Are you vulnerable to Procurement fraud, bribery & corruption?

1. Procurement Fraud: Are you
vulnerable?
Dr Gordon Murray
GCP Business Change
1 Copyright © 2013 Tata Consultancy Services Limited

2. 2
Procurement Fraud, Bribery & Corruption is a
BIG ISSUE
 Bribery Act 2010
– Covers giving & receiving with potential of 10 years’ imprisonment
– Places obligations on organisations to put in place effective systems
– Act applies to Global operations
 Knolls 2013/14 Global Fraud Report
o 19% of companies globally have suffered vendor, supplier or procurement
fraud in last year
o Increase of 7% on previous year
 White collar procurement fraud has resulted in custodial sentences
and damaged reputation
o 6 years for local government energy buyer who diverted client management
fee to his own private account
o 5 years for Lloyds Head of Fraud & Security for submitting false invoices
o 4 years for a Sainsbury’s buyer who accepted bribes
o 2.5 years for an NHS engineer who raised bogus orders
o 18 months for NHS technology manager who set up his own company and
then bought from it.

3. 3
Costs of perpetration of Fraud, Bribery & Corruption
Higher prices
Reduced
quality
Reduced
safety
Negative
profile
Reduced
market
confidence
Increase in PR
and Marketing
Share price
impact
costs to
salvage/rebuild
reputation
£

4. 4
Reducing Vulnerability: Approach
Document
analysis
Process
mapping
Interviews Workshops
TARGET OPERATING MODEL
Governance
Policy & Strategy
Structure
Processes
Systems
Skills
Benefits
VULNERABILITY
ASSESSMENT

5. 5
A case study
6 week review
13 interviews
41 areas of Vulnerability identified
27 areas of Significant Risk identified
20 Recommendations
£8m potential savings identified through process improvement
LACK OF CONSISTENT POLICY & PROCESSES
LACK OF STRATEGIC MANAGEMENT OF RISK OF FRAUD, etc
LACK OF ROLE CLARITY
LACK OF AWARENESS OF CORPORATE CORRUPTION PREVENTATIVE MEASURES
LACK OF ADHERENCE TO TRAINING REQUIREMENTS
LACK OF SEGREGATION OF ROLES
NO eSourcing, eAuctions or Benchmarking

6. 6
Example of Risk Register addition
Procurement fraud, bribery and/or
corruption
Probability Medium
Impact: Reputational damage to organisation; loss of
income; service failure, potential penalties under
UK Bribery Act.
Proximity High
Owner: Procurement SPOC
Mitigation: 1. Independent due diligence review of
procurement processes to access vulnerability;
2. Prioritised implementation of
recommendations.
3. Segregation of duties.
4. New progammes required to address risk at
‘Start Up’
5. All staff to complete Anti Bribery and
Corruption Training once a year.
6. Suppliers commit to Group Supplier Code
7. Review at least every two years

7. 7
Whitepaper, Cheatsheet, Journal article &
BPS Blog
Whitepaper accessible at:
http://www.tcs.com/SiteCollectionDocuments/White%20Papers/Procurement-Fraud-0614-1.pdf

8. 8
How can you help?
Suspect Corruption is something ‘happens to others’
• Those organisations you are engaged with think Fraud, Bribery &
• Risks & vulnerability to procurement fraud, bribery & corruption
• Legal need to proactively ‘take steps to Prevent’ Signal
• Whitepaper
• Blog Share
Suggest improvement plan
Signpost • Interest to jg.murray@tcs.com
• TCS can help reduce vulnerability with due diligence &