“Vast amounts of money, combined with a secretive purchasing process, can be a formula for corruption.” Zachary Mehan, a communications assistant at the Transparency International Defence and Security Programme, made this statement in reference to government defence procurement, but it can easily refer to all sectors of the procurement industry.
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The Many Faces of Procurement Corruption
Cases of procurement fraud are far from rare. From bid tampering to misuse of funds, alleged instances exist in both the public and private sectors and the range of wrongdoings is tremendously broad. In Miami, officers arrested a procurement official for leaking bid information on a city project.
Jessica Harper, former head of fraud and security at Lloyd’s Bank, received a 5-year sentence for falsifying invoices and claiming the payments. Supplier influence and offset payments in defence procurement leads to unnecessary military spending around the world. Corruption comes in many forms.
Can Procurement Fraud Be Stopped?
“Corruption in the defence and security sector is dangerous, divisive, and wasteful. It cannot only be changed by strong leaders in the government and military, but by a public that is aware and willing to stand up against corruption,” says Mehan. Again, this is true in any sector of the procurement industry. Transparency and accountability are the keys to prevention.
In most countries, public procurement transparency standards are in place, allowing the government as well as the stakeholders to monitor the activity. In the private sector, corporate policies should include transparency and accountability standards. Ideally, supply chain management will integrate into the daily operations of the company to improve accountability and transparency. Some companies choose to outsource procurement to guarantee compliance.
In recent years, procurement corruption has been on the rise. Transparency and accountability standards will lower instances of fraud and will make it easier to spot corruption, but in a world of temptation, corruption can never be completely eliminated.