Don’t be blind to fraud

1 March 2011
Here’s a little reminder (if you needed one) why buyers must keep a close eye on suppliers. US government procurement staff were duped into awarding $834 million (£511 million) of military contracts to a supplier because they believed 75 per cent of the charity’s work was carried out by blind or severely disabled individuals. Robert Edward Jones, the former CEO and president of a now defunct Texas-based charity, the National Center for the Employment of the Disabled (NCED), was the primary supplier to the military of chemical-warfare suits in the 1990s. However the president's Committee for Purchase from People who are Blind or Severely Disabled discovered that the company did not employ enough disabled individuals to qualify for the contracts it won. These deals were specifically set aside for not-for-profit organisations who hire blind or severely disabled workers to perform three-quarters of the work on government contracts. In 2009, Jones admitted that from November 2003 until March 2006, he lied about the number of blind or severely handicapped NCED workers to qualify for no-bid government contracts. And if that wasn’t enough, he also admitted that between late 1998 and March 2006, he defrauded the County of El Paso, the El Paso, Ysleta and Socorro Independent School Districts, as well as citizens in the area, by paying a number of bribes in the forms of campaign contributions and gratuities in order to secure contracts. Jones was sentenced on 17 February to 10 years in prison and must pay just under £40 million for embezzling government funds. Former NCED board member Patrick Woods was sentenced to three years in prison and must pay $1.7 million (£1 million). A third NCED officer, Ernesto Lopez, is also due to be sentenced. FBI agents arrested the three in 2008. It followed a raid by investigators at the NCED clothing company’s premises in 2006. Supplier diversity rules, however entrenched in an organisation’s psyche, still require rigorous monitoring.
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