Corruption Matters - June 2020 | Issue 55
Corruption prevention and COVID-19
A report released by the ICAC in April summarises the areas where agencies could face higher levels of corruption risk during the pandemic and the associated economic downturn. In broad terms, the pandemic and associated working from home arrangements could push agencies out of their business-as-usual control environments. Combined with financial pressures arising from a likely recession, this could lead to more corruption.
“Past experience tells us that periods of economic turmoil can create the motive and opportunity for corrupt conduct,” says Chief Commissioner the Hon Peter Hall QC. “Although the vast majority of public officials are honest, practices like a greater reliance on emergency procurement or direct negotiations could be exploited by a small number of individuals who lack integrity.”
It has been widely reported that the pandemic has been accompanied by a surge in attempted cyber fraud. This has involved examples of identity fraud and cyber criminals impersonating government agencies in emails and text messages.
The ICAC has recommended that agencies assume any request to add an unknown supplier to the vendor master file could be a fraud. Similarly, an existing supplier or employee seeking to have their bank account details altered, should be regarded as suspicious. Better practice is to verify the change request by telephone, but without relying on contact information contained in the potentially false email.
The ICAC’s experience is that corrupt conduct is often associated with failures to maintain normal levels of staff supervision. Investigation reports often refer to corrupt individuals who exploited opportunities because their manager was absent, too busy, or simply unaware of the decisions being taken by colleagues under their watch. Inattentive management is especially problematic when subordinates are able to exercise financial delegations.
With a large percentage of the public sector workforce working from home, it is therefore important for people managers to remain aware of the activities of team members.
Fewer people in the physical workplace makes it easier for individuals to misappropriate stock and assets. The ICAC has even received allegations of high-demand consumables such as hand sanitiser, face masks and toilet paper being stolen.
The Commission’s report, Managing corrupt conduct during the covid-19 outbreak, also briefly touches on some of the risks that might arise from changes to normal procurement practices. This could include increased pressure to:
- engage in emergency procurement
- agree to contract variations
- use direct negotiations and other exemptions from competitive procurement processes
- pay suppliers quickly; perhaps without verifying that the invoiced goods and services have been delivered
- rely on the use of agency-issued credit cards.
Even if deviation from business-as-usual is essential, agencies can reduce the risk of corruption by ensuring that the rationale for using any temporary workarounds is documented and that at least two people are involved in procurement decisions.
Agencies requiring more detailed corruption prevention advice about managing risk during the pandemic, are welcome to email the ICAC at icac@icac.nsw.gov.au.
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