Procurement corruption in the midst of COVID-19
Correspondent | Friday August 21, 2020 14:33
In my considered view, the procurement function is one of the hardest hit functions by the pandemic that is currently causing havoc across the operations of many sectors from government to private owned entities.
Sadly, while many business functions have had to deal with the disruptions brought about by the coronavirus only, the procurement function seems to be battling the two pandemics at the same time: COVID-19 being the first pandemic of course, while the second is massive corruption that has besieged the procurement of Personal Protective Equipment (PPE) across the world.
The spike in number of procurement corruption cases related to procurement of PPEs ever since COVID-19 broke out is heartrending to say the least. But perhaps COVID-19 is a necessary evil for the procurement function as it has played a key role in putting a magnifying glass on the vulnerability of organisations’ emergency procurement processes to expose how they can easily be manipulated for corrupt activities during times of crisis.
Furthermore, the pandemic has also shown us that a heavy price can be paid when the procurement function is neglected and looked at through the narrow lens of cost minimisation instead of being acknowledged as a strategic area that deserves a seat in the boardroom at all times not only during times of pandemic.
Worthy of note is that corruption in procurement has been a perpetual headache for eons, albeit not always being widely reported as now. It is problematic evil whose impact is far reaching both on the organisation and the country at large. In 2016, a study commissioned by the European Parliament made a startling revelation that public procurement corruption alone costs EU €5 billion a year.
Already millions of pula have been lost both by private and government-owned organisations as a result of corruption in procurement of PPEs as widely reported in the local media. What hurts most is that some of these monies lost could have been used to save jobs of our beloved brothers and sisters if the good governance principles could have been adhered to and the interest of the organisations been prioritised over that of selfish individual interests.
Furthermore a great deal of reputational damage has been suffered on the part of those organisations who have been implicated in these allegations of corruption leading to loss of stakeholder confidence and trust.
The question now is how do we move forward from where we are now and also ensure that issues of procurement corruption are contained in future whenever there is a pandemic.
This is because COVID-19 does not seem to show any signs of slowing down and it certainly will not be the last pandemic we face which may contribute to rise in the number of procurement corruption cases as companies invoke their emergency procurement processes.
A few suggestions are proposed to deal with the current problem. The procurement function must be allowed at all times to function autonomously without any undue influence from those holding positions of power either politically or within their respective organisations. In most cases many procurement professionals always strive to adhere to CIPS code of conduct in their line of duty but external interference always presents a challenge.
Use of whistleblowing policy and public advertising of toll free lines for staff, suppliers and the general public to report any act of corruption in procurement of PPEs during this period is essential. The toll free must be managed by an external auditor who is independent and the Public Procurement and Asset Disposal Board (PPADB) must be applauded for having long adopted this progressive initiative many years ago. It is also important to centralise procurement within an organisation to avoid a situation whereby divisions procure for themselves which can open floodgates of corruption whereby employees within various departments strike corrupt deals with suppliers without following laid down procedures leading to inflated prices which costs companies millions of pula.
Additionally, there is need to monitor adherence to the use of suppliers who are in the existing approved suppliers database where there is a clear documented selection criteria to ensure that all qualifying bidders are given equal chance. Where there is a need to use a supplier outside the approved database, a justification must be provided to top management for consideration.
The internal Audit function personnel should be actively involved and move from being reactive to being pro-active to ensure compliance right from the early stages of the procurement process (scrutinising of the need and selections of suppliers) and throughout the process instead of having to wait for the process to be completed and provide audit when it may be too late.
Weekly analysis of reports related to procurement of PPE’s by top management or any established committee should be done to monitor adherence and also to continuously recommend improvements to close any gaps that may exist.
Market research must be conducted on the commonly procured PPEs covering different quality standards and prices with a view of putting a price cap on these selected items as a measure of cost control to mitigate against cases where buyers connive with unscrupulous suppliers to inflate prices.
The above list of recommended measures in averting procurement corruption during these turbulent times is by no means exhaustive.
Procurement professionals and members of the C Suite in any organisation be it public or private owned, must continuously raise awareness about the importance of adhering to good governance principles at all times in procurement in order to protect the reputation of their organisations and also to save money which will be used to keep their companies afloat and save jobs.
MATLHOGONOLO A. MAANO*
*Matlhogonolo A. Maano-MCIPS, is a Chartered Procurement Professional who writes in his personal capacity. Feedback on the article can be sent to maano316@yahoo.com. This article is of general nature and is not meant to address any particular person, or organisation