How corruption flourishes

The Pay Off

Don’t underestimate the importance of public sector values and behaviours extending to outsourcers and private industry suppliers to government, wrote Lexton Gebert in the Feb/March 2014 issue of Government News magazine. Australia is in the top 10 “cleanest” countries according to Transparency International’s Corruption Perceptions Index. However significant corruption does occur – for example the Securency and Note Printing Australia bribery scandal, or various examples cited in Ombudsman reports. With the newly created Independent Broad-based Anti-corruption Commission (IBAC) in Victoria, it is easy to assume that the issue of public sector corruption is a problem for the public service and Governments, and not the private sector; and high profile corruption cases are extreme isolated instances.

The Impact of Outsourcing on the Public Sector

Traditionally, one of the areas of high risk for corruption has been procurement. Accordingly, probity services are predominantly used at the highest risk point (i.e. during a procurement), however the risks continue into the contract management phase. The public sector relies heavily on private sector services. Traffic camera maintenance, construction, hosting driver licence information and detention centre management are just some diverse examples. In Victoria, the Government purchases approximately $7 billion in services every year from the private sector and this is likely to grow with the effects of the Sustainable Government policy. The shifting of responsibility and risk requires public sector buyers to consider how a service provider’s staff will make good decisions aligned with the values of the public sector. In Victoria, responsibility is often specified through contract clauses which oblige suppliers to comply with the Victorian Public Sector Code/s of Conduct. This obligation is often addressed by the supplier in a perfunctory or loose fashion. Over the years, many professionals have said to me “probity is just common sense” or “I was brought up by my parents to have good morals so I’ll be alright”.

However for Governments that are required to be transparent, meet a raft of statutory obligations and are held to account by the media in addition to public sector checks and balances, a practical lack of application to understanding and implementing public sector values is a concern. Consider a multi-national corporation that promotes one of its values as “family”. This is an admirable value and one that employees would share with their employer, however, how does this value compare in the context of the Government’s values? Hiring a capable relative may be acceptable in a private sector entity (it is not in many), but in the public sector, issues of nepotism need to be dealt with appropriately. Another interesting example that highlights this issue is the case of Edward Snowden and the leaking of Australian intelligence information. Should a contractor to the Government apply their own personal values and discretion to release Government and personal information to the public because they feel it is in the public interest? Could this be acceptable? Under what circumstances? In both the above examples, knowledge of the policies and practices that enforce the Codes of Conduct become important not only to protect the interests of the State and its citizens, but also to help provide professionals guidance and options especially in times where there is a high risk of improper conduct.

Cognitive Dissonance It’s often said that acts of corruption are committed by people who were “bad to start with, and it doesn’t matter what controls are in place, they were always going to break the law”. However according to Dan Ariely, a leading behavioural economist, it is the “cognitive flexibility” in all of us, which helps us to justify our own behaviour, and places everyone at risk of being dishonest. Mr Ariely believes that everyone wants the benefits that come as a result of cheating but just as important is the ability to reconcile one’s conscience. This cognitive paradox can result in an individual justifying their “cheating a little” for personal gain, with the individual believing they remain a good person. Over time it is possible for the instances of “cheating a little” to become more frequent or more severe. There are indications that corruption is increasing. A KPMG report noted that from 2010 -2012, individual frauds exceeding $1M increased by 82 per cent in Australia and New Zealand. Mr Ariely is not saying that we are all corrupt but in certain situations, individuals will apply their own personal values or change their personal values in order to justify their actions. What can be done?  Mr Ariely’s experiments also revealed that by reminding people of values (even if the values are not their own), the act of cheating decreased. The very act of reminding people resulted in the self-supervision of behaviour to a higher degree. There are a few simple things that both public sector agencies and the private sector can do to help mitigate its risk:

1. Conduct a Supply Risk Assessment

What could happen if there was a breach of the Code of Conduct under a contract of supply? This could be in the form of fraud, information security breaches, corrupt behaviour or conflicts of interest. Are they likely to occur and what could the consequences be? For instance, when hiring temporary labour for a specific job, how important is it that the person you hire understands the Code of Conduct and the policies and practices underpinning it? If the person will be privy to sensitive information, that if released to the public could jeopardise natural justice or provide an unfair competitive advantage to a supplier, then it is imperative that this person is knowledgeable of the code and can apply practices that maintain integrity and demonstrate respect.

2. Change Policy Guidance Where high-value and high-risk procurements or supply agreements exist, having people who have demonstrated their understanding and experience of related Government policy is recommended. For example, policy changes might be: a) all personnel working on a procurement project must have a basic understanding of the Code and the agency’s related policies and practices; b) when Government is selecting a service provider, a preference for suppliers with knowledge and experience with relevant policies and practices will be taken into account; c) all staff involved with the custodianship of sensitive Government information should demonstrate their understanding of the Government’s Code of Conduct; and d) all staff involved that act as an agent on behalf of the Government should refresh their understanding of the Code every three years.

3. Remind Your Staff Regularly Refresher training, tips and tricks, quizzes and competitions and entertaining experiments similar to Mr Ariely’s are just some ways that can keep the appropriate behaviours and practice at the forefront of an individual’s mind. Mr Ariely argues that an individual can progress from “cheating a little bit” to “cheating a lot” if they no longer think that they are a good person. “If I’m not good, I might as well enjoy it”. Working through minor issues constructively, fairly and through due process will help to prevent people making this negative progression. Lexton Gebert is the Managing Director of Landell which has recently launched the Values of Government and Procurement (VGAP) Accreditation Scheme. The scheme is designed to build and maintain professional knowledge of the Victorian Government Code of Conduct and related policies and practices.

Comment below to have your say on this story.

If you have a news story or tip-off, get in touch at  

Sign up to the Government News newsletter

Leave a comment:

Your email address will not be published. All fields are required