Procurement Fraud! Will it Ever Stop?

Tuesday, June 21st, 2016

Procurement Fraud!
Will it Ever Stop?

The perpetrators of procurement fraud have almost endless opportunities to commit fraud. We have another example for you. It concerns construction procurement, so there is no surprise there. The case investigated included bids for projects, some of which was either (1) fraudulent or (2) from a company owned by an associate company of another bidder. On four occasions the bids were forged by another bidder.

The audit was unable to determine who received any of the bids. Individuals, whose names were on the bid packages, including the Director of Procurement Facilities Operations, claimed they “merely signed off on the documents and denied knowledge as to where the bid documents originate from.” In each instance the fraudulent documents had the same omissions, none included the post code; the name of the contact person or, incredibly, a working company telephone number.

The husband of the owner of one of the Transgressing companies, had previously owned the company until he was convicted of felonies in connection with submitting falsified and inflated invoices. The auditors observed that the relationship between the in-house project managers and a supplier was ‘questionable.’ This is a polite way of putting things.

How could the above happen? Poor management, appalling procurement, complacency, corruption, poor audits (if any at all – the audit was triggered by anonymous complaints). Could it be happening in your business?