Some supplier/buyer relationships do not always work out as hoped and at times, the fallout from these failed relationships can have a significant impact on both organisations.

Suppliers can fail buyers in many ways including negative business practice, poor financial health, failure to perform, corruption, links to terrorism and operating through shell companies. This is why lists such as the National Treasury List of Restricted Suppliers have come into existence, as they serve to safeguard organisations from repeatedly doing business with unworthy or fraudulent suppliers.

The List of Restricted Suppliers contains the names of companies and individuals banned from doing business with the state. It is prescribed by the Treasury Regulation 16A9.1c, that all state “accounting officers must check the National Treasury’s database – List of Restricted Suppliers – prior to awarding any contract, to ensure that no recommended bidders or any of its directors are listed as companies or persons prohibited from doing business with the public sector.”

In addition to screening against published restricted lists, Rudi Kruger, GM of LexisNexis Data Services advises that every business engaging in procurement should create and maintain their own restricted list and ensure that each and every party is vetted prior and during business transactions.

When deciding on who to place on an internal restricted list, Kruger said common red flags to look out for include:

* A director of a company recently added to the restricted list, now operating under a different company name.

* A director listed under multiple companies of the same industry, one or more of which has been listed – for example, a contractor who registers another company just to get back on site.

* An individual listed for questionable conduct.

* An individual recently dismissed from the organisation.

* An employee that fails to declare conflicting business interests.

* Poor performance of an entity to achieve the required work.

* Companies who have been sanctioned for fronting.

* Uncompetitive practices where companies are found in collusion.

* Companies that have been listed for misrepresenting of facts.

* Failure to fulfil purchase order obligations.

* Claiming and accepting payments for services not rendered.

* Employees submitting a false declaration of interest.

Designed to assist with vetting and screening during the procurement process is Lexis ProcureCheck, an online solution that houses the List of Restricted Suppliers as well as enables companies to create and maintain their own preferred vendor/restricted vendor lists.

“Once an internal restricted list is created, Lexis ProcureCheck will do the monitoring for you,” says Kruger. “All you have to do is ensure that you continue to add the employees and vendors you deem to be a risk to your business and we will ensure your list is included in our ongoing monitoring cycle.”

In addition, the solution assists supply chain management officers in ensuring compliance with the Public Finance Management Act and the Municipal Finance Management Act.

Lexis ProcureCheck’s other features include the ability to:

* Identify potential connections and ownership of property.

* Identify possible fraudulent activity within vendors and employees with the help of South African Fraud Prevention Services.

* Highlight business interests of employees within your organisation.

* Recognise conflicts of interest within your organisation and potential supply chain partners.

* Provide automated irregularity alert reports as well as reports on vendors and staff.