Governments have rightly relaxed procurement rules in order to act quickly on Covid-19, but stories already abound on alleged corruption and financial mismanagement.
For instance, there are the tests that don’t work , the ventilators that never materialised, the PPE that failed to arrive, and the Health Minister who was sacked. What’s telling, is that these were all for high profile, urgent purchases that were very much in the public eye. Governments need to be wary of what is happening in other categories too. Without knowing it, Governments are potentially losing millions of dollars to off-book purchases and payments to suppliers where no tender was put in place and no contract was let.
Luckily, the issue is solvable, and here we outline what Governments can do to tackle procurement fraud:
# 1. Invest in a Service to Analyse Your Spending.
It is possible to analyse hundreds of millions of payments and transactions in seconds. It is possible to isolate anomalies amongst all those transactions in a few more seconds. Using the latest data science techniques, it is possible to spot anomalies that would have taken hundreds of hours to find. By combining analysis with assiduous follow-up work, it is possible to isolate and act on procurement fraud in a matter of days. Our database platform, combined with our advice, can be used by Governments to spot anomalies in millions of transactions.
# 2. Publish Your Data.
It is much riskier to lie in public. By publishing data on your contracts, your spend and your suppliers it is tougher for corrupt officials to operate. As a result, the sunlight of transparency improves your procurement, makes markets more competitive and builds trust between citizens and Government. Most of all, open data makes it harder for corrupt officials to hide their mismanagement of funds. The Open Contracting Partnership has laid out exactly how to start publishing your contract data openly here.
# 3. Be Public About Your Anti-Corruption Work.
In Tom Gash’s excellent book on criminality, he shows that most crime occurs because perpetrators believe that they will not be caught. So making a bold, public statement about your anti-fraud work will cause opportunistic criminals to think twice. Bold and clear statements about analysing every payment across all of Government will have a chilling effect on opportunistic fraud, creating doubt and giving corrupt suppliers and officials cause to think twice. Best of all, this is not hubris, tools like the Spend Network Insights platform can already do this work.
# 4. Set Up Whistle Blowing Services.
Tackling corruption still requires the collaboration of your staff, if they do not have the ability to safely and anonymously report crime. Each Government department should provide a reporting hotline where employees can report crimes, their reports should be evaluated independently and addressed seriously. Most of all, whistleblowers should be protected from losing their jobs and being treated unfairly. If you can, protect whistle-blowers in law, making sure that they cannot be disadvantaged for reporting a crime.
# 5. Know Who’s Who.
Knowing who owns the companies that you’re trading with is critical, without this information it is much harder to isolate conflicts of interest. Governments need to be able to explore relationships between buyers and suppliers that could be corrupt. This makes it essential to find out who owns and runs your suppliers. That’s not all. You’re going to need to know who owns the companies that own your suppliers. This network of relationships is called beneficial ownership, there’s a movement to record and openly publish data on who owns companies called Open Ownership, you find out more here.
The good news is, Governments can act today to fight corruption. If part of your plan to recover from Covid also means recovering funds lost to corruption, get in touch.
By Ian Makgill Founder, Spend Network.