CORPORATE SOCIAL

RESPONSIBILITY (CSR)

• CSR can be loosely interpreted as a strategy that

involves the business taking a broad view of its
(economic) operations by looking beyond profits for
shareholders and focusing on other social and
environmental stakeholders.
• A stakeholder is anyone that has an interest in, or
may affect, the decisions and actions of a business.
 CSR is
• ‘…a process whereby companies integrate social,
environmental and ethical issues into their business
operations and strategy in close interaction with their
stakeholders, going beyond the requirements of
applicable legislation and collective agreements.’
(European Union – CSR Strategy 2020)

• ‘… a commitment of business to contribute to sustainable

economic development, working with employees, their
families, the local community and society at large to
improve quality of life, in ways that are both good for
business and good for development.’ (World Bank
Institute, 2003)
 WHY CSR ?
(i)Cost and risk reduction (meeting threshold level of social or
environmental performance. Organizations engaged in CSR signal to stakeholders that
they are committed to meeting stakeholder demands. Such organizations appear to
potential lenders and investors as encompassing less risk. This perception can lead to
revenue opportunities (as a result of positive positioning) and cost savings (as a result of
a lower cost of capital).

(ii) Competitive advantage

(iii)Reputation and legitimacy

(iv) Synergistic value creation

• Socially responsible companies cultivate positive brand recognition, increase customer

loyalty, and attract top-tier employees.
• These elements among the keys to achieving increased profitability and long-term financial
success.
 IN TOTAL

• CSR is a tool through which businesses can ‘create

shared value’ for both society and shareholders.
Therefore, CSR is not only based on compliance
with national/international laws, codes of conduct
(COCs), and the company’s own principles, but
also considers social, economic, and
environmental sustainability.
SUPPLY CHAIN
 SUPPLY CHAIN

• ‘Chain’ is the most suitable analogy for assessing the

strength and sustainability of any business that relies
on suppliers (for inputs) and customers (buyers of
goods/services).
• If a member in that group is weak and goes against
either the business’ best practices or community or
national interests; then the position for which the
business sequence is formed becomes invalid.
SCM
STAGES OF SUSTAINED SC
ESGs ISSUES IN SC
 CSR IN PROCUREMENT

• Taken together, these arguments suggest that the

extent to which a firm shows responsibility and
concern for its stakeholders is indicative of the firm’s
non-opportunistic behaviour and long-term
orientation.
• As such, CSR may serve as a signal of
trustworthiness, and hence as a contributing factor in
the bundle of trust.
• Accordingly, companies with higher CSR are more
likely to obtain government procurement contracts.
Case study: Managing the Future of
CSR issues in Supply Chain at Kakira
Sugar Ltd (KSL)
 CORPORATE FRAUD
Corporate fraud has become the centre of public concern including
but not limited to
• regulators, investors, corporate managers, board of directors, and
academics.

• PricewaterhouseCoopers (PwC) report, the economic crime

across the globe still represents more than a third of all criminal
activities.
• The Federal Bureau of Investigation (FBI) also reported that
pending cases for corporate fraud in the U.S. continue to rise in
recent years.

• Hoi et al. (2013) find a strong relation between excessive

corporate social irresponsibility activities and unethical behaviour
measured by more aggressive tax avoidance.
 PROCUREMENT FRAUD

• Procurement fraud can be defined as dishonestly

obtaining an advantage, avoiding an obligation or
causing a loss to public property or various
means during procurement process by public
servants, contractors or any other person
involved in the procurement.
 Types

1. Kickbacks and corrupt payments

• A type of bribe, a kickback is paid by the contractor
after they’ve received payment for the winning
project. They often vary between 5% and 20% of the
overall contract value.
•A corrupt payment is promised to influence the
recipient for a successful bid. It can be monetary, but
can also take the form of goods or services in kind
such as expensive gifts, credit cards, sexual favors
and overpaying for reciprocal purchases.
 TYPES

2. Corrupt influence
• Corrupt influence includes paying over market rates,
buying more items than are needed, qualifying an
untested or unqualified supplier and excluding
qualified bidders. The perpetrator might also tailor or
narrow specifications to such a degree that only
their chosen bidder can win.
 TYPES
3. Collusion and manipulation by bidders
• Collusion (bid-rigging) often accompanies kickbacks
and involves groups agreeing to submit
complementary bids to win contracts, sometimes on
a rotation basis. This system may be used to divide
regions between select parties and to monopolies the
field.
• Manipulation occurs when a bid, or circumstances
surrounding it, are managed to benefit a preferred
bidder. Examples are leaking information from fellow
bidders, accepting late bids and re-bidding of the
tender.
 TYPES
4. Billing fraud
• This is the intentional submission of false, duplicate or inflated
invoices by a supplier or contractor. This can also happen in
collusion with the representatives of the buyer who will profit in
some way from the fraud.

5. Conflicts of interest
• Non–disclosure falls under this category, wherein a member of
the procurement team fails to disclose their interests with a
contractor or supplier, liaises with them unofficially, or accepts
gifts or payments.
• Where an employee purchases items through their company and
bills this to a project for private use, this is deemed to be
personal interest and is clearly fraudulent.
 TYPES

6. Delivery fraud
• There are three main types of deliver fraud: variation abuse, contract
specification abuse and improper claims.

• In variation abuse, a contractor submits a successful low bid (in collusion

with a procurement executive) and subsequently submits further multiple
variations to increase financial gain.

• Fraudulent contractors may display contract specifications by delivering sub-

par goods or services, aware they fail to meet the quality expected. In order
to succeed, the quality of the items or works is concealed or falsely
represented.

• Sometimes, suppliers exploit operating costs or petty cash funds with false or
exaggerated requests for reimbursement of expenses, personal or
unauthorized spend, or duplication. (refunded from both petty cash and
accounts payable)