Where there is Procurement, there is Fraud

We’d like to think here in the U.S. that shady procurement transactions and under the table dealings are a thing of the past.

Nope.

The trouble is finding the fraud when it happens. Often it takes months or even years for the suspicious activity to be discovered.

The procurement rep lacking ethics doesn’t even have to be particularly savvy to make a pretty hefty and fast profit.

Case in point, the Virginia man jailed for defense procurement fraud.

Seems this 28-year-old procurement employee was buying surveillance equipment on the defense department dime, and then selling it on the internet. There were as many as 15 such transactions in 2005 and 2006 which netted the guy almost half a million dollars.

News of his prison sentencing comes just a couple months after the breaking news of the Apple procurement rep helping out suppliers with information and pricing details.

I’d like to throw up my hands and holler “what’s going on!?!?” but I know the answer. What’s going on is what has always been going on. Sadly, fraud is a part of procurement and managing ethics is an ongoing difficult issue.

What concerns me is that these are both fairly young guys. Is it a sense of entitlement of our youth? Or is it a complete lack of good training for our procurement professionals?

I’d say the latter, mostly. I’ve seen plenty a young kid straight out of college thrown into a Procurement Hero job and told to tread water with little guidance or direction.

That’s just asking for trouble.

Mentoring is key. Ongoing education. Oversight and review. Don’t just take the automated online catalog orders for granted. When no one is looking, that’s when fraud can easily happen.

I hate being audited as much as the next guy, but really…it matters. There has to be that check and double check.

And then when something like this happens, when one of ours goes astray and goes to jail, we need to talk about this with our procurement teams as well.

It’s all well and good to show a photograph of an Enron exec in handcuffs, but that’s not relatable. Talking about a procurement rep that could be you or me? That’s powerful.

And then, once more, we have to ask ourselves…at eight years since its inception, is Sarbanes Oxley really working? Results are mixed.