Collusion is when two or more people agree (usually in secret) to deceive, mislead or defraud others.
If collusion is occurring, it usually is the result of a breakdown in controls. Collusion does, in some way, cost your organisation money. For example:
- Consider collusion occurring between an employee and an employee of a contractor who is tendering for major construction works. It is likely that either the tender will be cheaper for the contractor to win and thereby it may result in poorer quality workmanship and / or materials used or may be overvalued and the organisation may be charged more than should be; or
- As the purchasing officer in the organisation, the employee allows the supplier to charge more than the items could be purchased for elsewhere, thus incurring additional costs for the organisation.
To attempt to avoid collusion:
- All employees should be required to disclose any potential conflict of interest that may exist;
- All employees should be required to, at least yearly, sign off that they understand all policies and procedures;
- Ensure that vendors and suppliers are fully aware that gifts and gratuities are not to be given to employees or volunteers. If they wish to support the organisation, it should be made by way of donation;
- Ensure employees, volunteers and suppliers have a way of reporting suspected collusion. It is surprising the number of times collusion is picked up by another organisation who also has an employee involved in the collusion.
Collusion is very difficult to discover and also very difficult to investigate as any benefit is usually received by the individual. Any suspicion of collusion needs to be investigated thoroughly.