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Procurement fraud

This Kind Of Fraud Happens When A Company Purchasing Goods Or Services Does Not Follow The Legitimate Method Of The Tender Process Or If There Is Bid Rigging Or Other Malpractices Involved. Supply Chains Are Vulnerable To Such Kinds Of Corruption. 

It Is A Scam Related To The Procurement Chain Where One Party Is Given Preference Over Others. It May Involve Disruptive Practices Like The Middle Man Collects The Tender Bids For The Organisation. 

In Kickback, A Corrupt Person Gives A Bribe As A Percentage Of The Contract To Acquire The Bid. In Some Of The Complex Procurement Chains, Certain Orders Get Undetected, Leading To Such Malpractices. 

How To Spot It?

  • If There Are Unnecessary Middlemen Interference During The Process.

  • If A Colleague Gets Gifts Or Rewards From The Bidders. 

  • Such Practices Result In An Escalation Of Costs Of Procurement, missing Bills, Or duplicate bills. In Addition, It Can Cause A Mismatch Of Data On Invoices. 

  • Bid Rigging Is The Process Where The Firm And The Suppliers Coordinate And Share The Profits Of The Awarded Contract. 

  • In Such Cases, The Impostors Will Leak Information, And The Late Bidder Often Has The Lowest Amount. 

  • There Can Be A Conflict Of Interest Where Bids And Decision-Makers Have Connections With The Suppliers That Can Influence The Process. 

How To Report It?

  • The Method Of Investigation And Reporting Differs In The Case Of Different Types Of Procurement Frauds. 

  • One Can File A Complaint With The Authorised Agencies If One Sees A Red Flag. In Addition, There Can Be Internal Or External Investigations Conducted By The Firms To Gather Evidence. 

  • Staff Should Be Vigilant At The Time Of Bidding, And They Should Check All The Details Of The Suppliers, Like The Trading Name, Logos, Bank Details And Others To Avoid It. 

  • If You Find Any Issue, Report It To The Authorities. 

 How To Protect Yourself?

  • Check All The Payment Details To Recognise Anomalies In Account Details To Find Unauthorised Spending Or Misuse. 

  • It Is Not Easy To Detect Such Frauds In The Normal Business Cycle, But Firms Should Establish The Right Culture To Avoid It. 

  • Staff Demanding An Extended Notice Period Before Allowing An Audit Indicate A Red Flag. 

  • The Organisation Should Have Rules To Minimise The Amount Of Control Individual Employee Has Over Business Processes During Allotment Of Projects. In Addition, They Should Have A Proper Fraud Response Plan To Handle Such Issues.

  • Such Fraud Happen When The Process Is Deliberately Overridden By Individuals Or By A Group Of Employees. 

  • Hiring The Right Staff And Providing Proper Training To Them Can Help Reduce The Risks. 

  • A Supplier Must Be Subjected To Due Diligence To Ensure They Comply With The Legal And Regulatory Procedures.

Date Published: Sep 14, 2023

Types of fraud

A-Z of fraud

To help understand which fraud you've been affected by, we've categorised them into an alphabetical list.

What is fraud and cyber crime?

Cybercrimes can be of two types. First, it can be cyber dependent, where the fraudsters use online devices to convince the victim to accept their offers.

Advance fee fraud

If you are trying to get a loan for a house or a car, they ask to meet the provider to get the financing arrangement and pay the finder's fee in advance.

Corporate fraud

Corporate frauds can be complicated, committed either by the firm or an individual. Nevertheless, it mostly involves cheating where the employee or the firm.

Individual fraud

There are many types of individual frauds related to advance fees, investments, insurance brokers, bogus tradespeople, Ponzi schemes, pension liberation.

Online fraud

Hence the number of cases of online fraud is increasing each year, and most such cases include – account takeover, direct frauds, or scams related domain names.

Identity fraud and identity theft

The criminal uses the stolen identity of another person living or deceased to conduct unlawful activities like obtaining goods or services in another's name.

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