Ethics and Fraud in Procurement Among Private and Public Organizations in Kenya

Abstract

This research project is a comparison between the unregulated and regulated procurement environment in order to establish the prevalence of ethics and fraud in procurement among private and public organizations in Kenya. It is the aim of this work to establish prevalence levels of fraud and unethical behavior among the sectors, establish the common forms fraudulent practices and unethical conduct in the procurement cycle, identify and recommend strategies to reduce unethical and fraudulent practices in procurement in both private and public organizations. The first chapter lays the background of the study by establishing the research problem and the specific objectives of the study. The second chapter comprises of detailed literature reviews and the theories that form the basis of this study. The third chapter outlines methodology where the study adopted a descriptive, comparative research design to carry out the study where the populations were all the targeted (85) respondents from (23) Parastatals (public organizations) and (62) private companies in Kenya. Random sampling methods was used to choose study sample and the sample size was determined using Yamane (1967) simplified formula. Data was collected through interviewing the respondents. Analysis of data was done through content analysis technique and presented using frequency tables and radar charts. The study findings established that the prevalence levels of fraudulent practices and unethical behavior in all stages of procurement high in the public than in private sector. The study concluded the difference in practice among the sector was not significant despite the difference in procurement environments. The study recommended the following strategies; segregation of duties in all organization to ensure different roles are played by different individuals, conducting regular audits, installing purchasing control software, and implementing anonymous theft reporting systems. On ethics the strategies included; establish and enforce code of conduct, show appreciations to employees on regular basis to encourage loyalty and hiring for value. Limitations of the study included difficulty to access relevant literature and rigid policies by respondents before being allowed to participate in the study among others. Suggestion for further studies to include; The most appropriate methods of detecting fraud in the procurement process among organizations and establishing the reasons why fraud and unethical behavior is highly prevalent in the public sector.