How to identify pullbacks in procurement
O tkaty is a common practice, and even a crystal-clear, decent employee can succumb to the influence of corrupt counterparties. Every fourth manager received kickbacks in purchases. At the same time, three quarters of those who confessed consider this a normal business practice and do not feel guilty. In other spheres there are much fewer “haulers” - an average of 9%.
It is possible to fight corporate corruption only by systemic means, that is, not only to identify individual facts and prosecute specific violators, but to create conditions under which it is impossible to receive a reward for a transaction.
What is rollback?
A kickback is a remuneration that a company official receives for concluding an agreement for the purchase of a product or service from a specific supplier. Kickback amounts in most cases are calculated as a percentage of the transaction amount. And if earlier the remuneration was most often received when they concluded contracts for the purchase of goods of inferior quality or at inflated prices, today the very fact of concluding a contract and choosing a supplier is the basis for starting a conversation about remuneration. Even electronic trading, which is considered an effective way of dealing with kickbacks, does not rescue from the established practice.
In the field of public administration, in 2016, the Ministry of Internal Affairs and the health sector became the leaders in kickbacks in procurement; there are no such statistics for private companies. The average amount of remuneration varies by industry and reaches 20% of the transaction.
Is kickback a disciplinary offense or a felony?
The actions of an employee who performs managerial functions and provokes a kickback is detrimental to a private company or a government agency. In what cases can he be prosecuted under the Criminal Code, and when will he have to limit himself to dismissal or disciplinary action?
The Criminal Code of the Russian Federation contains article 204 "Commercial bribery". It allows you to contact law enforcement agencies and prosecute employees who violated the procurement procedure and received remuneration from counterparties for this. Proceedings are initiated at the request of the party that offered the reward, or at the request of the affected organization. In judicial practice, there are cases when they were brought to justice for a kickback under Article 201 of the Criminal Code “Abuse of powers”.
Interestingly, most cases against hauliers are initiated not at the initiative of the company's administration, but at the initiative of the counterparty, when the buyer's behavior is frankly out of bounds, which is manifested in an inadequate increase in requirements.
The peculiarity of law enforcement practice in the issue of kickbacks is that the norms of Articles 204 and 201 apply only to an employee who has the right to make decisions in accordance with job descriptions. Ordinary managers from the point of view of the law are nothing more than lobbyists. If the company is unable or does not intend to initiate a criminal case, it is necessary to record incidents such as a one-time gross violation of labor duties.
It is also possible to compensate for the damage caused by the actions of the case worker. If the company is able to prove damages, the law allows you to go to court with a civil claim within the framework of a criminal one. In other cases, this is impossible.
Companies sometimes have an unspoken permission to receive kickbacks, provided that the bribe threshold does not exceed a predetermined minimum limit. The logic is that it is better to control the situation, which is inevitable, than to suffer losses from the breakdown of established business ties or frequent rotation of responsible employees. This method of work is used by managers with work experience since the days of the Soviet Union or by private shareholders who deliberately use this method of motivation, believing that it is more profitable for the company than paying bonuses.
Rollback mechanisms for modern procurement methods
With constant personal contact between the supplier and the buyer, it is extremely difficult to prevent direct collusion and kickbacks. Procedures such as tenders and electronic tenders are introduced to avoid corrupt schemes. According to federal legislation, almost all purchases by government agencies and companies with government participation are carried out in this way. In fact, they do not save from kickbacks either, although the turnover of suppliers during several similar tenders helps to reduce the risks of forming stable relations between the buyer and the supplier.
Rollbacks during tenders
Many large companies establish mandatory tender procedures for procurement. Documents of several companies are submitted to the tender, a comparison is made and the optimal price offer is selected. The decision is fixed in the act of the tender commission. However, in practice, the mechanism does not work, since it is impossible to check the relevance of the selection of bidders, especially if the tender is carried out by the request and comparison of offers.
Rollback schemes can only be identified when there is suspicion. However, this is due to the parallel collection of proposals for the region and the market in a larger volume than provided for under the terms of the tender. Often the winner of the competition is the candidate who offered really better conditions, but also provided a rollback.
Rollbacks in electronic trading
If there is collusion, then the organizer will find a way to make them available only to a specific supplier. In the area of procurement, there is even a special term - "clearing the clearing." This means that the auction or electronic tender is specially prepared for the supplier who offered the rollback, and the rules of contractual bidding cut off all bona fide offers.
Various methods are used in the preparation of electronic bidding on the basis of collusion, for example:
- An overly detailed product specification is drawn up. The description of the smallest elements and details makes it possible to purchase products only from a certain manufacturer or supplier.
- They set deliberately unfeasible terms for the implementation of the order, for example, 10 days for the development of complex software.
- Uses an imprecise classification when the order name differs from the technical specification.
- Prohibited characters are entered into the title of the tender, and then the ad cannot be found in search engines by keywords. Among thousands of similar ads, it is found only by the supplier who knows the writing code.
The methods of manipulation in electronic trading are revealed by the Federal Antimonopoly Service and the Accounts Chamber. In 2015, auditors of the Accounts Chamber revealed violations in the field of electronic trading for a total amount exceeding RUB 125 billion. It is curious that there are precedents when FAS employees are brought to responsibility for kickbacks. For example, the head of the Altai Territorial Administration of the department was fined 3 million rubles and was deprived of the right to hold positions in government agencies for 4 years for rolling back “only” 0.15% of the contract for 200 million rubles.
How to get kickbacks
Kickbacks have not been transferred in cash for a long time. Various ways have appeared to “list” remuneration, which are not even directly related to the personality of the buyer and his work in the company. Traces of such transactions are not revealed during the analysis of contractual documents and are found only during the investigation. For example:
- transfer of funds in the form of payment for marketing or consulting services in favor of a company that the buyer creates specifically for this;
- paying for vacations or purchasing valuables such as a car;
- money transfer to a bank card issued to a third party;
- employment of the purchaser's relatives with an official salary. (for a contract manager in a government structure, the situation is unacceptable, but in private organizations it is a frequent way to "motivate" the contractor's managers).
It is not surprising that it is extremely difficult to determine the total volume of kickbacks, and statistics are not kept for private business at all. According to various estimates, the approximate size of kickbacks in Russia, in the private and public sector, is 1–2% of GDP. Modern methods of identifying kickback patterns, including the introduction of software tools, help to reduce the numbers and generally improve the economy.
Methods for detecting and combating kickbacks
Kickbacks in procurement, as in other areas, can be tackled at the security or shareholder level. Organizational methods are most often used to combat corporate fraud, although there are special tools to reduce the level of risk.
To identify kickbacks, security services often use frontline methods such as test purchases . During the checkout, the "buyer" proposes a rollback and step by step captures the behavior of the sales manager or purchasing manager. This method works successfully in small companies where tender procedures are not used in procurement. At the same time, a test purchase requires a lot of experience and skill from an employee of the security department, who must also provide guidance in the market situation, therefore it is rarely used. In addition, suppliers and buyers know each other and work with a strictly limited circle of well-known companies.
Observing the purchasing manager will help to identify a change in living standards, which indirectly indicates the practice of kickbacks, unless the manager won the lottery or received an inheritance. The disadvantage of monitoring an individual employee is that the method will allow only an ordinary manager to be caught in kickbacks. If the “motivated” purchasing scheme involves management or someone who is at the top of the corporate hierarchy and decides to conclude a contract, monitoring the line manager will not bring the desired result. The security or internal audit service is ready for a conflict with management only if the task of identifying a rollback is set by shareholders planning to change the company's management. Any methods of collecting information that are not prohibited by law are allowed here.
Relocation of an employee to another direction after six months of work on procurement will not allow the formation of stable corruption ties. The separation of powers will also be useful, when one employee is responsible for the selection of a counterparty, the second forms price parameters, the third negotiates a deal, and the fourth concludes an agreement.
Another effective solution is the formation of working groups with an open discussion of transaction parameters in the company's electronic document management system. This will allow you to check every stage of the negotiations and identify non-transparent solutions. The supplier accreditation system has also proven itself well, under which transactions are allowed to be concluded only with verified, bona fide companies from a specific list.
The internal audit or audit department identifies kickbacks using a price comparison method . The mechanism works in cases where prices are significantly overpriced, since companies from one market segment offer approximately the same price, which already includes the supposed small amounts of kickbacks. The basis for verification may be a significant difference in the level of costs if purchases are not carried out centrally, but by each division or branch separately.
Anti-corruption software solutions
Special hardware and software tools are used both when checking procurement algorithms and when testing employees. In the hardware group, the polygraph stands out. However, the use of lie detectors reduces risks only at the grassroots level, excluding the machinations of average employees. Testing is rarely used against top managers or the security personnel themselves. In addition, the law allows polygraph testing only with the consent of the employee.
Back in 2009, an algorithm appeared on the public procurement portal to identify potentially corrupt tenders. However, this is a measure with low anti-corruption effectiveness, since the principles of the algorithms are known, and experienced tenderers know how to get around them. In addition, even a transparent auction does not exclude the possibility of subsequent extortion of a bribe.