Psychology of Tendering Fraud

Trilogy of fraud

There is no single reason behind procurement fraud. Any explanation of it need to take account of various factors. However three most important factors which leads to fraud are

The perceived suitability of targets for fraud.

The incapability of potential offenders.

(Government agencies) to look after their interests.

The motivation of potential offenders.

Fraudsters Perspective

Looking at the same issue from the fraudster’s perspective, it is necessary to take account of:

Motivation Includes

Motivation (including the conditions under which people can rationalize their prospective crimes as ‘necessary’ –especially when done for the contracting firm –‘harmless’ – because the victim (Government) is large enough to absorb the impact or even ‘justified’ because ‘the victim deserved this ‘because I was mistreated’.

Opportunity

Opportunities to commit crime(s) (which may include the existence of national and international social networks, and transferable criminal skills)

Technical ability

This may include skills to carry out fraud i.e. Bid rigging or collusive tendering,

Risk Calculation

The expected risks are often different then the actual consequences after the fraud has been carried out.

Consequences of discovery

Expectations of consequences of discovery, including non-penal consequences such as job less and family stigma, proceeds of crime confiscation and traditional criminal sections. (That fraud will not be disclosed often expecting).