Health service CEO’s unhealthy tendency for corrupt conduct

Publisher
Independent Broad-based Anti-corruption Commission
Date published
January 2021

Relevant impacts: Financial impact and government outcomes impact

A former CEO of a Victorian regional health service exploited weaknesses in the entity's systems and controls for their own financial benefit and for the benefit of some close associates.

The former CEO awarded a contract worth almost $1 million to a consultancy firm while in a personal relationship with one of the firm's directors. They also inappropriately authorised payment of invoices to a company owned by a relative, and inappropriately spent funds on travel and hospitality.

A report by the Victorian Independent Broad-Based Anti-Corruption Commission found that the entity had a culture that discouraged employees from speaking up, and that the former CEO lacked oversight from the board.

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Related fraudster personas

The Concealer

The Concealer hides their actions from being seen or known about to dishonestly gain personal benefits.

The Exploiter

The Exploiter uses something for a wrongful purpose to dishonestly gain personal benefits.

Related countermeasures

Positive workplace culture

A positive workplace culture can encourage ethical and supportive behaviours while discouraging fraudulent or corrupt activities. Staff will be less able to rationalise fraudulent or corrupt activities where a positive workplace culture exists. A culture built on honesty, transparency and integrity is a key organisational strength that can serve to reduce the risk of fraud. If weak countermeasures are the fuel, a bad culture can be the spark that ignites fraud and corruption.

Governance, accountability and oversight

Establish governance, accountability and oversight of processes by using delegations and requiring committees and project boards to oversee critical decisions and risk. Good governance, accountability and oversight increases transparency and reduces the opportunity for fraud.

Segregation of duties

Separate duties by allocating tasks and associated privileges for a business process to multiple staff. This is very important in areas such as payroll, finance, procurement, contract management and human resources. Systems help to enforce the strong separation of duties. This is also known as segregation of duties.

Reconcile records

Reconcile records to make sure that 2 sets of records (usually the balances of 2 accounts) match. Reconciling records and accounts can detect if something is different from what is standard, normal, or expected, which may indicate fraud.

Audits or reviews

Internal or external audits or reviews evaluate the process, purpose and outcome of activities. Clients, public officials or contractors can take advantage of weaknesses in government programs and systems to commit fraud, act corruptly, and avoid exposure.

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