1 Sample fraud awareness presentation Combating Corruption and Fraud Nigel Savage, JD, CFE...
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Transcript of 1 Sample fraud awareness presentation Combating Corruption and Fraud Nigel Savage, JD, CFE...
![Page 1: 1 Sample fraud awareness presentation Combating Corruption and Fraud Nigel Savage, JD, CFE International Fraud Expert and Man of Action SavageFraud.com.](https://reader036.fdocuments.in/reader036/viewer/2022081519/56649c8f5503460f94949234/html5/thumbnails/1.jpg)
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Sample fraud awareness presentation
Combating Corruption and Fraud
Nigel Savage, JD, CFE International Fraud Expert and Man of Action
SavageFraud.com
![Page 2: 1 Sample fraud awareness presentation Combating Corruption and Fraud Nigel Savage, JD, CFE International Fraud Expert and Man of Action SavageFraud.com.](https://reader036.fdocuments.in/reader036/viewer/2022081519/56649c8f5503460f94949234/html5/thumbnails/2.jpg)
Categories of corruption and fraud schemes• Corruption
o Bribes and kickbacks
o Hidden interests in contractors by project officials
• Bid rigging
o Rigged specifications
o Unbalanced bidding
o Leaking of bid information
o Change order abuse
• Fraud
o False statements and claims
o False and inflated invoices
o Failure to meet contract specifications
o Product substitution
• Collusive bidding by contractors o Agreements by bidders to inflate bid prices, rotate winning bidders, divide markets, etc.
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![Page 3: 1 Sample fraud awareness presentation Combating Corruption and Fraud Nigel Savage, JD, CFE International Fraud Expert and Man of Action SavageFraud.com.](https://reader036.fdocuments.in/reader036/viewer/2022081519/56649c8f5503460f94949234/html5/thumbnails/3.jpg)
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1. A BRIBE is offered or demanded in exchange for the promise of a contract award or other favor, which leads to…
2. Some form of BID RIGGING to exclude the other, often more qualified and less expensive bidders, and finally…
3. FRAUD in by the bribe payer, to cover the cost of the bribe and exploit the corrupt relationship. The fraud can take the form of:
False, inflated or duplicate invoices Failure to meet contract specifications Substitution of cheaper inferior materials or products
Fraud is the most costly and disruptive stage.
The schemes often are linked…
![Page 4: 1 Sample fraud awareness presentation Combating Corruption and Fraud Nigel Savage, JD, CFE International Fraud Expert and Man of Action SavageFraud.com.](https://reader036.fdocuments.in/reader036/viewer/2022081519/56649c8f5503460f94949234/html5/thumbnails/4.jpg)
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Corruption
• Bribes & kickbacks • Conflict of interest
![Page 5: 1 Sample fraud awareness presentation Combating Corruption and Fraud Nigel Savage, JD, CFE International Fraud Expert and Man of Action SavageFraud.com.](https://reader036.fdocuments.in/reader036/viewer/2022081519/56649c8f5503460f94949234/html5/thumbnails/5.jpg)
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Bribes and kickbacks Giving a “thing of value”
1. “Gifts, travel & entertainment 2. Sexual favors3. “Study tours”4. Rental of properties, etc. 5. Cash payments6. Payments thru subs, local partners,
consultants, etc. 7. Hidden interests
To influence a contract award or execution:
S selection P price Q quantity Q quality D delivery…and F facilitate fraud
![Page 6: 1 Sample fraud awareness presentation Combating Corruption and Fraud Nigel Savage, JD, CFE International Fraud Expert and Man of Action SavageFraud.com.](https://reader036.fdocuments.in/reader036/viewer/2022081519/56649c8f5503460f94949234/html5/thumbnails/6.jpg)
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Why were bribes paid?
• To be short listed • For a contract award • To expedite the payment of invoices • For contract amendments and
extensions • To influence inspectors to accept
sub-par work or goods • To compromise auditors and NGOs• To avoid cancellation of the contract
for poor performance
![Page 7: 1 Sample fraud awareness presentation Combating Corruption and Fraud Nigel Savage, JD, CFE International Fraud Expert and Man of Action SavageFraud.com.](https://reader036.fdocuments.in/reader036/viewer/2022081519/56649c8f5503460f94949234/html5/thumbnails/7.jpg)
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Conflicts of interest
For example, an employee:
Secretly owns a supplier or contractor, or
Sets up a “shell company” through which he or she purchases supplies at an inflated price, or
Has an undisclosed interest in property sales or leases, etc.
![Page 8: 1 Sample fraud awareness presentation Combating Corruption and Fraud Nigel Savage, JD, CFE International Fraud Expert and Man of Action SavageFraud.com.](https://reader036.fdocuments.in/reader036/viewer/2022081519/56649c8f5503460f94949234/html5/thumbnails/8.jpg)
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Corruption red flags
• Complaints from losing bidders • “SPQQD” factors • Unjustified sole source awards • Multiple awards just under procurement thresholds • Pressure to select an unknown or unqualified contractor • Pressure to select a particular subcontractor or agent• Long delays in contract negotiations or award • Involvement of unnecessary broker or questionable agent • Undisclosed agent fees and commissions • Questionable contract amendments and extensions • Procurement staff live beyond their means
![Page 9: 1 Sample fraud awareness presentation Combating Corruption and Fraud Nigel Savage, JD, CFE International Fraud Expert and Man of Action SavageFraud.com.](https://reader036.fdocuments.in/reader036/viewer/2022081519/56649c8f5503460f94949234/html5/thumbnails/9.jpg)
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Bid rigging
Unbalanced bidding Rigged specifications Excluding qualified biddersLeaking bid data Manipulation of bids after receipt Unjustified sole source awards Split purchases Change order abuse
![Page 10: 1 Sample fraud awareness presentation Combating Corruption and Fraud Nigel Savage, JD, CFE International Fraud Expert and Man of Action SavageFraud.com.](https://reader036.fdocuments.in/reader036/viewer/2022081519/56649c8f5503460f94949234/html5/thumbnails/10.jpg)
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Bid rigging red flags
• Repeat [sole source] awards to the same bidders • Multiple awards just under thresholds (followed by change
orders or contract extensions)• Bids just at or close to budget or estimate• Narrow specifications• Ambiguous specifications• Unreasonable pre-qualification procedures • Short or inadequate notice to bidders• Fewer than the average or required number of bidders • Low bid awards followed by change orders
![Page 11: 1 Sample fraud awareness presentation Combating Corruption and Fraud Nigel Savage, JD, CFE International Fraud Expert and Man of Action SavageFraud.com.](https://reader036.fdocuments.in/reader036/viewer/2022081519/56649c8f5503460f94949234/html5/thumbnails/11.jpg)
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Collusive bidding
People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.
Adam Smith, The Wealth of Nations, 1776
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Collusive bidding red flags
• Connections between bidders, e.g., common addresses, fax numbers or personnel; assignment of contract to losing bidder, etc.
• Persistent unexplained high prices• Unusual bid patterns; e.g. bids an exact % apart • Rotation of winning bidders • Same bidders bid; new bidders excluded • Losing bidders become subcontractors • False or forged bid securities
![Page 13: 1 Sample fraud awareness presentation Combating Corruption and Fraud Nigel Savage, JD, CFE International Fraud Expert and Man of Action SavageFraud.com.](https://reader036.fdocuments.in/reader036/viewer/2022081519/56649c8f5503460f94949234/html5/thumbnails/13.jpg)
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Fraud
• Delivery of expired, fake or adulterated drugs
• Reporting of exaggerated cure rates and project results
• False CV’s and company histories• False and plagiarized feasibility studies
and reports • Forged performance documents• Forged bid securities & manufacturer’s
certificates • Delivery of substandard goods or
equipment • False and inflated invoices
![Page 14: 1 Sample fraud awareness presentation Combating Corruption and Fraud Nigel Savage, JD, CFE International Fraud Expert and Man of Action SavageFraud.com.](https://reader036.fdocuments.in/reader036/viewer/2022081519/56649c8f5503460f94949234/html5/thumbnails/14.jpg)
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Aid-financed rural “school”
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New aid-financed hospital
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Fraud red flags
• “Outliers,” “mismatches,” etc. • Poor quality goods or works • Missing or altered supporting documents• Inconsistencies between contractor’s claims
and inspections • Culture of corruption of inspectors • No costs booked by contractor for work
claimed • Complaints from users