Organisations that have training and awareness at the heart of their company ethos not only have a greater opportunity to develop internal capabilities and retain expertise but also have an increased ability to develop an understanding of the risk that the organisation faces and an increased aptitude to respond to these risks.
As an example, it can be a challenge to persuade leaders of the benefits of procurement fraud and corruption education and how it can positively impact various roles within an organisation, and although the possibilities and value of such education can be quite significant, many leaders don’t see or believe that education on the basics of procurement fraud risk mitigation can have such a positive financial impact on their organisation that includes stopping the ongoing losses and recovering monies through contract terms.
Staff understanding the typologies of procurement fraud and corruption, how and where it can be committed allows them to understand what risk looks like within their working environment and where to report it. Recognising how they can mitigate risk within their own areas of responsibility additionally allows each member of staff to understand how they fit into the organisations anti-fraud strategy and the importance of each individual within it.
PROBLEM
Following on from an education programme in which students were taught how to identify procurement risks that impact their sector and organisation, how to mitigate risks and how to assess and create a risk register for organisation projects, management requested an assessment of a staff and supplier risk in which they didn’t understand what was going on in what appeared to be suspicious activity. They raised concern over actions of an individual and information that they may have interests in a company supplier. We were tasked to identify the level of risk and scale of any losses including whether there was a network of individuals involved.
PROCESS
Our approach assessed a number of areas that included the procedures that were in place for procurement and fraud management that included tendering procedures and security procedures. A 5C’s approach was taken to the individual, supplier and contracts that had been awarded that included assessing conflicts of interest risk, payments, communication between individuals and assessment of contract files. These actions identified the unauthorised disclosure of commercial information including pricing data, undisclosed shareholding with supplier and the planning of introducing a new business that they created as a supplier to rig the tendering process. Additionally, a number of procurement files and eProcurement information were missing that is suspected was done to hide the fraud.
After briefing the executive of these findings, immediate action was taken against the individuals involved. Severe weaknesses were identified within the company compliance with policy and procedures and recommendations were made and introduced that a training program on fraud and compliance risk should be given to key staff and leadership and that a governance department be introduced to oversee key areas of risk within the organisation.