Procurement fraud – make CPOs and CFOs accountable

Here’s something that really, really gets me worked up.  Madeleine Webster has been sent to prison for spending £160,000 of her employer’s money on printer cartridges then reselling them on eBay. What makes it worse is that she was employed by the UK’s National Health Service (NHS) in Liverpool – I don’t know precisely which part of the NHS, however. But money that should have been spent on nurses, patients, etc.

Now, perhaps surprisingly, it isn’t actually the perpetrator that makes me most furious.  It is that again, here is a procurement fraud that would never have happened if the most basic of processes had been in place and managed properly.  This happens time and time again, and the NHS seems to be particularly vulnerable. (Remember the lady who was stealing money through faking invoices in order  to pay for her stud farm costs?)  But it happens everywhere, public and private sector.

Here is the Daily Mail reporting on this latest case.

An investigation was launched. It was found that before Webster took over ordering ink cartridges the department spent about £2,500 a year.  After it became her responsibility, the bill rocketed to £10,854 in 2008 to 2009, then to more than £27,000, £45,000 and finally £60,000 in the following years.  

How on earth did no-one spot the spend on cartridges going from £2,500 a year to £60,000? Is there just so much money washing around the NHS that this gets lost in the rounding? And who on earth signed off the budget that allowed £60K to be spend on cartridges in a year? Or if it wasn’t budgeted, who should have picked that up?  Who authorized the orders?

Colleagues do seem to have been pretty naive – they noticed cartridges around for printers that they didn’t have in the office, and even saw her and her husband removing items via the fire escape, but it didn’t seem to click until someone found her eBay account!

In other cases we have seen, budget holders authorised payment without any checks on whether goods or services had been received, or fake suppliers diverted payments intended for genuine ones. All this could be stopped by some pretty simple processes.  Really, this needs addressing at a systemic level in the NHS and indeed everywhere.  So here is my radical suggestion.  EVERY Board (not just in the NHS, although that wouldn't be a bad start) should meet their heads of finance and procurement and say this to them.

“We want you to put in place best practice process and controls to make procurement related fraud as difficult as possible in our organisation. We will back you in that. Then if fraud happens in the future, because of lax controls, we will fire you both. The one exception is if any member of staff did not play their part properly – for example, a manager did not properly check a purchase order before signing it – in which case they will be fired”.

There must be thousands of CPOs (and CFOs) around the world who KNOW that their organisations are wide open to fraud. They need to speak up. And if they had the threat that they would suffer if something does go wrong, maybe they would.

First Voice

  1. Sam Unkim:

    Funny how her methods were a bit amateurish, compared to Leicester NHS boss Dean Evans, yet she got way with much more ££ over a longer period..

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