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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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