Procurement Fraud by Colin Cram FCIPS

Editor’s NOTE: As a follow-up to my April 23rd post “Where did purchasing go wrong: Businessman sells £50 Million of fake bomb detection equipment to governments around the world,” contributing columnist Colin Cram has by way of today’s post provided his take on the James McCormick case.

The recent fraud case where businessman, James McCormick made £55m selling fake  ‘bomb detectors’ to various governments and the United Nations at £27,000 may sound amusing.  However, according to ‘The Times’ newspaper, Aqil al-Turehi, Inspector General of the Iraqi Tourist Ministry, believes that the fraud has been responsible for 100s of deaths because explosive devices were not identified. That illustrates the problem with ‘white collar’ fraud.  Had McCormick killed someone when robbing a bank, he would have received a life prison sentence. Whereas, being responsible for the deaths of many through his ‘white collar’ fraud, his punishment will be far less severe. So let’s say it for what it is. White collar fraud is a major killer. In the Turkish earthquake in 2011, 200 people were killed and many more maimed due to sub-standard building work charged at full prices.

American crisis aid to Pakistan has been diverted fraudulently http://www.telegraph.co.uk/news/worldnews/asia/pakistan/8171943/US-hotline-to-tackle-aid-fraud-in-Pakistan.html  . This will have had devastating impact on many families, with a huge number of deaths. Projects in many countries suffer from corruption – bridges collapsing, roads developing pot holes soon after they are built. This has a serious impact on economic development and jobs. In case anyone thinks that the worst corruption takes place in ‘developing countries’, look at the record of the USA in Iraq. According to the Huffington Post, between $31 and $60bn was ‘misspent’ out of the $160bn spent by the American government on re-construction. http://www.huffingtonpost.com/2013/03/20/iraq-war-contractors_n_2901100.html. The report makes sobering reading. It is not difficult to envisage that alleged corruption on such a scale in such a sensitive part of the world will have had an adverse impact on America’s security. In case anyone struggles with such large figures, the amount alleged to have been misspent equates to an average of between $100 and $200 per adult and child (and baby) in the USA. It is worth noting that it was 350 years ago that the UK started to take procurement corruption seriously. The reason? It lost a war due to funds being diverted by navy chiefs from the upkeep of the navy to the upkeep of their lavish lifestyles. Nations such as the USA would do well to take heed of such lessons of history.

30