Perspective

By:

Joshua Luka

Fraud in the Nigerian public sector remains on the rise despite years of implementation of anti-corruption reforms and laws, leading to poor delivery of public goods and services to Nigerians and loss of public trust in successive governments.

Fraud is said to occur when a person or group of persons unlawfully obtains value or advantage from another person, group or organisation through intentional deception, falsehood or misinformation. When ghost workers are inserted in a payroll and monies are taken out for the benefit of living beings, payroll fraud has occurred. When public procurement processes are manipulated through deception, putting other bidders at a disadvantage to the advantage of a preferred bidder, public procurement fraud has occurred.

For fraud to occur, there must be opportunity, pressure and rationalisation (Cressey, 1953). Of the three factors, opportunity, created by weaknesses in internal control, poor governance and oversight, remains the most influential factor (Siregar et al., 2026).

Significant progress has been made in the combat against personnel cost fraud in Nigeria, as the digitalisation and centralisation of government payrolls under the Integrated Personnel and Payroll Information System (IPPIS) has significantly reduced payroll fraud (Osayor, 2025).

Public procurement fraud, however, is on the rise and now accounts for over 90% of public sector fraud in Nigeria, according to the Economic and Financial Crimes Commission (EFCC, 2025).

This calls for concerted efforts by all Nigerians to tackle the menace. Indeed, the success in curbing payroll fraud is largely attributable to the digitalisation and centralisation of payrolls rather than the reactive efforts of anti-corruption agencies. Fraud prevention is certainly better than responding to fraud after it has occurred. Public procurement fraud can thus be better tackled through reforms that target prevention rather than response to fraud, with the latter only complementing the former.

There are many lessons in public procurement that Nigeria may learn from Malaysia, an emerging economy like ours. Public procurement in Malaysia is primarily handled through centralised electronic management, multiple administrative checks and stringent corporate accountability laws. While Malaysia faces its own ongoing battle with systemic procurement leaks and cartels, its deeply institutionalised electronic infrastructure provides a clear, actionable blueprint for countries like Nigeria to drastically curb manual contract rigging.

Unlike Nigeria’s statutory approach via the Public Procurement Act (PPA) 2007, Malaysia’s federal procurement relies heavily on centralised administrative instruments managed by the Ministry of Finance (MOF).

The cornerstone of the Malaysian system is ePerolehan, a robust, mandatory electronic procurement application. It handles the entire procurement cycle online, from initial vendor registration and document downloads to bid submissions, catalogue ordering and final electronic payments. This effectively eliminates direct physical contact between contractors and procurement officers during tender windows, removing opportunities for cash-based bribery or manual document tampering.

Like Nigeria, Malaysia divides public spending into tightly regulated operational thresholds as follows to limit discretionary power:

• Direct Purchase: Up to RM50,000 (N17.5 million), allowed directly from registered vendors.
• Quotations: Between RM20,000 (N7 million) and RM200,000 (N70 million), requiring quick competitive quotes from multiple suppliers/contractors.
• Tenders: Anything exceeding RM200,000 (N70 million) must undergo a formal, public open tender process.

To prevent an individual from unilaterally fixing a bid, the evaluation process is intentionally divided among three distinct committees:

• Tender Opening Committee: Senior officials who open and log all incoming digital bids.
• Technical and Financial Committee: Experts who independently evaluate the specifications and scores without knowing the bidders’ financial connections.
• Agency Procurement Board (Lembaga Perolehan): Makes the final selection based purely on the structured scorecards from the previous committees.

Furthermore, any high-value tenders exceeding RM50 million (N17 billion) for supplies or RM100 million (N34 billion) for works are automatically escalated away from the agencies to the central Ministry of Finance for a final decision.

Under Section 17A of the Malaysian Anti-Corruption Commission (MACC) Act, commercial organisations are held strictly liable if a person associated with the company commits corruption to secure a public contract. This shifts the burden of proof onto the directors, forcing private corporations to implement rigorous internal anti-bribery policies or face massive fines and jail time.

Nigeria can leverage specific components of the Malaysian model to address its high rates of prearranged bidding fraud.

While Nigeria utilises the Nigeria Open Contracting Portal (NOCOPO) to publish historical data, its actual bidding remains highly manual, fragmented and vulnerable to paper-swapping. Nigeria must emulate Malaysia’s ePerolehan by enacting a policy where no public contract can be awarded unless it is processed end-to-end digitally. An online lockbox format ensures that no official can view or leak competing bids before the closing date.

In Nigeria, “contract splitting” is used to keep budgets low enough to bypass the Bureau of Public Procurement (BPP). Nigeria should adopt Malaysia’s hard financial thresholds. By automatically routing any contract over a specific threshold to a completely separate, centralised federal authority via automated software flags, the ability of local bureaucrats to hand-deliver bloated variations to prearranged winners is vastly reduced. The bid opening and bid evaluation committees should comprise independent officials, including representatives of the EFCC.

Nigeria’s anti-corruption frameworks primarily prosecute individuals. Nigeria should introduce statutory corporate liability laws modelled after Malaysia’s Section 17A. If an employee of a Nigerian firm attempts to bribe a procurement officer, the entire company must be legally barred from bidding, and its corporate directors should face direct criminal prosecution. This forces the private sector to police itself.

Malaysia maintains the MyProcurement Portal, which transparently publishes the names of successful bidders alongside the exact agreed price. Crucially, it provides a strict 10-day objection window for competing bidders to legally contest the decision if they suspect foul play. Nigeria should implement a similar public countdown clock on awards to allow verified bidders to halt suspicious contracts before funds are disbursed.

Other measures which are capable of preventing or minimising public procurement fraud in Nigeria and ensuring value for money for expenditure of public funds include the following:

(i) Prices of equipment, inputs and consumables are so often over-inflated by public officials in charge of the procurement process that even after parting with as much as 20% or more of the contract sum plus tax deductions of 12.5%, the pre-arranged bid winner still makes a margin. This means that the mark-up on cost must be over 50%, leaving less than 50% for the actual execution of the contract, thereby compromising value for money for public expenditure and eroding public trust in government.

This scheme may be thwarted by clearly specifying the mark-up on market prices allowable for government contracts and criminalising any violations. Furthermore, the National Bureau of Statistics should be empowered by law to maintain a database of market prices of equipment, inputs and consumables, which will form the baselines for mark-ups for government contracts. This discourages over-pricing, routes out kickbacks and ensures value for money for public expenditure.

(ii) Vague contracts and specifications are often advertised while preferred bidders are availed detailed scopes and secret codes to ensure that they are the only real bidders, cutting out any competitors. The preferred bidders submit uncompetitive bids to accommodate the interests of insiders, but because they are not in fair competition with other bidders, they win the bids.

The scheme is facilitated through vague specifications or the use of codes which are given only to the preferred bidders. This scheme may be thwarted by enforcing the digitalisation of all public procurements and implementation of e-procurement in all government agencies, as is the case in Malaysia. Furthermore, every procurement must have an identification code which must be publicly displayed to ensure that all bidders are bidding for the same job with the same job specification.

(iii) The issuance of No Objection by the Bureau of Public Procurement means that others cannot bid with the favoured company. This has become an easy way to stifle competition from other genuine contractors. This window has been abused, with many companies allegedly parting with large sums or percentages of the contracts in order to obtain No Objection, since this means that they will no longer be competing with other bidders.

This scheme may be thwarted by introducing strong oversight around the issuance of No Objection so that it is no longer at the discretion of the Bureau of Public Procurement alone, or better still, providing for accelerated procurement processes through e-procurement portals that shorten the process but ensure transparency and open and fair competition.

(iv) Contract splitting to beat procurement thresholds continues to be on the rise, even with the raising of approval thresholds. Variation of contract after award is another window that has been abused by many. If an awarded contract is no longer viable, it ought to be re-advertised rather than internally varying the price for the successful bidder.

This scheme may be thwarted by effective oversight by the Bureau of Public Procurement and Office of the Auditor-General for the Federation.

(v) Independent verification agents should henceforth be engaged by government to verify every capital project approved at the threshold of the Parastatals Tenders Board and above before payments. The independent verification certificate should become a mandatory requirement for processing payment.

(vi) Mandatory declaration of assets by all public officials handling key public procurement functions, especially those in the directorate cadre, should be enforced. Any asset found not declared or owned by proxy should be subjected to recovery proceedings under the Proceeds of Crime (Recovery and Management) Act 2022.

(vii) Lifestyle audits should be conducted regularly, using independent forensic investigators, on public officials charged with key public procurement responsibilities in order to unearth any red flags which could lead to recovery proceedings under POCA, where necessary.

Nigeria must be made a better nation by ensuring value for money for public procurements so as to stop our youths from running to other countries that effectively provide public goods and services to their citizenry through transparent and fraud-free public procurement.

References

Cressey, D. R. (1953). Other People’s Money: A Study in the Social Psychology of Embezzlement. Glencoe, IL: Free Press.

EFCC. (2025). The Economic and Financial Crimes Commission. Annual Report, 2025. EFCC Website: www.efcc.gov.ng.

Osayor, E. I. (2025). Impact of Integrated Financial Management Systems on Governance in Developing Economies. Malete Journal of Accounting and Finance, 6(2), 241-256.

PPA (2007). Public Procurement Act. Federal Government Printers. Federal Ministry of Information and National Orientation, Abuja, Nigeria.

Siregar, P., Kesuma, S. A., Muda, I., & Syafir, F. (2026). A Systematic Literature Review of Fraud Triangle Theory (2020-2025). Jurnal EMT KITA, 10(1), 504-511.

http://doi.org/10.35870/emt.V10i1.5818.

Dr Joshua Luka
Othman Yeob Abdullah Graduate School of Business, Universiti Utara Malaysia, 06010 UUM Sintok, Kedah, Malaysia.