20% of purchasers suspect fraud

3 March 2005
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03 March 2005 | Cara Whitehouse

One in five procurement professionals has encountered fraud, bribery or corruption in the past year, according to the results of an SM online poll.

A further 21 per cent suggested their department may have seen foul play by answering with "don't know".

David Alexander, fraud investigation partner at KPMG, told SM he was not surprised by the results.

"If a company thinks it is not suffering from bribery and corruption, it is probably being naive. Procurement is one of the hotspots, particularly as it is very difficult to detect back-handers."

According to KPMG's annual Fraud Barometer, published at the end of January, the total number of fraud cases rose by 14 per cent in 2004. The government was the biggest victim, losing £174 million to fraudsters.

David Sherwin, partner in charge of special investigations at Ernst & Young, was surprised that only 20 per cent confirmed experience of corruption.

"Procurement is one of the higher risk areas in an organisation for fraud, so I'm surprised the figure was not higher. Maybe respondents were genuinely not aware of it or would not admit to it in their organisation."

Roy Ayliffe, director of professional practice at CIPS, urged purchasers to consider as part of a supplier's assessment criteria its susceptibility to fraud and corruption.

He added that CIPS members should follow the institute's code of ethical business, which states they "have a duty to the profession and to their employing organisations to alert their senior management" should they be aware of corrupt activity.



SMmar2005

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