TOPIC 11 ETHICS INTEGRITY AND PROFESSIONALISM IN PROCUMENT

MANAGEMENT

Ethics(also known as moral philosophy) is a branch of philosophy which seeks to address

questions about morality; that is, about concepts such as good and bad, right and wrong, justice,
and virtue.
Ethics can also be defined as rules or standards governing the conduct of a person or the
members of a profession e.g. procurement function.
Integrity is the practice of being honest and showing a consistent and uncompromising
adherence to strong moral and ethical principles and values. In ethics, integrity is regarded as
the honesty and truthfulness or accuracy of one's actions.
Professionalism refers to the adherence to a set of ethical principles and standards within a
particular profession or field of work. It involves maintaining a high level of integrity, honesty,
and responsibility in one's professional conduct.
Code of Ethics” means a statement encompassing the set of rules based on values and the
standards of conduct to which suppliers are expected to conform.
Principles and standards:
Principles of Professional Ethics
Individuals acting in a professional capacity take on an additional burden of ethical
responsibility. For example, professional associations have codes of ethics that prescribe
required behaviour within the context of a professional practice such as procurement, medicine,
law, accounting, or engineering. These written codes provide rules of conduct and standards of
behaviour based on the principles of Professional Ethics which include:
1. Impartiality and Objectivity
Impartiality: Professionals must act without bias, ensuring decisions are based on facts and
merit, not influenced by personal relationships or external pressures.
Objectivity: All decisions should be made by assessing situations fairly and equitably, focusing
solely on the best interests of the project and stakeholders.
2. Openness and Full Disclosure
Openness: Being transparent in actions, ensuring that stakeholders have access to relevant infor-
mation.
Full Disclosure: Providing all necessary information about potential risks, conflicts, and deci-
sions made, ensuring honesty and accountability.
3. Confidentiality
Professionals must safeguard sensitive information obtained during their work and not disclose
confidential data to unauthorized parties. This builds trust and maintains the integrity of the pro-
curement or project process.
4. Due Diligence / Duty of Care
Due Diligence: Exercising reasonable care and competence when performing duties. This in-
cludes thoroughly evaluating risks, opportunities, and obligations.
Duty of Care: Ensuring that the rights and interests of all parties are considered and protected in
decisions.
5. Fidelity to Professional Responsibilities
Professionals are expected to faithfully fulfill their responsibilities, maintaining loyalty to ethical
standards and adhering to the rules and principles of the profession.
 6. Avoiding Potential or Apparent Conflict of Interest
Professionals must avoid situations where personal interests conflict with professional responsi-
bilities. Even the appearance of a conflict can damage credibility, so transparency and disclosure
are crucial.
7. Business Gifts
Accepting gifts from suppliers or contractors could create an impression of favoritism. There-
fore, it is important to establish clear guidelines on accepting business gifts to avoid conflicts of
interest or unethical influence.
8. Hospitality
Hospitality offered by suppliers should be evaluated carefully. Accepting meals, entertainment,
or travel could be seen as compromising impartiality, so clear policies should govern when and
what hospitality is acceptable.
9. Fair Competition
Ensuring that all suppliers or bidders have equal access to opportunities without favoritism or
discrimination promotes a fair, competitive environment. It prevents collusion and unfair prac-
tices in procurement or project management.
Ethical standards:
The Code of Ethics and standard of Professional Conduct are the ethical cornerstone of many
companies across the globe. They are essential to company’s mission to lead the global
investment profession and critical to maintaining the public's trust in the financial markets.
The procurement ethical standards are:
1. all business must be conducted in the best interests of the State, avoiding any situation which
may impinge, or might be deemed to impinge, on impartiality;
2. public money must be spent efficiently and effectively and in accordance with Government
policies;
3. agencies must purchase without favour or prejudice and maximise value in all transactions;
4. agencies must maintain confidentiality in all dealings; and
5. Government buyers involved in procurement must decline gifts, gratuities, or any other bene-
fits which may influence, or might be deemed to influence, equity or impartiality.
ETHICS IN PROJECT MANAGEMENT
Ethics in project management refers to the application of moral principles and professional
conduct standards to ensure fairness, transparency, accountability, and integrity in managing
projects. Ethical practices are vital for building trust, fostering collaboration, and ensuring the
success of projects while maintaining the well-being of stakeholders.
Ethical Principles in Project Management:
1. Honesty and Transparency:
Project managers must be truthful in their communications, provide accurate information, and
avoid misleading stakeholders about project progress, risks, or outcomes.
2. Accountability:
Ethical project management involves taking responsibility for decisions, actions, and outcomes.
Project managers must own their successes and failures, ensuring accountability at all levels of
the project team.
3. Respect for Stakeholders:
Project managers should respect the rights, interests, and dignity of all stakeholders involved, in-
cluding clients, team members, suppliers, and the community. This includes considering stake-
holder needs and ensuring fair treatment.
4. Fairness:
Decision-making processes should be impartial and free from bias. Project managers must ensure
that no stakeholder is unfairly advantaged or disadvantaged and that resources are allocated equi-
tably.
5. Compliance with Laws and Regulations:
Ethical project management requires adherence to all relevant laws, regulations, and industry
standards. This includes respecting labor laws, environmental regulations, and contractual obli-
gations.
6. Confidentiality:
Project managers must protect sensitive information and maintain confidentiality where required.
This involves safeguarding proprietary data, client details, and other confidential information
from unauthorized access.
7. Avoidance of Conflicts of Interest:
Project managers should avoid situations where personal or financial interests could compromise
their ability to make impartial decisions. Transparency in disclosing potential conflicts is essen-
tial.
8. Commitment to Quality:
Project managers must ensure that the project meets the agreed-upon standards and quality re-
quirements. Cutting corners or compromising on quality to save time or money is unethical.
9. Cultural Sensitivity:
Project managers working in diverse environments must respect and accommodate cultural dif-
ferences, fostering inclusivity and mutual respect within the project team and with external stake-
holders.
IMPORTANCE OF ETHICS PRACTICES IN PROJECT MANAGEMENT:
1. Building Trust:
Ethical behavior fosters trust between project managers, teams, and stakeholders, which is
crucial for successful collaboration and project delivery.
2. Enhancing Reputation:
Projects managed with ethical standards enhance the reputation of the project manager and
the organization, leading to future business opportunities and long-term relationships.
3. Risk Mitigation:
Ethical practices help avoid legal risks, penalties, and reputational damage by ensuring com-
pliance with laws, contracts, and industry standards.
4. Improved Decision-Making:
Ethical project management promotes transparent and balanced decision-making, leading to
fair outcomes that benefit all stakeholders.
5. Sustainability:
Ethical behavior supports sustainable project outcomes by considering environmental, social,
and economic impacts, ensuring long-term success and responsibility.
6. Procurement have power over large sums of money and hence the power has to be
regulated by the ethical code of conduct.
7. It is essential in creating organizational reputation.
8. It helps in avoiding any form of temptations to act unethically.
9. Ethics also helps in maintaining objectivity and rational thinking in procurement process.
Ways of Enhancing Integrity in Project Procurement Management
1. Strict Compliance with Procurement Laws and Regulations
o Ensuring adherence to procurement guidelines and legal frameworks to maintain transparency
and fairness throughout the process.
2. Open and Competitive Bidding
o Allowing for an open and fair competition where all qualified suppliers can submit bids, which
enhances transparency and accountability.
3. Clear Conflict of Interest Policies
o Implementing strict rules requiring the disclosure of any potential conflicts of interest and ensur-
ing that procurement decisions are not influenced by personal gain.
4. Transparency and Accountability
o Making procurement processes and decisions accessible for review by relevant stakeholders and
the public to ensure actions are traceable and justifiable.
5. Training and Education on Ethical Standards
o Conducting regular training sessions for project procurement professionals on ethical standards
and best practices.
6. Internal Audits and Monitoring
o Regularly auditing procurement processes to ensure compliance with ethical standards, detect ir-
regularities, and address potential risks promptly.
7. Whistleblower Protection Policies
o Providing safe channels for reporting unethical behavior and ensuring that whistleblowers are
protected from retaliation.
8. Code of Ethics for Procurement Professionals
Establishing a code of ethics that outlines acceptable behavior, encourages integrity, and pro-
vides clear consequences for violations.
Common Ethical Issues/unethical behaviors in Project Management:
1. Misrepresentation of Project Status:
Providing false or misleading information about project timelines, costs, or risks to stakeholders.
2. Favoritism and Bias:
Granting unfair advantages to certain team members, suppliers, or stakeholders based on per-
sonal relationships or preferences.
3. Conflicts of Interest:
Making decisions that benefit the project manager personally or professionally, rather than the
project's best interest.
4. Resource Misallocation:
Unethical allocation of project resources for personal gain or favoring certain tasks or stakehold-
ers at the expense of others.
5. Reciprocity
Giving preferential treatment to suppliers who are also customers, creating a "you buy from me, I
buy from you" arrangement.
This limits fair competition and encourages biased purchasing decisions.
6. Personal Buying
When procurement departments purchase materials for personal use by employees.
Misuse of company resources, leading to loss of control over procurement policies and potential
conflicts of interest.
7. Accepting Supplier Favors
Accepting gifts, favors, or other benefits from suppliers, which may influence purchasing de-
cisions.
 Can compromise a buyer’s objectivity in selecting the best supplier and lead to biased decision-
making.
8. Misinformation
Providing inaccurate or misleading information, such as inflating estimates to secure unfair
prices.
It creates mistrust between buyers and suppliers and can lead to inflated costs or unethical busi-
ness practices.
9. Unfair Dealing
Engaging in deceptive practices like soliciting bids without the intent to purchase or favoring
certain vendors unfairly.
Damages supplier relationships and undermines the procurement process's fairness and integrity.
10. Conflict of Interest
When procurement professionals make decisions based on personal gain, such as preferring sup-
pliers where they have a financial interest.
Compromises professional integrity and may result in biased purchasing, affecting the organiza-
tion's performance.
11. Fraud
Engaging in deceptive activities like accepting kickbacks or manipulating the procurement pro-
cess for personal gain.
Leads to financial losses, legal liabilities, and a loss of trust within the organization.
12. Corruption
Abuse of power for personal gain, including bribery and misappropriation of resources, espe-
cially in public sector procurement.
Results in inflated prices, poor-quality goods or services, and undermines trust in public and
private institutions.
13. Bribes
Accepting money, goods, or services in exchange for influencing procurement decisions.
It's illegal and unethical, compromising fairness and leading to potential legal actions and reputa-
tional damage.
Each of these unethical practices has the potential to damage the integrity of the procurement
process, leading to poor business outcomes, legal consequences, and a loss of trust among
stakeholders
Purchasing and fraud management:
In the broadest sense, a fraud is an intentional deception made for personal gain or to damage
another individual. Fraud is a crime, and is also a civil law violation. Many hoaxes are
fraudulent, although those not made for personal gain are not technically frauds. Defrauding
people of money is presumably the most common type of fraud.
Purchasing is a function that is particularly vulnerable to fraud. Fraud is not necessary restricted
to those with the title purchasing officer but may involve anyone in direct contact with suppliers;
including engineers, works managers, sales and computer staff.

Examples of supplies-related fraud:

 Buyer/supplier collusion leading to approval for payment of fictitious charges.
 Presentation of false invoices-typically the offender will set up a fictitious company with
impressive stationery and invoice the purchaser for goods not supplied.
 Re-presentation of genuine invoices that have not been cancelled at the time the initial
cheque was signed.
 Abstraction of tenders or arranging for the lowest tender to come from a desired source.
 Omission of credit notes for goods returned to the supplier.
 Premature scrapping of assets in return for a ‘kickback’ from a scrap dealer.
 Computer-based frauds which take advantage of inadequate controls or limited under-
standing of information technology on the part of senior management.
Prevention of fraud:
The prevention of fraud in relation to supplies depends on sound internal control, internal and
external auditing and the detection of ‘give away’ signs. Control mechanisms of fraud
encompass:
 Ensuring a separation between recording and custodian duties
 Only specified employees should have the power to requisition goods and then only up to
an authorised limit which increases with the level of authority
 Goods inward should be received in specially designated areas.
 Invoices presented for payment, a sample should be examined on a random basis.
 Provision of external audits
 Job rotation
 Closer supervision.
 Separation of duties.
Measures to Curb Corruption in Procurement
To enhance accountability and transparency in procurement, several measures have been imple-
mented or can be taken. These include:
1. Competitive Bidding
Promoting fairness and transparency in procurement by allowing equal opportunities for suppli-
ers to bid on contracts.
Public notification of bidding opportunities, clear documentation on needs and processes, con-
tract terms, and criteria for selecting the winner ensures an open and transparent process where
all bids are fairly evaluated, reducing the chances of favoritism or corruption.
2. Declaration of Conflict-of-Interest Rules
Public officers must avoid conflicts between their personal interests and public duties. They are
required to declare personal interests and wealth status before taking office.
Penalties for non-disclosure, prohibition on receiving gifts from contractors, and enforcement of
strict conflict-of-interest rules.
3. Enforcement of Rules
Strict enforcement of procurement regulations and codes of conduct.
Ensures that public officials are held accountable and deters corruption by embedding ethics into
daily operations.
4. Public Participation
Encouraging the public’s involvement in the procurement process.
Enhances accountability by subjecting the procurement process to public scrutiny.
5. Procurement Sanctions on Bidders
Penalizing contractors involved in corrupt practices such as collusive tendering or bribery.
Exclusion from future bids, contract termination, fines, and imprisonment for individuals and
corporate entities involved in corruption.
6. Internal Control Mechanisms
Mandating firms bidding for government contracts to implement internal mechanisms to detect
and prevent corruption.Declaration forms confirming no corrupt activity, inclusion of internal
control mechanisms in annual reports.
7. Whistleblowing
Establishing policies that allow individuals to report corruption anonymously and provide pro-
tection for whistleblowers.
8. Training
Training public officers and contractors on the standards of conduct in procurement and the con-
sequences of unethical behavior.
Regular training sessions to ensure understanding of ethical standards, detection of corrupt prac-
tices, and enforcement mechanisms.
Causes of Unethical Practices and Behaviours
1. Setting a Bad Example: Ethical behavior starts at the top. Employees emulate their
leaders, and the most significant factor in ethical leadership is personal character.
Corporate leaders who employees view as demonstrating personal character are more
likely to be perceived as setting a strong tone, researchers say. If employees see the boss
knocking off early every day, they may do likewise.
2. Slippery Slope: Misconduct starts small, such as the exaggeration of a mileage report.
But the longer it goes unchecked, the worse the offenses become
3. Peer Influence: If everyone is doing it, it must be right. Or is it? What’s to stop someone
from padding their expense report when their co-workers do it but don’t get caught? Too
often people lapse into the bad behavior of others.
4. No Code of Ethics: Employees are more likely to do wrong if they don’t know what’s
right. Without a code of ethics, they may be unscrupulous. A code of ethics is a proactive
approach to addressing unethical behavior. It establishes an organization’s values and sets
boundaries for adhering to those values. Everyone is accountable.
5. Low salaries
6. Poor storage of pilferage materials
7. Fear of Reprisal-When explaining why they don’t report ethical misconduct that they witness,
people often say it is because they worry about the ramifications. They don’t want to damage
their career or incur the wrath of the offender.
8. Impact of Peer Influence-If everyone is doing it, it must be right. Or is it? What’s to stop
someone from padding their expense report when their co-workers do it but don’t get caught?
Too often people lapse into the bad behavior of others.
9. False Communications-False communications fall into various categories. They include falsifica-
tion of auditor ‘s or controller‘s report or any form of manipulation that does not tell the whole
truth.
10. Collusion-Collusion, especially with competitors, to fix prices, is an unfair business practice
today. This could be considered stealing from customers.
11. Gifts and Kickbacks-Some organizations do not allow their employees to receive gifts from cli-
ents during normal course of business. Those who do, generally provide guide lines on limita-
tions as to the amount an employee can receive as gift.
12. Conflict of Interest-Conflict of interest occurs when ones private interest interferes or appears
to interfere in any way with the interest of the organization
 Some examples of conflicts of interest are:
 Diverting from the organization for personal benefit, a business opportunity,
 Using the organization‘s assets for personal benefit,
 Accepting any valuable thing from the organization‘s customers or suppliers, and
 Having a financial interest in an organization‘s competitor

Adverse Effects of Unethical Practices on Project Procurement

1. Cost Overruns
o Unethical practices like bribery or bid rigging can lead to inflated contract costs, driving up
project expenses and wasting resources.
2. Delayed Project Completion
o Fraudulent actions such as accepting substandard materials or services can result in project de-
lays, impacting timelines and efficiency.
3. Compromised Quality
o Engaging in unethical practices can lead to poor-quality goods and services, affecting the overall
success and longevity of the project.
4. Legal and Financial Consequences
Unethical practices can expose the project and the organization to legal action, fines, and penal-
ties, ultimately harming its reputation and financial health.
5. Loss of Trust and Reputation
Corruption or unethical behavior erodes stakeholder confidence in the project and the organiza-
tion, leading to loss of future business and partnerships.
6. Increased Risk of Project Failure
Unethical behavior can lead to misallocation of resources, compromised project integrity, and
poor decision-making. This increases the risk of project failure, resulting in wasted resources and
the inability to meet project objectives.
7. Unfair Competition
When unethical practices such as favoritism or fraud are prevalent, honest and capable suppliers
may be excluded from the procurement process. This leads to a lack of competition, and the
project misses out on getting the best value for money and innovative solutions.
8. Wasted Resources
Unethical practices can lead to the misuse or misallocation of resources, such as materials, time,
and finances. This inefficiency contributes to the wastage of public funds or project investments,
reducing the overall effectiveness of the procurement process.
9. Negative Impact on Employee Morale
Witnessing or being involved in unethical behavior can lower morale among employees and pro-
curement staff. It can create a toxic work environment where individuals are less motivated to
perform their roles ethically and efficiently, further reducing project success
Measures to eradicate unethical behaviors
1. Create Policies and Practices: Organizations must research, develop, and document
policies and processes around defining, identifying, and reporting ethics violations. These
policies should be articulated in the employee handbook and protections should be put in
place for those who raise ethical issues.
2. Hire Right: Selecting quality people from day one can make a huge difference in the ethics of
your organization. Some organizations scour background checks, purchase screening tools, or
 use behavior-based interview questions, which may ask candidates to describe a situation when
they acted ethically even when it was against social or cultural norms.

3. Develop People's Understanding/educate- sensitization of staff to provide awareness

on ethical matters
4. Incent the Right Thing: Some in the education community are asking, "Do states and
school districts incent people to cheat or act unethically by giving more weight to certain
measures over others?" Before introducing a new measure in schools--or any other indus-
try-- leaders must consider if it encourages the type of actions that are valued by the orga-
nization. If there is a risk of impropriety, it is important to have a conversation around
what checks and balances will be put in place to make sure unwanted behaviors are han-
dled appropriately.
5. Put Controls in Place/e procurement- adopt e procurement in operations of the organi-
zation
6. Build a Culture of Transparency, Openness, and Communication: Cultural manage-
ment work is difficult. To ensure true success when it comes to organization ethics, peo-
ple must see and hear what is going on as well as feel comfortable to stand up and speak
out if they see something occur that is not right.
7. Leadership Must Walk the Talk: Leaders can talk about the importance of policies and
processes, incentives, communication, and openness all day, but if they turn around and
act unethically, it can be like throwing a large stone into the pond of ethics tranquility.
The same goes for promoting staff who have behaved unethically. It doesn't take long for
staff at all levels of an organization to recognize a leader who talks the talk, but doesn't
walk the walk when it comes to ethics. This can breed suspicion and destroy trust.
8. Punishing the culprits/taking administrative actions this involves punishing the of-
fenders and rewarding the diligent employees
9. Rotation of procurement staff _ in their roles/jobs to avoid building of empire jobs.

Ethical Codes
An ethical code is a set of principles and guidelines that define acceptable behavior and best
practices for professionals within a specific field or organization. In project procurement
management, these codes provide a framework for decision-making and establish standards for
integrity, fairness, and accountability.
Importance of Ethical Codes in Project Management
1. Promotes Integrity and Transparency
o Ethical codes set clear standards for conducting procurement processes, ensuring that all activi-
ties are performed with honesty and openness.
2. Guides Ethical Decision-Making
o Provides a benchmark for procurement professionals to make fair and ethical decisions, even in
complex situations, thus reducing the risk of malpractice.
3. Ensures Compliance with Laws and Regulations
o Ethical codes align with legal requirements, ensuring that all procurement activities adhere to the
law, which minimizes the risk of legal violations.
4. Builds Trust and Credibility
o Following ethical codes enhances trust among stakeholders, clients, and suppliers, contributing
to a positive project reputation and stronger relationships.
5. Prevents Corruption and Fraud
o Ethical codes serve as a deterrent to unethical behaviors such as bribery and favoritism by clearly
outlining unacceptable actions and the consequences of violations.
6. Supports Long-term Project Success
By fostering ethical behavior, project teams can avoid short-term temptations of unethical
practices and focus on long-term success and sustainability.
Kenya Anti-Corruption Commission (KACC)/ Ethics and Anti-Corruption Commission
(EACC) in project procurement
KACC stands for Kenya Anti-Corruption Commission. It was an independent body estab-
lished in 2003 under the Anti-Corruption and Economic Crimes Act (ACECA) to combat and
prevent corruption in Kenya. The KACC was responsible for investigating and prosecuting cor-
ruption-related offenses, promoting integrity, and educating the public about anti-corruption
measures.
In 2011, KACC was replaced by the Ethics and Anti-Corruption Commission (EACC) fol-
lowing the promulgation of the 2010 Kenyan Constitution and subsequent legislative changes
Role of Kenya Anti Corruptions Commission (KACC)/EACC in project procurement
1. Investigating Corruption, Economic Crimes, and Ethical Violations
o The EACC investigates cases of corruption, economic crimes, and violations of the codes of
ethics, particularly those outlined in the Anti-Corruption and Economic Crimes Act
(ACECA) and the Leadership and Integrity Act (LIA). This ensures that procurement pro-
cesses are free from fraudulent activities.
2. Developing and Enforcing Codes of Conduct and Ethics
o The EACC is responsible for creating and enforcing the Codes of Conduct and Ethics for
public officials involved in project procurement. This helps to maintain high standards of in-
tegrity and prevents unethical practices in procurement processes.
3. Promoting Best Practices on Integrity
o EACC works to promote best practices related to integrity and ethics in public procurement,
ensuring that procurement officers uphold professionalism and transparency.
4. Filing Recovery Proceedings, Including Forfeiture of Unexplained Assets
o EACC is empowered to file legal proceedings to recover assets or properties acquired
through corrupt means. In project procurement, this helps to ensure that public funds are not
misappropriated.
5. Recovering Public Property Acquired through Corruption
o The EACC recovers public assets that have been obtained through corrupt procurement activ-
ities, ensuring that resources are returned for proper use in public projects.
6. Conducting Mediation, Conciliation, and Negotiation
o The EACC plays a role in resolving disputes related to corruption and unethical practices in
procurement through mediation, conciliation, and negotiation, helping to maintain a fair pro-
curement process.
7. Promoting Standards and Practices of Integrity and Anti-Corruption
o EACC sets standards for integrity and ethical behavior in project procurement, helping to es-
tablish a transparent and accountable procurement process.
8. Educating and Creating Awareness about Corruption and Unethical Conduct
o The EACC educates public officers, contractors, and the general public on the dangers of
corruption and unethical practices in procurement, promoting a culture of integrity and ac-
countability.
9. Facilitating Investigations on Unethical Conduct
o EACC facilitates investigations into unethical conduct within project procurement, ensuring
that any wrongdoing is promptly identified and addressed.
10. Undertaking Preventive Measures Against Corruption and Unethical Practices
 The EACC implements preventive measures to curb corruption and unethical behavior, such
as audits, risk assessments, and the creation of control mechanisms in project procurement
management.
Challenges that EACC experience in dealing with unethical practices

 Political interference as many cases are politicized

 Lack of enough resources to undertake investigations on the unethical practices.
 Delays in prosecuting cases that have been forwarded to the director of public prosecu-
tion
 Corrupt KACC officers who are compromised to cover up some of the unethical
practices.
 Lack of cooperation by the organizations and individuals being investigated.
 Interference by the executive in some of the cases being handled by KACC