Bribery and Corruption in Maintenance and Service Contracts · Media circus Department of Finance...

Bribery and Corruption in Maintenance and

Service ContractsKirsten 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.

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What’s in it for the public officer?

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

The ‘Dominant Executive’

• Senior Manager

o Approver/buyer

o Procurement

• Male

• 40 – 55

• No convictions, trusted

• Strong personality

• Greed, acts alone

The ‘Trusted Support’

• Clerical role

o Office Manager

o Accounts payable/receivable

o Payroll

• Female

• 35 – 55

• Very intelligent

• Trusted

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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-b88948941zAccessed 14 October 2019.

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Public Officer

Procurement Officer

G AProject Officer

Company 1

Company 2

Company 3

1. Contracts services

2. Seeks quotes

bufferPays

Recommendscompany

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

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NMHS – whole of Government response

Public anger

Department of Health DGsubject to scrutiny

Media circus

Department of Finance

Reviewed all service maintenance

contracts

Health Boards

Subject to external procurement review

by major accounting firm

WA PoliceProsecution?

Public Sector Commission & PremierCall to action

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Procurement Red FlagsRepeat 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 interestQuestionable business minority or disabled ownershipBullyingLack of leave/holidays

Poor financial literacyLiberal accounting practicesGeneral ‘wheeler-dealer’ attitudeSecretive - unwillingness to share dutiesPublic 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-b88899718zAccessed 21 October 2019.

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