The frequent theft of public funds by corrupt government officials is dominant in third world countries with South Sudan among the worst in the world to suffer from its negative effects. The nation’s elites have developed a kleptocratic system that controls every part of South Sudan’s economy.
A 2012 report even stated that more than $4 billion in government funds have been stolen since the emergence of self-rule in 2005. The major scandal since the beginning of self-rule has been the so-called “Dura Saga” although there have been multiple instances of similar wrongdoing.
All this has come about due to the problem of serious lack of transparency in South Sudan government records and business information. Any attempt to request official data can be turned down without any reasonable grounds.
As much as the government may pay a deaf ear, corruption scandals do reflect the failure of the government to contain the problem of fraudulent theft of public funds by its own officials. Its detrimental effect is affecting the standards of living of the people of South Sudan hence tainting South Sudan’s image globally.
So for the government to fight the problem of theft of public funds, it’s vital to first identify and understand different types of fraud indicators/risks before structuring solutions to combat them. Some of the fraud indicators include;
1. Contractor Fraud Indicators
Contractor fraud is one of the most common ways public funds are stolen and transferred to the organization’s employees, political associates, friends, family members, etc.
Here are some of the indicators that can be used to identify this kind of fraud;
- A contractor is given an advance payment for a service yet to be rendered.
- A contractor is paid via wire transfer instead of cheque, because a cheque may require approval by a higher authority.
- Payments are made to the contractor without going through the standard procedures of approval.
- A contractor’s official address is the same as that for an employee of the government parastatal, family member or close business associate affiliated to the key employees of the parastatal awarding the contract.
- A contractor has no actual address but contracts are awarded to them.
- A Contractor is paid in a very short interval of time, and he donates almost the same amount to a political ally, event or cause.
- A contractor has very close relationship with employees of the organization or local officials.
- A contractor is paid an advance for a service to be rendered.
2. Procurement Fraud Indicators
This type of fraud is very similar to contractor fraud and it is carried out on an immensely large scale. Examples include;
- When submitted bids are too small
- When contracts are awarded without bidding process
- When a contract is not awarded to the contractor company with the lowest bid, without and major explanation.
- When one contractor is winning similar contracts across different parastatals
- When the bidding process is not advertised as required by the law.
- When the won awarded bid is much higher than the budgeted cost.
- When most of the companies have never executed a similar project in the past.
- When the government parastatal fails to show history of its bids
- When a contractor is awarded multiple contracts in one bidding process.
3. Payroll Fraud Indicators
Payroll fraud is more rampant in government institutions ever since South Sudan’s independence, and they have taken so many forms including nepotism, ghost employees and so much more. Here are some indicators of payroll fraud.
- No physical verification of terminated or current employees
- Several employees sharing the same salary account
- Cheques are mailed instead of picking them at the accountant’s office.
- A bigger number of employees are registered but office premises are less populated.
- Too many former and existing employees are related to current employees.
- Multiple employees sharing same home address which is not official staff quarter.
- Financial Fraud Indicators
While similar to the payroll indicators, financial fraud indicators are usually more direct and are easy to spot. Some of them include;
- Transactions in the ledger are back-dated
- Ordering issuing documents and accounts department do not arrive at the same figures at the end of the day.
- Financial reports are incomplete or suddenly go missing
- Organization’s activities are digitalized but employees prefer doing work manually.
- Too many large transactions are manually recorded
- When employees take long to present documents for audit or verification purposes.
- Undocumented money transfers from the organization’s bank account.
- Too many bank accounts rather than ledger reports
- When expenses recorded in a department are unrelated to the department’s needs
4. General Fraud Indicators
While contractor, financial, procurement, and payroll fraud are the major fraud sources in organizations, there are still other general fraud indicators that shouldn’t be overlooked as they are still loopholes that aid the theft of public funds. They include;
- An organization has been run by one individual for 10 years or more
- Employees work for extra hours they are not paid for.
- Leadership ignores procedures laid to get things done right
- There’s high number of lawsuits against the organization
- There are little or no safety measures for critical organization assets like cash, supplies etc.
- Leadership prioritizes part-time employees over permanent ones.
- When there are rumors of corruption in the organization
- When employees refuse to take leave off work
- When non-official email addresses are used for official purposes
- When there are no restrictions for transfer of money from the organization’s bank accounts.
Basing on the above-listed fraud indicators in government organizations or even private organizations, implementing technology-driven systems that increase efficiency and effectiveness in accountability is key to fighting the theft of public funds. Below are some strong ways the government of South Sudan can use technology to fight corruption in government entities.
Leverage Block Chain Technology For 100% Transparency
To get a better understanding of what blockchain means, it’s important to know that blockchain is a public growing list of records called blocks. These blocks are linked using cryptography. By design, the data in blockchain cannot be modified. So any legitimate or illicit transaction can never be modified or removed.
Once a transaction gets captured in a blockchain, the details of the transaction e.g the asset price and ownership are automatically recorded, verified, and reconciled in a matter of seconds. It is public knowledge that this process is 100% irreversible. Blockchain would build an extremely transparent work ethic as data can never be altered or tampered with once entered into the system. Anybody that tries to alter it would be publicly identified and verified.
While blockchain technology was initially created as an accounting method for virtual currencies such as Bitcoin, it’s possible to digitalize, program, and insert any document or any commercial application into the blockchain.
Many countries around the world such as Rwanda and India are already adapting to the use of blockchain technology to ensure transparent activities across all government entities. Blockchain technology is the most secure way to track activities in any government entity,
Digitalization Of The Entire Workflow Of Every Government Entity
The government of South Sudan should digitalize the entire workflow of its operations by setting up a network-based revenue management system where all workflows regarding generating orders, receipts, payments, recording data, etc. can be linked to one centralized system.
This would ensure that every single operation of the entity is centralized and monitored remotely. This way accounts can be easily reconciled since data is automatically recorded every time an activity takes place.
Provide An Easy And Highly Efficient Way For Employees And Whistle Blowers To Report Theft And Fraud By Co-Workers
There should be an anonymous computerized system that makes reporting suspicious fraudulent activities extremely easy. The access to fraud report data should not be kept too private, because when a small clique of people controls information, they can easily alter it by deleting or modifying it. The data on fraudulent reports should be sent over a blockchain network so that it becomes easy to verify in case of an investigation.
Carry Out Periodic Unannounced Informal Audits
The government must carry out periodic unannounced audits. They should never announce information on when audit activity will be done, and the auditor should be completely an independent firm with zero ties to the government entity in question or its staff members to avoid conflict of interest.
Build Up In-Depth Information On Every Single Employee And Office Holder
Gathering and building up in-depth information on every employee or officeholder should be established at the time of employment and after employment. This will make it very easy what the employee does when given responsibility and whether the employee is susceptible to fraudulent activities.
Some information that should be gathered from employees and stakeholders are;
- Lifestyles that are above their salary level
- Proneness to gambling, borrowing or bad cheque writing
- Having them declare their assets every after six months
- A sudden devotion to work and working late beyond normal work hours even after people have gone home
- Personal and official relationship with fellow employees
- Their alcohol and drug usage levels
By having in-depth information on the employees and stakeholders of any entity, it can be pretty easy to determine which employees is most likely to involve themselves in legitimate/illicit activities in an entity.
There is no better way to instill fear and discipline than prosecuting guilty offenders. The prosecution should be effected immediately on the guilty party with a heavy prison sentence given once found guilty. This would scare away the would-be-offenders of similar fraud activities.
The theft of public funds is mainstream in South Sudan and will continue to create a bigger problem to South Sudan’s economy unless if measures are put in place to stop these vices on an aggressive scale. If South Sudan is to curb fraudulent theft of public funds from its confines, it must implement measures that don’t just target guilty individuals but measures that frustrate the whole theft process and quickly prosecutes guilty individuals with lofty punishments.
What are your thoughts on how the government of South Sudan can use technology to stop the looting of public funds? Share in the comments section below.