I had promised in my earlier article on the recent bid-rigging case which was pursued by the Competition and Consumer Commission of Singapore (CCCS) that I would share more about that case in a future post. But before I write about that, indulge me in sharing the pivotal milestones in my 29 year journey as a governance professional on how I managed to develop this set of internal heuristics that led to my recent significant discovery.
Since I started my career as an auditor with the Auditor-General’s Office (Singapore) (AGO) back in the mid 1990s, I had always dreamt of being that one auditor that would be able to detect and flag out a big finding that involved wrong-doing, fraud or major non-compliances. Close to three decades (and less hair, more wrinkles) later, I have managed to achieve that break-through.
I talked about the first bid-rigging case that I came across then in one of the Statutory Boards as a junior auditor.
Almost twenty years after the first case, I came across another case when I was Director of Internal Audit in a Statutory Board. This case was brought to my attention by my Finance department. There was a tender for the purchase of lab equipment and fittings for a renovated laboratory. When the tender closed and while it was being evaluated by the requesting department, one of the five vendors who made bids for this tender made a whistle-blowing report to our organization that two of the vendors, let us call them Company A and Partnership B were involved in colluding in their bid submission.
My Finance colleagues then contacted me as they were not sure how to investigate this case.
I took up the case and went to investigate it using a fairly straight-forward process: (1) Obtain and review all the tender documents (tender specifications, tender submissions etc. by vendors) (2) Use Handshakes by DC Frontiers search to detect if there were any relationships between any of the officers, shareholders and directors of the five vendors who bidded.
The clue that there could be a relationship between Company A and Partnership B was that from the Handshakes report, Company A director (tagged as Director A1) and Partnership B partner (tagged as Partner B1) were both directors of a defunct Private Limited Company a few years prior which had since been wound-up and de-registered.
This piece of information that Director A1 and Partner B1 could only establish that they knew one another. The Singapore marketplace is relatively small so it is not unusual for ex-business partners to still be competing in the same industry under different entities whether as employees or owners.
I like to think that audit, assurance and governance roles have a certain positive “karma” or energy infused in such careers. It is about doing good to protect society from those who would undermine the rules that help society work well for the benefit of all.
As “luck” or “karma” would have it, I was presented a gift in the tender document submissions by Company A and Partnership B. Among the many tender documents that vendors were required to complete and submit to our organization, there was a template called, “Form of Tender”. This form is essentially a cover letter by the vendor bidding for the tender to declare that they will abide by all terms and conditions of the tender, specifically the price, delivery timelines and agree for the prices stated to be valid for a stipulated period of time. The “Form of Tender” document requires the vendor to sign off by the director/partner/owner of the vendor and be witnessed by another natural person.
For whatever reason, Company A and Partnership B gave themselves away because I discovered that Director A1 signed off as the witness for Partner B1’s form and vice-versa. The two individuals witnessed each other’s forms!
This was the key evidence that demonstrated that Director A1 and Partner B1 were coordinating as they clearly could see each other’s bid prices as this was indicated in writing in their respective Forms of Tenders.
Based on this finding, I communicated to my Finance colleagues in a report and advised them to inform the Ministry of Finance’s Standing Committee on Debarment. As this case was quite some time ago, I cannot recall if the CCCS then was involved as the part of handling suspected bid-rigging in accordance to the Government Instruction Manual on Procurement typically involved the Finance procurement folks. My role then was to provide the evidence upon which they could act to inform the necessary authorities.
Sometimes, such cases are only caught because the fraudsters give themselves away and in this case there was a whistle-blowing vendor who was aware of what was happening in this particular tender.
So what happens when you do not have the benefit of any alert by a whistle-blower? When bereft of anyone alerting you of what is happening behind the scenes. How can you detect bid-rigging?
I will share more soon on how I detected the recent bid-rigging case without the benefit of being alerted by third parties.
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