Sample%20fraud%20awareness%20presentation%20%20Combating%20Corruption%20and%20Fraud

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Sample fraud awareness presentation Combating
Corruption and Fraud

• Nigel Savage, JD, CFE
• International Fraud Expert and Man of
  Action
• SavageFraud.com

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Categories of corruption and fraud schemes

• Corruption
• Bribes and kickbacks
• Hidden interests in contractors by project
  officials
• Bid rigging
• Rigged specifications
• Unbalanced bidding
• Leaking of bid information
• Change order abuse
• Fraud
• False statements and claims
• False and inflated invoices
• Failure to meet contract specifications
• Product substitution
• Collusive bidding by contractors
• Agreements by bidders to inflate bid prices,
  rotate winning bidders, divide markets, etc.

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The schemes often are linked

• A BRIBE is offered or demanded in exchange for
  the promise of a contract award or other favor,
  which leads to
• Some form of BID RIGGING to exclude the other,
  often more qualified and less expensive bidders,
  and finally
• FRAUD in by the bribe payer, to cover the cost of
  the bribe and exploit the corrupt relationship.
• The fraud can take the form of
• False, inflated or duplicate invoices
• Failure to meet contract specifications
• Substitution of cheaper inferior materials or
  products
• Fraud is the most costly and disruptive stage.

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Corruption

• Bribes kickbacks
• Conflict of interest

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Bribes and kickbacks

• To influence a contract
• award or execution
• S selection
• P price
• Q quantity
• Q quality
• D deliveryand
• F facilitate fraud

• Giving a thing of value
• Gifts, travel entertainment
• Sexual favors
• Study tours
• Rental of properties, etc.
• Cash payments
• Payments thru subs, local partners, consultants,
  etc.
• Hidden interests
  

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Why were bribes paid?

• To be short listed
• For a contract award
• To expedite the payment of invoices
• For contract amendments and extensions
• To influence inspectors to accept sub-par work or
  goods
• To compromise auditors and NGOs
• To avoid cancellation of the contract for poor
  performance

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Conflicts of interest

• For example, an employee
• Secretly owns a supplier or contractor, or
• Sets up a shell company through which he or she
  purchases supplies at an inflated price, or
• Has an undisclosed interest in property sales or
  leases, etc.

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Corruption red flags

• Complaints from losing bidders
• SPQQD factors
• Unjustified sole source awards
• Multiple awards just under procurement thresholds
  
• Pressure to select an unknown or unqualified
  contractor
• Pressure to select a particular subcontractor or
  agent
• Long delays in contract negotiations or award
• Involvement of unnecessary broker or questionable
  agent
• Undisclosed agent fees and commissions
• Questionable contract amendments and extensions
• Procurement staff live beyond their means

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Bid rigging

• Unbalanced bidding
• Rigged specifications
• Excluding qualified bidders
• Leaking bid data
• Manipulation of bids after receipt
• Unjustified sole source awards
• Split purchases
• Change order abuse

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Bid rigging red flags

• Repeat sole source awards to the same bidders
• Multiple awards just under thresholds (followed
  by change orders or contract extensions)
• Bids just at or close to budget or estimate
• Narrow specifications
• Ambiguous specifications
• Unreasonable pre-qualification procedures
• Short or inadequate notice to bidders
• Fewer than the average or required number of
  bidders
• Low bid awards followed by change orders

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Collusive bidding

• People of the same trade
• seldom meet together, even
• for merriment and diversion,
• but the conversation ends in
• a conspiracy against the public,
• or in some contrivance to raise
• prices.
• Adam Smith,
• The Wealth of Nations,
• 1776

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Collusive bidding red flags

• Connections between bidders, e.g., common
  addresses, fax numbers or personnel assignment
  of contract to losing bidder, etc.
• Persistent unexplained high prices
• Unusual bid patterns e.g. bids an exact apart
• Rotation of winning bidders
• Same bidders bid new bidders excluded
• Losing bidders become subcontractors
• False or forged bid securities

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Fraud

• Delivery of expired, fake or adulterated drugs
• Reporting of exaggerated cure rates and project
  results
• False CVs and company histories
• False and plagiarized feasibility studies and
  reports
• Forged performance documents
• Forged bid securities manufacturers
  certificates
• Delivery of substandard goods or equipment
• False and inflated invoices

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Aid-financed rural school

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New aid-financed hospital
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Fraud red flags

• Outliers, mismatches, etc.
• Poor quality goods or works
• Missing or altered supporting documents
• Inconsistencies between contractors claims and
  inspections
• Culture of corruption of inspectors
• No costs booked by contractor for work claimed
• Complaints from users