Ethical procurement, a prescription against corruption

Auditor General Edward Ouko addressing the press in his Anniverssary Towers office. He has questioned irregular procurement procedures in state departments. [PHOTO: JENIPHER WACHIE/STANDARD]

As a nation-state and a growing economy, we are facing an ethical disaster in our procurement unless we embrace.

Ethical procurement defines buying behaviour as right, good and appropriate. 

Employees in public service are bound to uphold certain values (Values and Principles of Public Service as espoused in Article 10 of Kenyan Constitution, Values and Principles of Public Service Article 232 of the Kenyan Constitution and generally Chapter Six on Leadership and Integrity) and basic principles for public procurement in Kenya are some examples that we can state.

Section 9 of the Bribery Act of Kenya, 2016 places obligations on all entities in Kenya to put up measures to prevent corruption.

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Any attempt to realise personal gain by conduct is inconsistent with proper discharge of the employee's duties and is a breach of the public trust. 

The value of the transactions in the procurement process along with pressures to lower costs could result in bribery, corruption and other practices which could be deemed unethical.

In the public sector where goods and services are funded by public expenditure, it is imperative that procurement operates ethically, with impartiality and integrity, with transparency and professionalism.

Advocates for ethical buying best practices say that ethical practice in an individual start when an employee in procurement follows the ethical code which dictates behaviour and actions while conducting business.

Ethical buying practices should then be extended to all stakeholders in the procurement cycle.

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It should also include an understanding of suppliers' operations and the procurement professional should offer guidance and support when improvement is necessary or appropriate and objective due diligence should be conducted to effect that.

Purchasing professionals, especially managers, occupy a boundary spanning role where, inevitably, they have to face situations where they must judge what is right (ethical) and wrong (unethical).

Buyers can, by their actions, affect the institution's financial position, social and environmental reputation.

Therefore, maintaining a strict ethical stance can be important in projecting the right image of the organization. 

Research has revealed that there is relatively little attention that has been paid to the ethical standards, and the perceptions held of buyers by their peers.

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Many of the issues of ethical concern in organizations arise within the purchasing function and they include deception, bribery, bid rigging, unsafe products and public safety.

Ethical buying has greatly been affected by conflicts of interest which are situations where there are individual decisions competing with the purchase process decisions. 

 Conflicts of interest can exist in many different situations. Conflicts of interest can be real or apparent. The biggest issue with conflicts of interest is not them being declared but how they are declared.

Ethical buying involves objectively looking at business gifts and business hospitality which are sensitive areas for procurement professionals, although being recognized as a standard private sector business practice, it is an issue in ethical buying process.

Procuring organisations should develop a clear policy on accepting business gifts, permissible and impermissible gifts as provided for in the Leadership and Integrity Regulations of 2016, and require that procurement professionals and suppliers comply with such policy as well as prevailing laws like the LIA, 2012 section (14) in Kenya for public purchases.

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The biggest problem with ethical buying process is corruption. Mostly, it involves dirty money.

Procurement professionals in the public sector have become a burden to an organization's ethical engagements. Procurement should not tolerate bribery or corruption in any form.

Forms of corruption can be listed as: One, bribery which is the offering, promising, giving, authorizing or accepting of any undue financial or other advantage to, by or for any persons associated with the procurement process, or for anyone else in order to obtain or retain a business or other improper advantage.

Bribery often includes:

(i) kicking back a portion of a contract payment to government or party officials or to employees of the other contracting party, their close relatives, friends or business partners,or

 (ii) using intermediaries such as agents, subcontractors, consultants or other third parties, to channel payments to government or party officials, or to employees of the contracting parties, their relatives, friends or business partners. 

Two, extortion or solicitation is the demanding of a bribe, whether or not coupled with a threat, if the demand is refused. 

Procurement professionals must oppose any attempt of extortion or solicitation and are encouraged to report such attempts through available formal or informal reporting mechanisms to enforcement institutions, particularly EACC. 

Three, trading in influence is the offering or solicitation of an undue advantage in order to exert an improper, real, or supposed influence. 

Four, laundering the proceeds of the corrupt practices mentioned above is the concealing or disguising the illegitimate origin, source, location, disposition, movement or ownership of property and/or money, knowing that such is the proceeds of crime. 

Fifth, nepotism which is the use of authority or influence to show favouritism to relatives or friends without merit. 

Sixth, is fraud and it is essential that procurement professionals and stakeholders adhere to a well-defined and established code of ethics as provided by professional bodies and regulators. 

A public procurement organisation should have an adopted code of ethics and require its employees to uphold the code and seek commitment to it. 

Ethical buying prohibits breach of the public's trust by discouraging a public employee from attempting to realize personal gain through conduct which is inconsistent with the proper discharge of the employee's duties.

Moindi Omai works with the Ethics and Anti-Corruption Commission, [email protected]

Public ProcurementFight Against CorruptionChapter SixLeadership and IntegrityKenyan ConstitutionBribery Act of Kenya