Corrupt subcontracting, labour exploitation and ghost workers
Subcontracting, labour hiring, and payroll are subject to patronage, extortion, and fraudulent practices, including ghost workers and inflated staffing.
Red Flags & Indicators
- Subcontracts are awarded or changed without competition and repeatedly favour connected, newly established, or non-transparent firms.
- Payroll and attendance records do not match the number of workers on site, including duplicate names, shared bank accounts, or unusually high cash payments.
- Worker complaints report unpaid wages, coercion, or unexplained deductions, together with high staff turnover, work stoppages, or unrest.
- Labour or security providers are linked to credible reports of intimidation, unclear ownership, or connections to influential individuals or networks.
Stakeholder Guidance
Stakeholder Exposure
Exposure includes inflated costs; labour abuse and extortion risk; increased labour, anti-money laundering, and anti-bribery and corruption risk; higher risk of workforce unrest and delays; and reputational risk.
Decision Point
Before approving payroll and labour subcontractors, verify worker records and conduct due diligence on subcontractors.
Mitigation Actions
• Use traceable wage payment systems and identify duplicate IDs, shared accounts, or unexplained cash use
• Conduct due diligence on labour subcontractors, security providers, and recruitment agents (ownership where feasible, conflicts, past violations)
• Require written contracts with defined rates and deductions, and no recruitment fees charged to workers
• Maintain complete and auditable labour records
• Maintain an accessible worker grievance mechanism, ensuring complaints are recorded and their resolution is tracked
• Use internal compliance escalation processes and whistleblower channels, where available, to report payroll inconsistencies, wage withholding, coercion, intimidation, or unsafe labour practices, documenting corrective actions
• Suspend and replace subcontractors and freeze disputed payments when credible exploitation or signs of ghost workers persist
Mitigation Resources
Require subcontractors, recruitment agents, security providers, and other third parties involved in workforce supply or payroll to comply with anti-corruption and integrity requirements; require reporting of ghost worker, payroll, coercion, or exploitation concerns, and apply the same requirements to lower tiers.
Supplier and subcontractor integrity controls — https://toolbox.infrastructuretransparency.org/resource/supplier-and-subcontractor-integrity-controls/Screen subcontractors, recruitment agents, security providers, and related counterparties involved in labour supply and payroll arrangements; verify beneficial ownership where feasible, related-party links, PEP exposure, and sanctions risks, and escalate or stop engagement where unresolved red flags remain.
Counterparty integrity screening and due diligence — https://toolbox.infrastructuretransparency.org/resource/counterparty-integrity-screening-and-due-diligence/Failure Cases
Good Practices
Stakeholder Exposure
Exposure includes higher human rights and labour risk; sanctions and debarment contagion via subcontractors; cost increase; delays from disputes and unrest; and reputational risk.
Decision Point
Before releasing funds, verify payroll and subcontractor controls, and suspend support if exploitation or signs of ghost workers persist.
Mitigation Actions
• Treat credible exploitation and ghost worker indication as a suspension trigger
• Include covenants requiring adequate worker documentation, transparent wage deductions, and an accessible grievance mechanism with documented resolution
• Include audit/verification rights over payroll and labour-subcontract payment flows
• Commission independent labour and payroll review in higher-risk contexts or when red flags emerge (duplicate IDs, shared accounts, opaque providers, intimidation reports), pausing disbursement pending review
Mitigation Resources
Conduct integrity due diligence and issue tracking for labour subcontracting and payroll arrangements; require worker identity and attendance reconciliation, traceable wage payments, disclosed labour providers, accessible grievance records, and pause support where ghost worker, coercion, or exploitation indicators remain unresolved.
Investor integrity due diligence and monitoring — https://toolbox.infrastructuretransparency.org/resource/investor-integrity-due-diligence-and-monitoring/Screen labour subcontractors, recruitment agents, security providers, and related counterparties involved in labour supply and payroll arrangements; verify beneficial ownership where feasible, related-party links, PEP exposure, and sanctions risks, and escalate concerns or stop engagement where red flags remain unresolved.
Counterparty integrity screening and due diligence — https://toolbox.infrastructuretransparency.org/resource/counterparty-integrity-screening-and-due-diligence/Failure Cases
Good Practices
Stakeholder Exposure
Exposure includes wasted public funds; higher risk of labour disputes and safety incidents; weak subcontract governance;risk of labour non-compliance; and loss of public trust.
Decision Point
Before approving subcontractor changes and payroll-related claims, verify worker registers, payroll records, and ownership information where available.
Mitigation Actions
• Require documented approval for subcontractor appointments and changes
• Maintain auditable labour records, and document inconsistencies (e.g., duplicate worker IDs, shared accounts, unexplained cash use)
• Maintain a subcontractor and labour-provider register and require disclosure of recruitment agents, services, and fees
• Require approval for high-risk labour and security providers
• Maintain an accessible worker grievance and whistleblower channel, ensuring complaints are recorded and their resolution is tracked
• Require corrective action for wage withholding, coercion, and abusive deductions, adopting swift remedy in case of critical inconsistencies (suspend subcontractors, require replacement)
• Require the use of traceable wage payment systems, including project bank accounts, to ensure direct payment of wages into workers’ personal bank accounts
• Refer credible labour and subcontracting fraud and intimidation concerns to independent oversight bodies, documenting corrective actions
• Publish and maintain public access to key labour-provider and subcontracting records, including approved and dirt-listed subcontractors
Mitigation Resources
Require subcontractors, recruitment agents, security providers, and other third parties involved in workforce supply or payroll to comply with anti-corruption and integrity requirements; require reporting of ghost worker, payroll, coercion, or exploitation concerns, and apply the same requirements to lower tiers.
Supplier and subcontractor integrity controls — https://toolbox.infrastructuretransparency.org/resource/supplier-and-subcontractor-integrity-controls/Require disclosure of labour subcontractors, recruitment agents, security providers, and related labour providers; review beneficial ownership information where available, related-party links, PEP exposure, and sanctions risks, and apply exclusion rules or escalate red flags where permitted.
Counterparty integrity screening and due diligence — https://toolbox.infrastructuretransparency.org/resource/counterparty-integrity-screening-and-due-diligence/Publish and maintain public access to key labour-provider and subcontracting records, including approved subcontractors, labour-provider disclosures, worker grievance channels, and reasons for related decisions, with only lawful redactions.
Transparency and data disclosure standards — https://toolbox.infrastructuretransparency.org/resource/transparency-and-data-disclosure-standards/Failure Cases
Good Practices
Stakeholder Exposure
Exposure includes worker exploitation and community harm; intimidation by labour and security networks; limited access to payroll and subcontract records; retaliation risk for reporting; and reduced accountability for labour standards.
Decision Point
During project execution, submit access to information to request clarification on labour conditions. Decide whether to (a) escalate through oversight channels to report credible labour abuse and signs of ghost workers , or (b) monitor while safely gathering evidence.
Mitigation Actions
• Mobilise communities to identify critical labour issues (wage delays, coercion, intimidation, excessive deductions, inflated records)
• Engage available grievance channels and oversight bodies, including labour inspectorates, when serious and repeated issues are identified (use safe, confidential reporting and anonymisation where the risk of retaliation is significant)
Mitigation Resources
Submit protected complaints or reports through worker grievance, labour inspectorate, audit, ombud, or other oversight channels where ghost workers, wage withholding, coercion, abusive deductions, or opaque labour-provider practices are identified; document evidence and timelines, track case handling, and support safe reporting where retaliation risk is material.
Grievance, complaints, and protected reporting — https://toolbox.infrastructuretransparency.org/resource/grievance-complaints-and-protected-reporting/Track labour and payroll patterns across subcontracting arrangements; compare reported staffing, wage payments, labour-provider disclosures, and grievance patterns with conditions in practice, and flag ghost worker, leakage, coercion, or exploitation indicators.
Expenditure tracking and leakage analysis — https://toolbox.infrastructuretransparency.org/resource/expenditure-tracking-and-leakage-analysis/