Construction fraud clean-up highlights need for risk mitigation

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construction_investigation.jpgThere is high risk of severe penalties for the construction firms implicated in the Competition Commission’s government contract price-fixing investigation.

The Commission says 21 firms have applied for leniency, but that another 25 have been implicated in collusive price-fixing for large government contracts.

The scale of the fraud highlights, once again, the desperate need for procurement professionals to implement and monitor risk mitigation as well as meet the required regulations, Rudi Kruger of LexisNexis Risk Management told SmartProcurement.

The Commission is expected to wrap up within the next few months its 2½-year probe into 300 projects worth R30-billion.

The State has "a substantial dossier of information on improper conduct" and the government would be cracking down on corruption, tender fraud and price fixing in the infrastructure programme in 2013, said President Jacob Zuma during his State of the Nation address.

Meanwhile, Justice Minister Jeff Radebe suggested naming and shaming corrupt government officials. "Sometimes numbers need to be attached to actual persons and it will help in the fight against corruption," he told journalists at a post-State of the Nation Address in Pretoria.

RudiKruger.jpg

For procurement professionals it is critical to implement the necessary processes and have the tools available to implement a risk mitigation policy, said Kruger.

Furthermore, they need a solution that can assist them to meet the required regulations of various industries. This will protect organisations and procurement professionals’ own reputations.

For more information on systems that assist with implementing and monitoring risk mitigation policies through identifying conflicts of interest; pass-through schemes; shell company schemes; and tender fraud email LexisNexis on contact@lnrm.co.za.

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