Vulnerabilities of ICT Procurement to Fraud and Corruption

Information communication technology (ICT) contracts are prone to fraud, corruption, bid rigging and collusion. The OECD foreign bribery report which shows that in 2014, 10 percent of the foreign bribery cases occurred in ICT sector. Integrated financial management systems (IFMIS) and other ICT systems play important roles in improving transparency and accountability and reducing the opportunities for fraud and corruption in developing countries. The procurement and implementation of such systems, however, present significant opportunities for abuse. The main reasons include: (a) the systemic corruption in many parts of the developing world where many such systems are procured, ironically in an attempt to reduce the impact of corruption and improve governance; (b) the large scale and complexity of such systems, which provide many opportunities to improperly rig contract specifications, manipulate implementation and inflate prices, and which make it difficult to detect such abuses; (c) the expense and potentially large profit margins of such systems, which provide ample margins to offer and pay substantial bribes to corrupt officials; (d) the relatively low risk of vendors or officials being caught and sanctioned, which is virtually nonexistent in many developing countries