The Victorian public sector has learned much from recent experience about corruption and how it can flourish.

IBAC has undertaken research about corruption and has also published podcasts and other useful material that explains to the public sector the situations in which corruption can take hold. Some activities and roles have been identified as particular opportunities for corruption and its prevention.

In a recent podcast IBAC explored this issue with Geoff Crawford, the Assistant Director for Fraud Prevention at the Department of Justice and Regulation.

Explaining how procurement and contract management may be vulnerable to corruption risks, Geoff Crawford said:

“This is probably one of the more significant areas that corruption can find its way into public sector activities. Throughout the lifecycle of procurement there could be many points where fraud and corruption becomes a potential issue for people. There’s key risks in the specification phase, determining the nature of the tender, shortlisting phase, valuation of tenders, managing deviations, ensuring compliance with product quality, pricing etc, in other words all phases of the tender.”

IBAC has identified four everyday activities particularly prone to corruption risks:

1. The bidding process – particularly when the specification is being developed and the competitive process is being conducted
2. Picking the preferred supplier
3. Paying for goods and services
4. Contract management.

Some control measures suggested by IBAC include:

– audits
– processes, practices, etc that address the known risks
– rotating staff, segregating roles
– raise purchase orders, detect duplicate invoices
– segregating approval and receipting roles
– investigate complaints
– due diligence

“The key issue is to focus on the proper and regular management of the contracts.” Geoff Crawford says. “There’s a range of reasons why things go wrong, it usually comes back, unfortunately, to managers not being effective in their roles. This could be reflected through poor management of conflicts of interest, allowing the processes to be undertaken without suitable oversight or probity measures, shortcuts taken in the interest of saving time or just in a busy environment trying to get things done. Additionally not knowing the business well enough to see when anomalies are actually taking place.”

It’s in everyone’s interest that the public sector seeks to ensure fair procurement and to build corruption resistant processes and checks. If our public sector can ensure value for money in procurement:

– employees will award contracts as government expects with integrity and fairness
– agencies will build good reputations as trusted and responsible organisations
– the community will benefit from high quality goods and services as intended
– honest hard-working businesses all have a fair chance of securing government contracts.

For more information, watch: ‘The red flags of corruption – procurement’ — published online by IBAC here on 9 November, 2015

A participant in the UN Global Compact, CourtHeath seeks to raise awareness about the sustainable development goals and the principles of the Global Compact with business and government organisations in Victoria. Anti-corruption is one of the ten principles of the Global Compact. Corruption impedes business growth, escalates costs including transaction costs for government and suppliers, poses serious legal and reputational risks and undermines fair competition.