If it’s Friday it must be more Procurement Fraud-day!

If it's Friday it must be fraud-day. Yes folks, it's our regular feature when we look at the wild and wacky world of procurement and supply-chain related fraud and corruption!

You've fumed at the LASER energy fraud, pulled off by a senior Cambridge educated procurement professional!

You giggled at the Sainsbury potato buying payola, with the buyer taking kickbacks in return for awarding contracts at higher than market prices.

You gasped at the MOD case in Northern Ireland (which took ten years to come tot trial)!

And now, chortle at the irony, as a Lloyds Bank executive who had “fraud “ in her actual job title is  prosecuted for claiming fraudulent payments of around £2.4 million, based on submission of false invoices.

A digital banking chief at Lloyds TSB was today charged with a £2.5million fraud over allegations that she stole from her employers using false invoices. Jessica Harper, 50, from Croydon, is accused of carrying out the scam while working as head of fraud and security for digital banking.

Joking aside, we'll no doubt hear more about exactly what she is supposed to have done, and more interesting for us, how she (allegedly) did it. Which will lead us no doubt back into discussion of proper procurement process.

But one thing that is clear from these recent examples. A common thread in all these cases is that the perpetrators were pretty senior people. That's not surprising when you think about it – they are the staff who hold budgets, can make decisions, and have the right to authorize payments and so on. The office cleaner or the graduate trainee just don’t have the opportunity to nick a couple of million, even if they liked the idea.

There's also a tendency for organisations to say, “we trust our senior managers”. So for example, having a policy that T&E claims are signed off by your line manager – but Directors and VPs can self-authorise.

That's simply wrong. There is no evidence that senior people are more trustworthy than junior. And the more senior, as we’ve pointed out, have more opportunity, even without special treatment which makes it even simpler for them to commit these crimes.

On a similar note, Christopher Grierson, a partner in Hogan Lovells, a top law firm, got sent to prison for 3 years last week for fiddling his travel expenses to the tune of £1.2 million. As often when you look behind the surface in these cases, it was all a bit sad – an eminent man sinking into what his defence claimed was a “depressive illness”, leading to stupid spending (including on his Lebanese mistress) and then theft to cover his debts.

If Grierson had known that even he, as a senior partner, would have his expenses properly checked, then it would never have happened. I know trust is a wonderful thing in business, but putting sensible governance in place doesn’t indicate a lack of trust; rather, we would argue it indicates a maturity of approach, that in effect says this:

“Yes, we trust you as a senior executive, but we also respect you. Therefore we don’t want to tempt you, even slightly, into doing something you might regret forever. So, even though you're very senior,  your expenses claims will be checked, and your purchase orders will be counter-signed”.

You know it makes sense.

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Voices (3)

  1. bitter and twisted:

    The way to minimise fraud is oversight and spend visibility, not trying to make it impossible to commit.

  2. eSourcingSensei:

    Actually to add a bit of “human” comment here – the saddest thing, genuinely, about all of these stories is what is it that drove these people to act in this way. What is it that drives, in these cases, very well paid senior executives, to conjour up methods of deception that even in the midst of gaining millions of pounds they must have known they would eventually be found out

    I just find it all quite sad really

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