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’ The ‘Trusted Support’ • Senior Manager • Clerical role o Approver/buyer o Office Manager o Procurement o Accounts payable/receivable • Male o Payroll • 40 – 55 • Female • No convictions, trusted • 35 – 55 • Strong personality • Very intelligent • Greed, acts alone • Trusted 3

North Metropolitan Health Service (NMHS) 4

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

“Corruption Model” at NMHS Company 1 . 3. Pays Recommends company Public G A 2. Seeks Officer Project quotes Company 2 Procurement 1. Contracts Officer Officer services Pays buffer Company 3 6

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 Health Public Department Boards anger of Health DG Subject to external subject to scrutiny procurement review Media by major accounting firm circus Department Public Sector of Finance Commission Reviewed all service & Premier WA Police maintenance Call to action Prosecution? contracts 8

Procurement Red Flags Repeat contracts to same entity Unusual coding for expenses Invoice splitting Weak internal controls Competitive bidders complaints Poor quality documentation/invoicing Urgent need to sole source Contract scope changes Unusually close association with vendor/customer Non disclosure of conflicts of interest Poor financial literacy Questionable business minority or Liberal accounting practices disabled ownership General ‘wheeler -dealer ’ attitude Bullying Secretive - unwillingness to share Lack of leave/holidays duties Public officer living beyond means 9

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 10

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