"A case of no one asking the question of where the money went"

From Singapore:

How did 9 men con $1.2m despite rules and safeguards?

Finance Minister Tharman Shanmugaratnam told Parliament in November last year that the root cause was human error and not the public sector procurement guidelines and rules, which were fundamentally sound, reported The Business Times. "There was human failure first in supervision, and second in audit," Mr Tharman had said.

And good supervision requires not just knowing the rules and procedures, but also continual vigilance.

Nine men, one government agency and a cool $12.2 million.

At the centre of it all were Koh Seah Wee, 41, and Lim Chai Meng, 38, who ran rings around the rules meant to safeguard the IT procurement system at the Singapore Land Authority (SLA).

an SLA spokesman said detection was difficult as the fraudulent transactions were supported by "invoices" from "vendors" who were conspiring business entities, and approvals were given by Koh, the authorised officer in line with approved procurement procedures then. In all, 282 contracts were awarded to 11 "vendors", which were shell companies operated by their accomplices.

Such scams can be difficult to ferret out, said Associate Professor Mak Yuen Teen, a corporate governance expert at the National University of Singapore (NUS) Business School. "When there is collusion, it is a bit more difficult to uncover such fraud," he told The New Paper.

He said that although this case involved significant IT software-related procurement, "which is more difficult to verify receipt of goods compared to physical equipment, I think this is a case of no one asking the question of where the money went to".

In passing sentence, Justice Tay Yong Kwang said that organisations may put in place the best systems. But if those entrusted with operating the systems, especially those at the higher levels, choose to be dishonest, fraud can still happen.

Since the offences were uncovered, measures have been taken to strengthen internal controls, systems and offences, an Intellectual Property of Singapore (Ipos) spokesman told The New Paper yesterday.

"These (measures) include strengthening internal audit structures and processes, centralising the procurement process, and ensuring that the purchasing officer and the receiving officer (who verifies the receipt of goods and services) are different individuals," said the spokesman.