Procurement sustainability efforts are plagued by traditionally long and opaque value chains, which can be traced all the way back to unregulated raw material extraction or agriculture in overexploited countries, which have always been vulnerable to corruption.
According to the United Nations’ Convention Against Corruption (UNCAC), “A procurement system that lacks transparency and competition is the ideal breeding ground for corrupt behaviour and thus most important international codes on anti-corruption and public procurement rest heavily upon these fundamental principles, in order to discourage corruption.”
There are many different places throughout the procurement process that corruption can occur, and just as many different types of corruption, from suppliers comping a purchasing executive for a meal to bribing officials to ignore regulatory and compliance breaches.
Weeding out corruption in procurement
Throughout the procurement function and the business beyond, it is vital to remain alert for corruption red flags like the following…
Organised criminal associations historically develop connections to access private information and exert influence over decision making processes. Individuals with criminal affiliations might attempt to infiltrate organisations or their supply chains, posing a threat across all levels of the organisation.
Misuse of Information, including the unauthorised disclosure of public or private sector information can result in severe consequences, particularly if it involves classified or sensitive data. Such breaches may facilitate bid rigging or price fixing, undermining fair market practices.
In times when recruitment and retention are increasingly challenging, organisations may face vulnerabilities due to inadequate recruitment and post-employment practices. Hiring individuals tainted by corruption or criminal activity can erode the organisation’s financial integrity. In the public sector, employees accused of corruption may resign before investigations conclude, escaping accountability and potentially re-entering public service roles.
Individuals in positions of authority may solicit bribes to sway decisions regarding project bids, licensing approvals, or project reviews. Such roles are susceptible to conflicts of interest, particularly when individuals transition from the private sector to regulatory agencies overseeing their respective industries. Likewise, identifying conflicts of interest can prove challenging, as they stem from relationships or interactions that yield benefits for one or both parties involved. Such conflicts encompass actions like accepting gifts or perks, maintaining prior business or personal connections, or pursuing employment before or after serving in a governmental capacity.
