I have decided that going forward, not only will the “Early Warning” section be used to highlight some of the negative things that are currently happening, but it will also be used proactively to try and avoid the negative things from happening. In this particular case “Procurement Fraud”. It is quite a large topic so as usual when this happens, it will be segmented into smaller parts.
So . . . let’s start at the beginning – What is Procurement?
According to the Wiki “Procurement is the acquisition of goods or services”. The Wiki goes on to say (sic) “It is favourable that the goods/services are appropriate and that they are procured at the best possible cost to meet the needs of the purchaser in terms of quantity and quality, time and locations (Weele 2010). Corporations and public bodies often define processes intended to promote fair and open competition for their business while minimizing exposure to fraud and collusion.”
So what then is “Procurement Fraud?”
Again, according to the Wiki (sic) “Procurement Fraud can be defined as dishonestly obtaining an advantage, avoiding an obligation or causing a loss to public property or various means during procurement process by public servants, contractors or any other person involved in the procurement process.”
In the Corporate world and certainly in the Government Departments and Parastatals, the whole procurement process is handled by specific “Procurement Departments” with often, hundreds of personnel and this usually is where all the mischief happens. Remember that in the larger companies (and obviously on a much smaller scale in the SMME playground), there are many different “types” of procurement, depending on the sector – some of the more generic ones are (but not limited to):-
Equipment (office and other)
IT (hardware and software) etc.
Keeping control of these purchases and these expenses has become a priority, as crime escalates and as always, as it affects the bottom line.
Sadly, more and more I am discovering that “Procurement Fraud” is not only taking place in the larger Corporates or Government or the Parastatals but also in smaller companies, so going forward, in this series, we will together identify the “red flags” and find practical solutions on how to avoid this particular scam.