Falling Through the Cracks: Eliminating opportunities for fraud and corruption in local government

Monday, 28 September 2026

Most fraud and corruption in local government does not result from a single bad actor with a grand scheme. It results from ordinary gaps in everyday processes, exploited over time by someone who knows where the gaps are. The good news is that the gaps are well documented. The harder truth is that closing them requires sustained discipline across procurement, contract management and project oversight.

What the Record Shows

The NSW Independent Commission Against Corruption (ICAC) has investigated a long line of local government corruption matters, and the patterns are consistent. In Operation Jarek in 2012, the ICAC found that 22 employees or former employees of 14 NSW councils engaged in corrupt conduct, accepting gifts from holidays to electronics in exchange for favouring suppliers, and in some cases facilitating false invoices.

More recently in 2024, the ICAC found that a former Inner West Council senior project engineer engaged in corrupt conduct that resulted in contracts totalling more than $1 million being awarded to businesses with which he had undisclosed associations. As the ICAC reported, control deficiencies at the Council included poor enforcement of procurement rules, deficiencies in managing building projects, and poor conflicts of interest oversight.

In Operation Mantis in 2024, a former Canterbury-Bankstown Council manager was found to have corruptly received about $208,000 in benefits from a close friend whose business reaped more than $4.5 million in gross profit. The pattern across these cases is similar: a relationship, a discretion, an absence of effective oversight, and a long enough time horizon for the conduct to take root. Mandatory referrals of suspected corrupt conduct by agency heads under section 11 of the ICAC Act 1988 (NSW) have increased by 80 per cent over six years, from 728 in 2018-19 to 1,311 in 2024-25, according to the NSW Government.

Where the Cracks Usually Are

In its publication Corruption Risks in NSW Government Procurement, ICAC identifies three pillars of corruption control: structures, process, and people. Predictable cracks recur within each.

Low-value procurement below tender thresholds. ICAC has been explicit that significant corruption occurs in low-value procurement that falls under tender requirements. While the cumulative total may not be material to the council, it is very material to the person extracting it. Splitting work into multiple low-value engagements is a classic technique.

Direct negotiation and sole-sourcing. Where competitive tendering is bypassed, the compensating controls must be stronger, not weaker. Without them, direct negotiations and sole-source decisions become an opportunity for exploitation.

Variations and scope changes. A contract awarded competitively can be quietly transformed through unmonitored variations. The original tender becomes irrelevant once enough scope has been added outside its original boundaries.

Undisclosed conflicts of interest. Almost every ICAC case involves an undisclosed association: a friend, a former colleague, a spouse, a side business. In instances where disclosures are made,  conflict register that nobody reads is not a control.

Inadequate supplier due diligence. ICAC has published guidance to help agencies probe supplier integrity, including techniques such as company register checks, internet archive searches and reverse image searches. These practices should be standard toolkit essentials.

Practical Controls that Work Mostly

This being said, there is no silver bullet. The councils with the best track record use layered, mutually reinforcing controls.

• Segregation of duties across the procurement cycle. The person who specifies the requirement should not also select the supplier, approve the invoice and certify the work. Where small teams make full segregation impractical, independent review of high-risk transactions is essential.
• Active conflicts management. Declarations should be tested, not simply collected. Cross-checking against company registers, LinkedIn and the supplier list is now standard practice.
• Threshold-based escalation on variations. Variations beyond a defined percentage should trigger automatic review by an independent party. The discipline matters more than the precise threshold.
• Data analytics on procurement and payments. Patterns such as multiple invoices falling just below approval thresholds, or rapid growth in spend with a single supplier, are easily detectable with basic analytics.
• A protected disclosures regime that people trust. The most powerful control is a culture in which staff feel safe to raise concerns, which requires visible leadership and consistent handling of disclosures over time.

The Capability Question 

Most procurement-related corruption is detectable. What is often missing is the vigilance and capability to detect it. Procurement and contract management are professional disciplines with their own bodies of knowledge, ethics and tradecraft. Investment in training and continuing professional development across the council’s procurement and contracting workforce is itself a corruption control. 

Closing the Cracks

No council will eliminate corruption risk entirely. The aim is to make corruption hard, slow and detectable, so that the calculus for any potential bad actor is unattractive. Strong processes, capable people and visible accountability are the three essential ingredients. The frameworks and guidance are available; the work is now in the application.

About the Author

Paul Vorbach is the Managing Director of AcademyGlobal, a Sydney-based capability development firm established in 2004 and the CIPS Centre of Excellence for ANZ. Since 2005, Paul has trained contract management, procurement and supply chain professionals across over twenty centuries in five continents. He is Vice President of the Institute of Strategic Risk Management (ISRM) ANZ, Treasurer of the Society for Risk Analysis (SRA) ANZ, and Adjunct Faculty at the Australian Graduate School of Management (AGSM) at the University of New South Wales.

AcademyGlobal partners with public sector, private sector, and not-for-profit organisations to build the capability that underpins sustainable delivery performance, and is the Chartered Institute of Procurement and Supply (CIPS) Centre of Excellence for Australia, New Zealand and Asia.