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How common are corrupt procurement practices?

How common are corrupt procurement practices?A report by international law firm Eversheds reveals that 80% of board-level executives have uncovered bribery and other corrupt procurement practices in their organisations. These surprising findings, gathered from 500 senior executives across 12 countries, confirm it as a significant and global issue.

The Biggest Concern: Commercial Risk

Nearly all (95%) of the senior executives surveyed viewed bribery and corruption as key issues. Legal penalties aside, respondents stated that the risks of bribery are largely commercial from reduced share prices, loss of, or failure to secure, investment and damage to customer trust. Their second biggest concern was of reputational damage which again would impact on commerce by diminishing further business opportunities.

How senior executives viewed the damage:

  • 61% impact on commercial success
  • 20% potential damage to reputation
  • 10% strong ethical culture at company
  • 9% potential legal ramifications

In addition, 77% of CEOs admitted to avoiding doing business with certain developing countries for fear of increased corruption, missing out on otherwise lucrative opportunities.

Current Anti-Bribery Policy and Training Failures

Over half the respondents admitted their anti-bribery policy was insufficient and didn’t work in practice and only 12% felt they had undertaken enough anti-bribery training. A further 87% stated their anti-bribery policy actually hindered business growth while 19% expressed concern that employees would resort to bribery or corruption when faced with aggressive growth targets and/or job insecurity.

Corruption in Public Procurement

Public contracts have certainly been awarded to suppliers with favourable political connections. And it certainly isn’t unheard of for companies within the same industry to play the system so each gets a share of the money.

The overall result? According to Transparency International, corruption can add as much as 50% to a project’s costs. Furthermore, corruption all too often leads to a significant loss of quality in services and goods.

How Secure Bidding Systems Can Tip the Scales

Evidently policies fall short and people are fallible so to fight corruption in the modern world it’s vital for organisations to set up a strong anti-bribery programme that works. Part of this programme should include secure, data-centric procurement systems.

Instead of just uploading tender documents, core bid information should be submitted via online forms and data entry tools. All data at all stages should be encrypted using industry-standard private key technology. This doesn’t preclude the process from being transparent but it ensure a fair process by ensuring that every time data is entered, viewed or edited, the interaction is recorded. This makes the process “tamper-proof”.

The benefits of protecting the procurement process:

  • Enabling business with developing countries – the World Bank expects developing markets to grow twice as fast as high-income countries in 2016
  • Safeguarding company reputation
  • Protecting commercial success
  • Ensuring quality services, goods and works

At Nextenders, we have our own patented technology – SBP or Secure Bid Process – which complies with all current legislation and is the most secure bid security solution available in the market today.

If you’d like to find out more check out our product snapshot here or contact us to arrange a demo.

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