29 November 2011

A report of a Western Australian Corruption and Crime Commission investigation published last week exemplifies why agencies are expected to have rigorous gifts and benefits policies. The CCC found that there has been widespread acceptance of unreported gifts by State and local government officials in return for approving the purchase low grade, increasingly expensive, toner cartridges on a scale vastly greater than the needs of the procuring agencies.

The payments made to the officials were “modest” with the most extreme case involving about $3,000 worth gifts, provided over three years. The cost to the Western Australian Government was an overpayment for toners of more than $415,000.

In June this year, the Victorian Ombudsman reported that employees in a number of that State’s agencies had been suborned in a similar way. In return for small gifts, officials committed their agencies to purchasing toners which progressively increased by $200 over five months, costing $270 more than the approved supplier price. One official bought a quantity amounting to 40 years supply for his agency, although the toner cartridges had only a 24 month “life”. Creative administrative and auditing processes were put in place to avoid triggering inquiries.

When organisations discuss the need for strict gift policies, the frequent response by staff is that they would not be corrupted by benefits, and particularly those proffered by vendors; that gift … “cannot be seen as compromising integrity”. T

The Victorian and Western Australian experience demonstrates that many do not resist the corrupting influence of gift giving, and that traders provide benefits to officials for a business purpose. In commerce, operating costs are not increased gratuitously. It is for that reason that the Auditor General reiterated guidance about organisations having a clear policy on accepting gifts and services in her report of public sector fraud, published earlier this month.

Being open about the acceptance of gifts is fundamental. Where there is no transparency the implication is that there is a reluctance to disclose. The underpinning suspicion is that reluctance masks an intention to deceive. The State Services Commission guidance about gifts remains best practice: “… it is expected that gifts will only be accepted following a transparent process of declaration and registration. To avoid misperceptions, it is essential that the process is public.”