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Procurement Fraud in the IT Sector
TopShelf writes "IT staff usually enjoy unrivaled access to the deepest details of an organization's structure, and all too often, some submit to the urge to use that knowledge for nefarious purposes. Baseline Magazine explores how how Tech Insiders Cheat Their Employers, with examples of executives creating their own vendors to which fat contracts are awarded. Perhaps the most galling case involves a director in the New York City Chief Medical Examiner's office who is accused of scamming FEMA in the wake of the September 11, 2001 terrorist attacks."
Slashdot Burying Stories About Slashdot Media Owned
As opposed to creating whole outsourcing companies to manage contractors during an outsourcing push. Or an executive personally subcontracting a building project at a bid below the rest of the local builders. Or the usual everyday case of standardizing on vendors that appear heavily in the executive's personal stock portfolio.
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Right off the top - there are always some people who are going to screw you, no matter how you treat them.
But for most employees, instilling loyalty and pride in the company is the best disincentive to theft. It's also the best way to increase productivity.
How does a company do that? Pay employees what they're worth, don't overwork people, be ethical in your business operations. Basically, it's the golden rule. Treat your employees the way you want them to treat your company. Your employees will take care of the rest, and the money will roll in.
It's too bad that most companies are only in business to line the pockets of the top execs this quarter, and damn the next financial period; we'll figure that out later.
Web 2.0 == Giant Blogspam Circle Jerk
Any employee with purchasing power can defraud the company. The more purchasing authority that person has, the greater the damage he can inflict. The only way to get around this is to make sure you're hiring the type of people who won't do this sort of thing because of a strong sense of ethics. Obviously, this isn't 100% foolproof, but there is always risk in business. The idea is to mitigate that risk as much as possible.
Singling out IT managers as potential sources of fraud is disingenuous. ALL managers have the potential for fraud, because they have the access and the authority to commit the crime.
It sounds like the companies that are being so defrauded must have terrible control measures. For instance, in my company (a logistics/shipping co) we need to have several pieces of documentation before any job is done, or any invoice raised. The measures are stricter when it involves money going out of the company in any way. There are varying levels of control depending on the value concerned.
At least 4 people see a cheque before it is signed and sent out, two signatures are needed on the cheque and one from someone like a manager on the form requesting it. If I want a printer cartridge, I have to fill out a form, get my line manager to authorise it, and then give that to the secetary - who also checks everything, then when she places her order it has to be signed off by her boss. Etc etc.
Control measures are fundamental to reducing exposure to fraud or theft IMHO. Trust me, I'm an accountant.
From the first fraud mentioned in the article:
"invoices were often hand-delivered to Motschenbacher who, in turn, would hand-deliver the Buca payment to EDP"
If your business processes are so pathetically broken that the same person processes invoices and writes the checks, your problem has nothing to do with IT having too much access to the company's nervous system.
I work for a metadata management company providing search capabilities for various information assets. You would be amazed at how long it takes for a simple implementation of our systems within larger corporations. We are talking of timeframes ranging anywhere from 3 months to 3 years. Many of these deals end up in the hundreds of thousands of dollars, and it is obvious to us that the reason it takes so long is because companies need to keep a very close eye on these types of things to avoid issues such as the ones seen in this article. Corporate corruption is a huge hindrance to business today. However, from a business standpoint, has anyone considered how much money is lost by the company in just coming to a decision when it comes to choosing a vendor (or a product)? Sure, John over in the R&D department could be skimming a few thousand off of a large deal - which I agree is quite a disgusting business practice in general - but how many thousands are lost in time spent coming to an overall decision? How many meetings must we sit through to be involved in the never ending/looping discussion over semantics? How many proposals are shot down after months (or years) of researching, traveling, and testing out different solutions?
...which reminds me I blogged on this and forgot to actually publish the post, must do that.
Can you hurry and publish your blog. I'm really eager to hear what you have to say on the topic. I bet it's insightful and spot on the money. Wow, I'm getting hot just waiting.*
*The above sentence is a fictional depiction and in no way represents my actual feelings about what you may have to say about this topic.
I'm not a nerd. Nerds are smart.
I didn't find this in the article, but let's see. New Orleans was built below sea level, and the problem was just a matter of time. The US government has decided to take my money to pay for the problems in New Orleans? That sounds like a scam in and of itself.
Check out this opinion
The basic point is that the US government is buying votes with your money, including subsidizing insurance in flood planes with your money. Gee, that encourages it, but the worst part is that people aren't bothering to buy flood insurance, as they know the FEMA will bail them out!
So a scammer scammed a scammer? Big deal.
Ed Barbar, President and General Manager, Furnit USA
You have taken nerdiness to such a level, there is no room for mockery.
I applaud you.