Historic culture can lead to Public Sector Procurement fraud – 5 tips for reducing fraud

Summit delegates.JPGThe allegiances formed during South Africa’s troubled political history are still  influencing the country’s supply chain processes. This was one of the issues highlighted during a panel discussion on SCM fraud prevention at SmartProcurement’s 2009 Public Sector Supply Chain Management Summit.

A historic culture of honouring, through business activities, the camaraderie formed during the country’s oppressive past was identified by the panel discussion as a key problem to fair tender practices, which the panel said needs to change through education and training.

“Friendships formed while fighting for a cause or under an oppressive political regime, which culture demands be respected, may falsely obligate individuals in the supply chain fraternity to help friends and comrades who bid on a tender, resulting in tenders being awarded to an organisation which may not have received the best functional and/ or price scores in a tender adjudication” was one of the key points raied by attendees at the Recently held  Public Sector Supply Chain Summit.

Robert Cameron-Ellis and Bernie Van Niekerk.JPGThe panel discussion focused on fraud prevention in an SCM Framework versus returning to the Tender Board System and concluded the Supply Chain Summit. The panel also included Robert Cameron-Ellis, Director of ENS Forensics, and Lucille Jansen Van Vuuren from KPMG.

The following ideas were raised by delegates to assist with the prevention of Fraud in the Public Sector:

1. Tip-off lines: ensure that the progress regarding tip-offs is made public; and

2. Create tip-off Lines independent of the department from which tip-off is eminating. Delegates felt that the current system in some departments does not protect the person that will be providing the information.

3. Have independent third parties act as adjudication committees for large tenders. e.g. A Large auditing house.

4. Have an internal audit function review each instance where an adjudication committee does not accept the outcome of the evaluation committee.

5. Consequences for fraud should be severe and lead by the country’s President. A few high profile examples of a clamp-down on fraud will send the right message.

The two-day Summit attracted over 100 delegates from the public and private sectors wanting to build their knowledge of Government’s procurement practices, laws and procedures.

Estelle Van Rooyen Summit photo.JPGSummit speakers included Estelle Van Rooyen, Director of Compliance, Contract Management and Specialist Functions at National Treasury , explained Government’s strategic sourcing framework and successful pre-tender planning using strategic sourcing principles.

Walter Johnson, UK public sector procurement expert and Chairperson of Purchasing Index (PI) UK, opened the Summit with his and PI’s observations on UK procurement practices, their shortfalls and successes.

Phoebe Bolton at summit Photo.JPGPhoebe Bolton, professor of law at the University of the Western Cape and author of the legal text The Law of Government Procurement in South Africa, offered her insights into tenders around the 3 Bid Committees processes and MFMA and, in a second paper, the constitutionality of preferential procurement as practiced by State-Owned Enterprises.

Mziwodumo Rubushe at Summit photo.JPGMziwodumo Rubushe, a Department Head at the Competition Commission, presented methods for detecting and avoiding collusion amongst large suppliers in public sector tenders.


“The 2009 Public Sector Supply Chain Management Summit was a tremendous success. The level of interest shown has given SmartProcurement cause to make the Summit an annual event,” said Euvrard Loubser, Commercial Director of SmartProcurement.

For further information on SmartProcurement‘s conferences please contact Erieka Santos on 0861 334 324 or email her at admin@smartprocureent.co.za

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