent reputation is necessary for a contractor that wants to stay in business.
The case provided clear empirical evidence on how to handle emerging cases of work-related crime. Several measures were identified to safeguard the reputation of the contractors against work-related crime. The single most important measure for the contractors' reputation is to deliver projects according to agreed price and quality within schedule while following the contract, legal jurisdictions, and ethical standards. Among other measures, the contractors needed to educate their own employees. The involved contractors developed their routines, and the use of supplier databases for pre-qualification of sub-contractors was considered as an important measure for future work against work-related crime.
The case has shown that it is essential to handle work-related crime in an open way to maintain a good reputation among clients, the public, the authorities as well as the rest of the industry. By doing this, the contractors clearly stated their position and attitude in the industry. Thus, it suggests that the main motivation to counteract work-related crime was that it challenges the ethical values reputable actors set for themselves. The contractors must take responsibility for the situation by freezing out criminal actors and condemn illegal actions when revealed. Ad-hoc approaches might work a couple of times, but with repeated infiltration of criminal actors during a relatively short time, the contractors have to do more than distancing themselves. They must actively prevent criminal actors from entering their projects. Furthermore, the fact that just some main contractors counteract criminal parties actively is not sufficient to solve the challenges of work-related crime in the construction industry. The rest of the construction industry and the relevant authorities also have to counteract work-related crime. Therefore, future research should focus on how contractors work to prevent work-related crime on the operational level. Contractors dissociated themselves from the criminal activities by stating to both industry and media that such conduct was unacceptable on their construction projects, and that they worked vigorously on excluding such actors.
Being a good example Working on, preparing-and expanding their routines regarding prequalification of subcontractors, and pressed for more extensively use of prequalification system / databases.

Taking responsibility
Showing willingness to rectify the situation and taking responsibility. The contractors settled the case through improving the situation by improving their own routines.
Continue to deliver good projects The contractors continued their work on deliver good projects according to contractual obligations.
Professional management Strong, transparent and open handling contributed to raise the contractors' reputation.
Redefining own requirements and systems In order to prequalify its subcontractors, both contractors expanded their criteria's beyond minimum requirements by the law.