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Preventing Corruption disguised as Fabricated Contract Variations: Strategies and Best Practices

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Preventing Corruption disguised as Fabricated Contract Variations: Strategies and Best Practices

Preventing Corruption disguised as Fabricated Contract Variations: Strategies and Best Practices

  • 21 May 2024
  • CS Abhay Sharma
  • 0 Comments
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Fabricated contract variations are a method by which bribes and corruption can be facilitated within projects, especially in sectors such as construction, infrastructure, and public works resulting into increased project cost. Here’s how this typically works:

Addressing Fabricated Contract Variations:
To mitigate the risks associated with fabricated contract variations, organizations can implement several measures:

a) Detailing the Scope of Work: Define the scope of work and the project specification in detail considering all foreseeable risk and complexities in the project. This will minimise the chance of variation.

b) Stringent Contract Management: Establish robust contract management practices that include clear documentation, justification, due diligence and approval processes for any contract variation.

c) Independent Audits: Conduct regular independent audits of projects and contract variations to identify and investigate any anomalies or suspicious variation.

d) Disclosure of Conflict of Interest: The officials involved in the contract variation should disclose their conflict of interest before engaging into it and give a declaration as to bear the consequences of making a false disclosure.

e) Stringent G&H Policy: Establishing a clear and robust Gifts & Hospitality policy will help minimise the risk of fabricated contract variations. The likelihood of accepting and approving contract variations in lieu of G&H from the contractors/ suppliers are always high.

f) Watch Out Red Flags: Keep an eye on the various red flags that the organisation has defined indicating conflict of interest or evidencing acceptance of G&H.

g) Whistleblower Mechanisms: Encourage and protect whistleblowers who report corrupt activities. Establishing anonymous reporting channels can help uncover hidden corruption.

h) Capacity Building: Train staff on ethical standards, contract management, and the detection of corruption schemes. Knowledgeable staff are better equipped to spot and prevent fraudulent activities.

By implementing these measures, organizations can reduce the risk of corruption through fabricated contract variations and promote integrity and accountability in project management.

CS Abhay Sharma

The Author is a Company Secretary, Law Graduate, Contracts Expert, Governance, Risk & Compliance (GRC) professional having more than 17 years of experience in company secretarial, legal, contracts, compliance, governance, ethics and risk management across Real Estate, Logistics, Hotels, Mining, Power, Facilities Management, Municipal Waste Management, and Metro Rail Projects.

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