Fri, 17 Sep 2021
22.7 C
Durban

Don’t let conflicted employees and dishonest suppliers destroy your business

Home Business Management Education & Training Don’t let conflicted employees and dishonest suppliers destroy your business

TWO things that could destroy your organisation’s reputation and credibility are conflict of interest and supplier misinformation. These have always been threats to business but now, in the midst of the COVID-19 crisis, the need for transparency is greater than ever as the business world anticipates an uncertain future.

That’s according to Rudi Kruger, General Manager at LexisNexis Data Solutions, who said that as the pandemic grips the globe and an economic downturn is expected, companies are having to rethink every aspect of their organisation.

“There is no longer room for half-hearted vetting. A lot is about to change, and it is wise to ensure that your organisation is in a better position to ride the wave of an economic slump. You need to trust your employees, partner and suppliers even more than before.”

Kruger said several frameworks exist to guide organisations against the risks including the King IV Report on Corporate Governance for the private sector and the Public Finance Management Act as well as the Municipal Finance Management Act, targeted at the public sector. However, regular reminders to be vigilant are always useful when protecting the business from hidden risks.

Risks present themselves in various ways but in the case of employees, here is what to look out for:

  • Employee involved in fraudulent transactions
  • Having direct ownership or business association with the supplier
  • Abuse or purposeful neglect in decision-making authority regarding purchases or supplier selection
  • Employee being a co-director of an active supplier
  • Employee co-owns property with a director of an active supplier
  • Property transferred to employee as compensation
  • Supplier sold a property to an active employee
  • Professional services rendered by employee for supplier in a private capacity.On the supplier side, misinformation could include:
    • Hiding the business interests of director, especially if they are linked to other suppliers/employees
    • Hidden pass-through schemes
    • Fraudulent banking details presented
    • Supplier no longer in business or filed for liquidation
    • Supplier director/s is an active employee
    • Supplier listed on restricted supplier database
    • Supplier director listed as an active government employee
    • Supplier appears on restricted list operating under another name

    He said one way to identify these risks internally is through employee declarations. Employee declarations of interest ensure that employees are transparent about their business interests outside of the organisation.

    While employee declarations will assist with information gathering, Kruger said the onus is still on the organisation to run vital checks. Likewise, suppliers must also go through extensive vetting to verify the information they’ve supplied before entering into a business relationship.

    “Vetting assists by uncovering the employee and supplier’s true natures, thereby confirming or dispelling the information they’ve supplied to you.”

    Key conflicts and misinformation can be identified by processing checks against external data providers and your organisation’s vendor database. “This will enable you to discover potential connections, ownership of property or unscrupulous behaviour between staff and suppliers,” said Kruger.

Most Popular

Ports authority pulls plug on Ngqura liquid bulk storage terminal

TRANSNET National Ports Authority (TNPA) has pulled out of development of the proposed new liquid bulk storage terminal at the Port of Ngqura but...

R253m road project boon for EC town

THE South African National Roads Agency (SANRAL) met with the Dordrecht business fraternity recently to discuss the economic benefits and job opportunities presented by...

Council tweaks budget in bid to stop taps running dry

AS the ongoing drought continues to grip the Kouga region, Kouga Municipality Council recently adjusted its capital budget in an attempt to prevent taps...

NMB drought mitigation plans ‘in overdrive’

THE Nelson Mandela Bay Municipality’s drought mitigation plans are in overdrive as the region continues to experience insignificant rainfall and low dam levels that...