Types of Procurement Fraud

Procurement fraud is a complex form of fraud and is interpreted in a number of ways.

Often defined as any illegal conduct through which the offender gains advantage, avoids an obligation or causes damage to an organisation. Procurement fraud can also be defined as the unlawful manipulation of the procurement process to acquire goods / services, obtain an unfair advantage, avoid an obligation or cause a loss to public property during the procurement process by public servants, contractors, or any other entity involved.

With this complex and broad definition, procurement fraud can be committed in a number of forms, some of which are:

• Bid rigging / bid splitting
• The establishment of ‘shelf companies’ as a means to facilitate fraudulent payments
• Collusion between vendors or between vendors and employees
• Unauthorised purchase orders and / or contract variation orders
• Unjustified single source awards
• False invoices for products and / or services for non-existent vendors