Companies can become hyper-focused on anti-bribery compliance. It is easy to do – just look on the Internet, Twitter and Linked In. There are plenty of groups, hash tags, postings and discussions on anti-corruption issues.

This focus on corruption reflects the reality of enforcement. But when it comes to misuse of funds, there is a significant, and oftentimes ignored risk – procurement kickbacks. Believe it or not, contractors in high-risk countries (and elsewhere) want to secure contracts with multinational companies. There is a high value in securing such contracts and companies need to watch over the procurement process to ensure that contracts reflect cost-effective solutions.

Internal complaints and investigations often focus on alleged procurement fraud or conflicts of interest in the contracting process. These weaknesses in internal controls can reflect a broader lack of supervision of financial expenditures.

In focusing on this issue, companies often create silos – one for procurement and another for due diligence of third-party intermediaries. It is important to coordinate the two functions to make sure risks in each are mitigated.

The most effective way to reduce potential procurement fraud is to appoint a manager who is not susceptible to local influence and to segregate the procurement function to make sure that no one person can derail the analysis and selection of a supplier. An effective procurement process depends on a carefully mapped step-by-step process with full information on each potential supplier.

If a single locally-hired employee has responsibility for procurement decisions, a company is more than likely going to experience fraud. Contractors will pressure and influence the individual with kickbacks and other benefits to secure a contract. It happens all too often.

Companies in high-risk countries face a significant risk of procurement fraud and pay little attention to the problem. Instead, if they discover an issue with the procurement manager, they fire the person and rationalize the problem by pointing to the deficiencies with the specific manager.

The failure to manage this risk is part of bigger issue – the failure of the company to design its internal controls to minimize operational risks. If a procurement manager can get away with fraud without being detected, it is not too big a leap to expect that sales managers can probably get access to money to pay bribes.

Apart from bribery and procurement fraud,    a weakness in financial controls probably reflects in risks of individual theft of company money. Companies have reported increases in theft and embezzlement risks, and that is not surprising in today’s economic environment. Any weakness in internal controls means that bribery, procurement fraud and theft risks are greater.

Bribery risks, however, include a serious risk of government enforcement and all the negative and collateral consequences. Given that significant risk, it is important to focus on bribery risks. Procurement fraud and theft/embezzlement are less significant risks to the company.

In focusing on internal controls to mitigate bribery risks, it is easy to improve procurement and theft/embezzlement controls, and these issues should be addressed as part of a company’s overall internal controls.