Tales of Corruption and Applying Lessons Learnt

The Corruption and Crime Commission’s Report on Fraud and Corruption in Procurement in WA Health: Dealing with the Risks (12 June 2014) was interesting reading for many of us working with and within government and to those involved with procurement generally. We questioned how could this happen? Then, as details unfolded, how could this have happened for so long?

 

The Commission’s review identified a range of governance issues including:

 

  • ongoing failure by staff to declare conflicts of interest, gifts and secondary employment;
  • close relationships with suppliers and contractors;
  • a lack of transparency around procurement contracts; and that
  • audits failed to identify multiple payments under the tender threshold

 

Rather than pondering how such events could transpire, we should be asking how can we learn from this and establish environments where misconduct and corruption won’t occur.

 

In December 2011, The Independent Commisssion Against Corruption (ICAC) published a report on Corruption Risks in NSW Government Procurement. ICAC’s report addressed Hidden Private Interests and stated “Conflicts of interest involving hidden private interests are often related to unauthorised secondary employment, such as when a public official establishes a private business or works as an employee for a private firm and keeps this hidden. Sometimes a corrupt public official might also arrange for his or her (unauthorised) private business or a friend or family member’s private business to be subcontracted by a supplier to perform services.” This report explained the¬†exact risk that was at the very time eventuating here in Western Australia!

 

ACAC’s report aimed to provide tools to Management to identify corruption. It suggested conflicts of interest that are kept secret due to private interests could be detected by research to help identify ownership/directorships of suppliers (ASIC searches) and the use of electronic tools to generate reports on increases, potential order splits, frequent payments just below delegation limits, and variations in work to identify unusual patterns that suggest a public official may have a conflict of interest with supplier.

 

We hope agencies demonstrate leadership commitment and allocation of appropriate resources to address corruption risks in their agencies. The financial loss and reputational damage far outweigh the cost of preventative action. The lessons learnt from the investigations and reports from the CCC and ICAC need to be applied rather than simply sitting on the shelf while similar horror stories emerge time and time again.

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