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Procurement Fraud: Leslie Ann D. Banaag MSCJ
Procurement Fraud: Leslie Ann D. Banaag MSCJ
Procurement Fraud: Leslie Ann D. Banaag MSCJ
Fraud
Leslie Ann D. Banaag
MSCJ
Procurement Fraud
“An ancient scam that flourishes
in emerging markets and costs
corporations billions”
Procurement fraud is possibly one of the oldest frauds
businesses have to confront. That fraud has flourished
in emerging markets in recent years. Whether in a
public or private setting, procurement fraud is often
'quid pro quo,' in exchange for something a favor or
advantage is given. In a typical scenario of
procurement fraud, the seller is awarded the contract,
typically well above the market prices; the
procurement manager receives cash, material goods or
other advantages in exchange for the contract award.
Procurement fraud is considered one of the most
common frauds perpetrated by managers operating
in emerging markets, and businesses and their
shareholders are the big losers of this fraud.
Businesses lose billions of dollars annually because
businesses do not pay the fair market value for the
vendors' services and products. Consider a
company's increased profits if it paid 20 to 50
percent less for the goods and services supplied by
the vendors.
Since procurement fraud schemes are difficult
to detect, multinational businesses continue to
fail to deter, recognize and overcome
significant kickbacks on growth markets for
procurement managers. Uncovering these
schemes can be a challenge for a variety of
reasons,
Procurement fraud is not only an old scam but
one of emerging markets' fastest-growing
frauds. Global companies operating in
emerging markets have lost and are likely to
continue to lose billions of dollars from these
frauds unless they take the necessary
preventive measures. These losses can be
significantly curtailed if the correct due
diligence protocols are established.
MOST
PREVALENT
CASE OF
PROCUREME
NT FRAUD
1. Bribes and Kickbacks 9. Imprest Fund Abuse
2. Collusive Bidding by 10. Leaking of Bid
Contractors Information
3. Change Order Abuse 11. Manipulation of Bids
4. Conflict of Interest 12. Fictitious Vendor
5. Excluding Qualified 13. Product Substitution
Bidders 14. Purchases for Personal
6. Failure to meet Contract Use or Resale
Specifications 15. Rigged Specifications
7. False, Inflated or 16. Split Purchases
Duplicated Invoices
8. False Statements and
Claims
REPORT OF
PROCUREMENT
FRAUD IN THE
PHILIPPINES
Philippine figures new economic survey,
authority pegs the growth rate of GDP in the
Philippines in 2019. Year-on-year 5.9 percent,
though this is the slowest rate of growth. Such
growth continues to be one in the Philippines
since 2011 the highest region in Southeast
Asia, and Overall.
In the global study, fraud against consumers is having
witnessed top field of economic crime. External attacks like
client's Fraud and cybercrime are a little bit of unpredictable,
and still evolving. Instead, misappropriation of properties
globally accidents have shrunk. Fraudsters have already turned
around emphasis on misappropriation of properties as global
undertakings equipped with valuable technologies to
themselves. Why we are still consider this kind of fraud as the
most common? Did the Philippines suffer fraud? It's maybe
our programs and the controls It may not have developed to
combat this as Much like more mature companies Lands.
Territories.
Malacañang reacted to PwC’s 2020 Global Economic
Crime and Fraud Survey–The Philippine Report that
cites the rise in bribery and corruption. The presidential
spokesperson said it’s the fault of the private sector. I
wish to make a few rejoinders to this reaction:
1. That is partially true. It is also true that between the
government and the private sector, it’s the former that
has the power.
2. Whenever a bribery transaction happens, it’s not the
government personnel that’s the hapless victim.
The PwC report discloses that 42 percent of
respondents were victimized by financial
crimes about two to six times during the year,
ranging from P500,000 to P5 million per hit.
One of the reasons why financial crime is on
the rise is that while corporates are willing to
invest in technology and digital upskilling, they
are not that keen on putting up the equivalent
investment in IT security. Thus, the tools we
sought to help us are easily used by fraudsters
to perpetrate the crime.
HOW
PROCUREMENT
FRAUD IS DONE
Bribes and Kickbacks