Can security vetting be extended to include the detection of financial misconduct?

Abstract

An analysis of the security vetting files of 19 employees within a South African National Department ("the researched department"), who had been found guilty of financial misconduct in the last five years, uncovered that existing security vetting processes did not detect the financial misconduct of which these employees have been found guilty. This research sets out to establish whether security vetting can be extended to include the detection of financial misconduct within said department and if so, how. Moreover, if security vetting can indeed be so extended, can it possibly enhance the management of fraud risk across all South African public sector departments. Qualitative interviews were conducted with 27 employees, who are key to fraud risk management and security vetting within the researched department. During the interviews, the following 5 themes emerged, were probed and are reported on: (1) the reasons why employees commit financial misconduct and (2) why it is not detected by the security vetting process; (3) the potential alignment of the security vetting process to facilitate the detection of financial misconduct; (4) the following through on security vetting findings, and (5) particularly sharing these findings with 1 the internal audit and risk management functions within state departments. The research established, firstly, that security vetting can indeed be extended to include the detection of financial misconduct within the researched department, and secondly, that it can enhance the management of fraud risk across all South African public sector departments, given the specific mandate of the State Security Agency ("SSA") and the national security vetting strategy.

Understanding the Micro-Foundations of Administrative Corruption in the Public Sector: Findings from a Systematic Literature Review

“…This idea also translates to the dysfunctional design of promotion systems. Perceived unfairness here also strengthens self-serving rationalization for corrupt behavior (Burns and X. Wang 2010;Tambulasi 2009), particularly if job security is low and if civil servants lack satisfying career prospects in rigid (Kühn and Nieman 2017;Oliveros and Schuster 2018) and competitive systems (Tambulasi 2009). This effect relates to Witnessing colleagues' continuously abuse of discretion can also encourage corrupt behavior in civil servants, particularly if integrity violations are inconsequential or the risk of detection is lowered by ineffective control and legal persecution (Closser 2020;Bellé and Cantarelli 2019;Nuswantara and Maulidi 2021;Meyer-Sahling and Mikkelsen 2016).…”

“…Procedural transparency reduces corruption (D. Kaufmann, Mehrez, and Gurgur 2019; Kühn and Nieman 2017). Transparency functions as a necessary condition of the preventive effect of installing independent bureaucratic or civic oversight on public employees' moral hazard (Parrado, Dahlström, and Lapuente 2018;Knox and Janenova 2019).…”

“…followers' behavior becomes a central predictor of individuals' likelihood of engaging in administrative corruption(Nuswantara and Maulidi 2021). While ethical leadership reduces favoritism and bribery(Asencio 2019;Silitonga et al 2019) but does not reliably affect corruption intent(Bellé and Cantarelli 2017), poor ethical role modeling and lack of moral incentives increases corruption in followers(Pelletier and Bligh 2008;Kühn and Nieman 2017;Bellé and Cantarelli 2019;Yeboah-Assiamah et al 2016; Burns and X. Wang 2010), particularly if leaders are charismatic and followers' identification with their leaders is strong(Miao et al 2013;Voliotis 2011). This is particularly problematic in cultures in which norms demand unquestioning respect for hierarchical relationship structures and the elderly, linking seniority with authority and dysfunctional organizational behaviors(Kumasey and Hossain 2020;Porter and Graycar 2016), policy confusion(Evans 2016), and accepting higher bribes, particularly for senior civil servants with high status (DeGraaf and Huberts 2008;Aidt, Hillman, and Qijun 2020).These agent-to-agent effects are aggravated by social group effects, which are strong promoters of administrative corruption in the public sector, particularly regarding grey and black forms of corruption(Pertiwi 2020;Pope 2017;De Graaf and Huberts 2008;Ashkanasy, Falkus, and Callan 2000;Silitonga et al 2019;Harari et al 2017;Rose and Peiffer 2016).Corruption relies on dynamic relationship networks (DeGraaf and Huberts 2008;Davis 2004;Hodson et al 2013) based on trust and individuals' psychological need to positively relate to others(Neveu and Kakavand 2019; Y. Zhang et al 2019; Y. Xu et al 2018;De Graaf and Huberts 2008…”

“…. Particularly, lack of performance oversight by supervisors(Kühn and Nieman 2017;Nkyabonaki 2019;Porter and Graycar 2016;Bellé and Cantarelli 2019;Silitonga et al 2019;Parrado, Dahlström, and Lapuente 2018), independent agents, and third parties both from within the bureaucracy(Parrado, Dahlström, and Lapuente 2018) and from civic society(Bozeman, Molina, and W. Kaufmann 2018) is associated with moral hazard because it hinders persecution(Fleming 2020). Ineffective sanctioning of corrupt behavior(Silitonga et al 2019), reduces the tangible and mental burdens of engaging in corruption and increases its attractiveness.…”

“…the associated stress afforded by insecure and unsatisfactory working conditions, moderating individuals' capacity to translate their high ethical motives into ethical behavior(Bellé and Cantarelli 2019;Ripoll and Breaugh 2019; Y. Zhang et al 2019;Konkipudi and Jacob 2017;Kühn and Nieman 2017). Indeed, research highlights that white and grey forms of corruption, e.g., bureaucratic rule breaking, is a common stress coping mechanism for overworked civil servants(Konkipudi and Jacob 2017;Kühn and Nieman 2017; Y. Zhang et al 2019), making stress and dissatisfaction important moderators of the preventive effect of behavioral beliefs on corruptibility. (7) Feedback & learning effects.…”