Protect the procurement process from conflict of interest

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RudiKruger_2017.jpgProcurement practitioners are responsible for ensuring a fair and transparent procurement process that is free from any conflicts of interest. Despite frameworks like the Public Finance Management Act, Municipal Finance Management Act and the King IV Report on Corporate Governance, there have been numerous incidents in which procurement professionals were found guilty of allowing their personal lives to interfere with their professional responsibilities and duties.

Rudi Kruger, General Manager of LexisNexis Risk Management, points out typical types of conflict of interest that procurement professionals could potentially benefit from, in SmartProcurement.

• Having direct ownership or shares in a business that the employer does business with
• Offering professional services to the employer’s clients in a private capacity
• Accepting gifts, money in exchange for discounts, preferential treatment or goods/service
• The use of company resources and commodities for personal enrichment
• Abuse of decision making authority regarding purchases or supplier selection

In many instances a conflict of interest is able to thrive because of unregulated environments, says Kruger. He encourages the introduction of internal policies to help curb the incidence of conflict of interest within the procurement department.

“Ensure your company has a declaration policy in place as a safety measure. This makes it compulsory for all employees to provide information regarding additional sources of income and to declare their personal and family assets and interests. Making it policy to confirm any links prior to involvement with outside entities will allow your organisation to make fully informed and transparent business decisions,” says Kruger.

It is important that the declaration policy is well structured and contains easy to understand content. Keep it simple and to the point, but ensure that it elaborates on the importance of the declarations the employee is expected to make.

A policy that prohibits the acceptance of any gifts, tokens of appreciation, awards, bribes or any form of reward is a measure to reduce the temptation to develop a conflict of interest.

“It is important that employees as well as suppliers and customers are well aware of the policy,” he adds.

While these policies are necessary, they may not always be fool proof as there will always be risk of employees and suppliers disregarding the rules, which is why a technology-enabled solution that helps to independently identify conflicts of interest within your supply chain is highly advantageous.

LexisNexis Risk Management’s ProcureCheck aids the procurement process by facilitating a transparent networking environment where business can be conducted with integrity in a credible and reasonable manner.

With ProcureCheck businesses can:
• Combat corruption by identifying potential connections and ownership of property
• Identify possible fraudulent activity within vendors and employees with the help of South African Fraud Prevention Services
• Highlight business interests of employees
• Recognise conflicts of interest within an organisation and potential supply chain partners
• Investigate negative and positive news on vendors and employees to assist in mitigating reputational risk

For more information visit the LexisNexis' press office.

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