Procurement scandals are not just isolated incidents; they reflect systemic weaknesses in governance, oversight, and accountability. When public funds are misused, it not only results in financial loss but also damages public confidence in government institutions. The recent bottled water case in Hong Kong highlights how easily procurement processes can be compromised when critical safeguards are neglected.
A Scandal That Undermines Public Trust
The recent case involving businessman 呂子聰, who allegedly misrepresented supplier credentials to secure a HK$52.9 million government contract for bottled water, has cast serious doubt on the robustness of Hong Kong’s public tendering process. The scandal reveals how a lack of rigorous supplier verification and inadequate contract monitoring can open the door to fraud, undermine public trust, and create fertile ground for corruption.
Breakdown in Due Diligence and Verification
Proper tendering requires transparency, equal opportunity, and value for money. In this case, however, critical safeguards appear to have failed. The awarding of such a significant contract without independently verifying the legitimacy of the manufacturer relationship illustrates a breakdown in due diligence.
The Silence of Oversight Bodies
In the past, I had invited ICAC to deliver an educational talk to my company on internal audit governance. The government, with its vast resources and experience, is expected to know and follow the best practices in tendering procedures. It is therefore disappointing that ICAC has remained silent in the wake of such a high-profile scandal, when public accountability is most needed.
Lessons for Internal Auditors in Tendering
For internal auditors, the lesson is clear: we must remain vigilant throughout the open tender process. If abnormalities arise, such as the lowest price not being selected without clear justification, or technical or subjective weighting being disproportionately high (for example, more than 50 percent), we must stay skeptical and ask the necessary questions. Internal audit has a responsibility to challenge unusual evaluation outcomes and to ensure that tendering remains transparent, fair, and free from undue influence.
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