Bribery and Corruption in Maintenance and Service Contracts - - PowerPoint PPT Presentation

Bribery and Corruption in Maintenance and Service Contracts

Kirsten Nelson, Principal Legal Officer

APSACC: 30 October 2019

What is procurement corruption?

Abuse of an entrusted power for private gain (Transparency International)

• related to the purchase of goods and services.

1

What’s in it for the public officer?

2

What a fraudster looks like … Any employee … but more likely to be…

The ‘Dominant Executive’

• Senior Manager
• Approver/buyer
• Procurement
• Male
• 40 – 55
• No convictions, trusted
• Strong personality
• Greed, acts alone

The ‘Trusted Support’

• Clerical role
• Office Manager
• Accounts payable/receivable
• Payroll
• Female
• 35 – 55
• Very intelligent
• Trusted

3

North Metropolitan Health Service (NMHS)

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https://thewest.com.au/news/crime/wa-authorities-want-to-bring-health-dept-corruption-scandal-fixer-home-ng-b88948941z Accessed 14 October 2019. 5

Public Officer

Procurement Officer

G A Project Officer Company 1 Company 2 Company 3

• 1. Contracts

services

• 2. Seeks

quotes buffer Pays Recommends company

• 3. Pays

.

“Corruption Model” at NMHS

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Characteristics of the fraud at NMHS

• Use of public position to gain benefit
• Award of contract without regard to

procurement processes

• Lack of understanding of the link between

relationships and conflicts of interest

• Long term contractors embedded as employees
• Exploitation of relationships
• Top concealment methods used

7

NMHS – whole of Government response

Public anger

Department

• f Health DG

subject to scrutiny

Media circus

Department

• f Finance

Reviewed all service maintenance contracts

Health Boards

Subject to external procurement review by major accounting firm

WA Police

Prosecution?

Public Sector Commission & Premier

Call to action

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Procurement Red Flags

Repeat contracts to same entity Invoice splitting Competitive bidders complaints Urgent need to sole source Unusual coding for expenses Weak internal controls Poor quality documentation/invoicing Contract scope changes Unusually close association with vendor/customer Non disclosure of conflicts of interest Questionable business minority or disabled ownership Bullying Lack of leave/holidays Poor financial literacy Liberal accounting practices General ‘wheeler-dealer’ attitude Secretive - unwillingness to share duties Public officer living beyond means

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How could this have gone on for so long?

• Financial mismanagement
• Agency culture
• Longevity in position
• Opportunity
• Lack of oversight and controls
• Inadequate performance review processes
• Lack of awareness of WA Heath Code of

Conduct and procurement processes

• Poor documentation

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Questions

https://thewest.com.au/opinion/dean-alston/dean-alstons-cartoons-august-13-18-ng-b88899718z Accessed 21 October 2019. 11