Six ways to reduce procurement fraud are discussed: 1) Implementing an e-procurement system provides transparency and has saved Ukraine over $233 million, 2) Developing a culture of ethics through open communication and a written code of conduct, 3) Training employees to trust their instincts and report potential red flags, 4) Restricting access rights when employees change roles to prevent unauthorized access, 5) Requiring two people to authorize supplier changes for security, and 6) Vetting all contractors and subcontractors to know who is involved to prevent issues.

1. Six ways to reduce procurement fraud

2. • From company culture
to spotting warning signs,
all wise organisations are
arming themselves
against fraud in a range
of ways.
• Here are six:

3. 1. e-procurement
• A new e-procurement system developed by a team of tech experts, business people and civil
servants to help combat widespread corruption in Ukraine's public procurement has started to
deliver impressive results.
• It was conservatively estimated that 20% of Ukraine's public expenditure had been lost
through corrupt practices, with reports on park benches bought for the price of a car - and
government departments spending $75 US dollars per cleaning mop.

4. 1. e-procurement
• The new open source, transparent e-procurement system was launched last year and by
November 2016 had already saved the country $233 million US dollars, with more than 15,000
buyers and 47,000 commercial shoppers on board.
• Although transparency was the driving force behind its conception, with state information
about public contracts easily accessible online for anyone to see, other benefits have included
increased competition, less time and money spent on contracting processes and better
decision making for buyers.

5. 2. A culture of ethics
• An ethical culture sets an expectation for all employees and contractors. By
recruiting the right people at all levels and ensuring that everyone, particularly
management, communicates with each other openly, honestly and fairly, it should
be evident that poor conduct is not accepted

6. ….. a culture of ethics
• As well as living up to your expectations in behavioural terms, there should be
an explicit, written code of conduct stating how the organisation does business,
makes its decisions and deals with different situations.

7. 3. Trusting instincts
• Buyers who don't take leave for
long periods of time, employees
having personal contact with
suppliers by text or out of hours,
generous gifts from suppliers or
people reluctant to have their
work audited at short notice.
These are all potential red flags.
• All team members should be
trained to look out for these signs
and be aware that it's their
responsibility to raise concerns in
confidence with an appropriate
senior colleague.

8. • People switch roles or move to different teams fairly often, so it's vital to remember to
remove their access rights to any systems that they no longer need to use, as well as
change passwords or pin codes on any shared programmes or devices.
4. Access denied

9. 5. It takes two
• Although it's a well
recognised security
procedure to assign two
people to authorise and
make any changes to
supplier lists or supplier
details, such as bank
accounts, it is worth
checking often that this
process is being enforced.

10. 6. Who’s on board?
• Do you know who all your
contractors and sub-
contractors are?
• While you may well have
completed a thorough
checking process on your
main suppliers, it is not
unheard of for sub-
contractors to fall through the
net.
• A sub-contractor's behaviour
can impact on your
organisation heavily, so
knowing who they are and
vetting their businesses
before authorising their
involvement is key.

11. … Who’s on board?
• It could be a contractual
condition that your contractors
have to inform you of any
proposed sub-contractors, or
you could award a contract on
the basis that it is fully carried
out by the main contractor and
no sub-contractors will be
authorised without written
permission.

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