Corruption at work place has been on the increase with devastating results and with loss of billions of dollars. Recently at Eyaktek Corporation an executive was among four charged in a federal bribery case. For more details read: Executive Charged with Millions of Dollars Bribery Case
Corruption at workplace is one of the most difficult frauds to be detected by any form of audit; the reason being due to the fact that there is usually collusion between the vendors and the employees to defraud a company. However, the good news is that this type of fraud is normally reported by some suspicions staff or a tipoff from somebody outside the company.
Usually corruption schemes involve the soliciting of a thing of value to influence a business decision. Kickback fraud happens when a vendor makes undisclosed payments to contracting officers of purchasing companies to receive preferential treatment. This preferential treatment may be in the form of bid-rigging where the company’s contracting officer/s fraudulently assists vendors to win contracts through the competitive bidding process. The corrupt vendors may also submit inflated invoices for payment in which the contracting officer/s have an undisclosed ownership or financial interest.
One of the best ways for companies to mitigate this fraud risk includes having a whistleblower policy and monitored hot lines where suspected fraud may be reported by anyone. Once the fraud is reported the company should have established channels of investigating thoroughly the genuineness of the allegations. If the allegations turn out to be true a forensic audit is recommended with the sole purpose of prosecution of those involved.
As preventive measure, it would be great to have antifraud programs and training in the company policy and procedures that should be communicated to all employees. A conflicts of interest policy should be made part of annual reporting that should be signed on annual basis by all employees and a copy placed in employee’s personal file.