In the last two months we have once again become aware of the risk to bidders of being scammed through tender scams. These scams take on a number of forms but some central themes are always present.
In the most basic of scams, fraudsters publish a fake tender advert and require a non-refundable document fee which is to be deposited into the fraudsters’ bank account. They may even provide suppliers with a complex document. The Department of Public Service and Administration (DPSA) issued a warning in October to prospective bidders about a scam involving tender fees for DPSA tenders. Prospective bidders were cautioned about a current scam where the DPSA name is being used to fraudulently charge non-refundable fees for Tender/Bid documents. The perpetrators misrepresent themselves as DPSA officials and seek to request or demand a non-refundable fee for DPSA tenders. The Department of Public Service and Administration does not charge any fee for Tender/Bid documentation.
Fraudsters publish false adverts requesting tenders for the supply of goods that are not readily available or easily accessible in the market. They may even specify a totally fictitious product. The scammers make use of a fake supplying company, manufacturer or primary supplier to supply the goods. Unwitting bidders will then likely find the fake manufacturer when they search for these scarce/fake products.
One of the scam cases in Durban required a tender for a particular camera lens. When the individual looked for the specific lens, he found a “supply company”, which was part of the scammers’ network.
Prospective suppliers are subsequently required to deposit money into fake accounts to the ‘manufacturers’ of the advertised goods. The victims only become aware of the scam once they ask for payment from the department. Since the beginning of the 2015 the Department of Water and Sanitation alone has received no fewer than 15 complaints by victims of the scam who have lost several millions of rands to syndicates.
The modus operandi of this scam involves false adverts in the name of a department asking for tenders for the supply of goods worth thousands of rands. Bidders are encouraged by the scammers to act as distributors of a specific manufacturer of the product that they have an urgent need for. So they are quite clearly positioned as a middle man between manufacturer and customer with potential of good margin. The “urgency” of the demand is used as a smoke screen for irregular procedures and reduced controls. Prospective suppliers are subsequently required to deposit money into fake accounts to the “manufacturers” of the goods. The scam may end here when they disappear with the cash or it may continue where suppliers are later asked to deliver the goods outside the targeted department and pay the pseudo manufacturers on delivery. In the latter instance they would have made full payment and lost the merchandise.
In another case the National Department of Health (NDoH) announced that corrupt companies and individuals are defrauding unsuspecting businesses in the name of the NDoH.
The scam involves the fraudsters using the departmental letterheads to send out fake Tenders to companies and requests to supply equipment and goods. The letter contains the contact person’s name and telephone number which is not the same as the NDOH in Pretoria.
The company insider will pretend to have influence over which supplier will be used for a purchase or contract. These scams are very often run through a LinkedIn approach and are quite commonly executed under the cover of a large multinational oil company or financial institution to inflate perception of the opportunity. An “official” of the company makes the initial approach via LinkedIn for the purposes of securing a supply contract with the victim who needs to source the product from a recommended “manufacturer”. It is clear from the start that he abuses his position in the organisation and relies on the victim’s greed to play along with this situation. The manufacturer is ultimately paid up front for his product and then disappears.
The SAPS has been successful in solving a number of these cases. In one case a syndicate was recently cracked through collaboration between Hawks and SAPS' Crime Intelligence members following months of tracking the illegal activities of the syndicate. They have been linked to more 104 illegal transactions in Gauteng alone and expectations are that more will be uncovered as investigations continue.
The carrot of huge margin often clouds judgement and lets potential suppliers abandon caution. These opportunities often seem so bright that they blind bidders to the risks involved. So be realistic about tenders and rather err on the side of caution
Although the advert looks legitimate, businesses need to be vigilant when it comes to submitting tenders and double check the credentials of customers. It is also worthwhile to ensure that you receive tender notifications from a reputable source.
If it is too good to be true it probably is: Know your customers and industry. Receiving a fresh requirement out of the blue may seem appealing but
Check addresses: When searching the address of the company that has sent the fake tender document on the internet you may not find them. Today this is very unlikely for an organisation publishing a tender. Even if they us a fake website then check the physical address to ensure that they do exist.
Shady bank account: The banking details are in a private name and not company name. The NDOH has alerted the relevant authorities including the SAPS and Hawks to investigate this scam, to protect legitimate businesses as well as the name of the Department.
Unexpected e-mail: A department will never send you an email asking you to supply equipment and goods without a purchase/order number. The department will not be liable for actions that result in companies or individuals being resultant victim of such scam.
If you are a supplier and you have any doubts about the legitimacy of any procurement enquiry do your homework. No matter how good their correspondence, their documents or even their “website” look, always double check the credentials.
Subscribers get daily e-mail notifications for tenders in their line of business. MarketSqr consolidates tender notification information from tender portals, tender bulletins, newspapers and web sites every day. This information is then filtered and a summary is e-mailed to subscribers every morning. If subscribers follow a tender they are interested the important dates relating to the tender will be added to the subscriber’s Tender Calendar. Tenders can be accessed via the website or any mobile device.
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