Signs a parts buyer is taking kickbacks
How a dealership or workshop can spot a parts buyer taking kickbacks from a supplier, and which quotation and order records make it harder to hide.
By Achekam · · 4 min read · For Automotive businesses in South Africa, Nigeria, Kenya
A parts department spends a large share of a dealership's or workshop's money, often through one or two people who know the suppliers well. That knowledge is valuable. It is also exactly what makes a kickback scheme possible: a buyer steers orders to a supplier, and the supplier quietly pays the buyer for the favour.
Kickbacks are hard to see because nothing looks wrong on any single invoice. The parts arrive, the prices are within reason, the supplier is a familiar name. The cost shows up elsewhere, in margins that slowly erode, comebacks that rise, and suppliers who never seem to lose. This article describes the signs, and the purchasing records that make a scheme harder to run.
How the bribe gets paid back
ACCA identifies three types of corruption fraud: conflicts of interest, bribery and extortion. ACCA describes bribery as offering money or something else of value to influence a situation. A supplier kickback to a parts buyer is bribery in that sense.
The supplier is not giving money away. It recovers the kickback from the business. The OECD, writing about corruption in public procurement, states that those paying bribes seek to recover their money by inflating prices, billing for work not performed, failing to meet contract standards, reducing quality or using inferior materials. The OECD's brochure on preventing corruption in public procurement describes these risks at each stage of buying, and the same mechanics apply to a private parts department.
In a workshop, that translates into a few recognisable patterns:
- Inflated prices. One supplier's prices drift above the market, a little at a time, and nobody else is asked to quote.
- Short deliveries. Invoices for quantities that never quite arrive, or for parts that were never fitted.
- Lower quality. Pattern parts invoiced at original-part prices, or parts that fail early and come back as comebacks.
Conflicts of interest and the missing second check
The OECD lists conflict of interest in bid evaluation, arising from familiarity with bidders, gifts or promises of future employment, as a contract-award risk, together with the absence of an effective "four eyes" principle, where a second person checks the decision.
In a parts department, the warning signs are human as well as financial:
- The buyer is unusually close to one supplier's representative, and that supplier's gifts or hospitality are never declared.
- The buyer resists anyone else dealing with that supplier, or covering for them on leave.
- The same person chooses the supplier, places the order and signs for the delivery.
- A relative or former colleague of the buyer works for, or owns, the supplier.
The OECD also lists technical specifications tailored for a specific company, and selection criteria that are not objectively defined in advance, as integrity risks. In parts buying, that looks like orders specifying a brand or part number only one supplier can provide, when equivalent parts are available elsewhere.
Reading the quotations
The quotations behind an order are where steering shows. Ask these questions of a sample of recent orders:
- Were competing quotations obtained at all?
- Who was asked to quote, and were they genuine competitors?
- Did the same supplier win nearly every time?
- Do the losing quotes look real, or do they seem prepared to lose?
- Did the winning supplier's price change after it was chosen?
A pattern of the same supplier winning, from a small circle of the same competitors, is worth a closer look even if every individual decision has an explanation.
The written reason when the cheapest quote loses
There are good reasons not to buy the cheapest part: quality, availability, warranty support. But each of those reasons should be stated when the decision is made, not invented afterwards.
In Achekam, supplier quotations are captured against a requisition and one is selected. Choosing a quotation that is not the cheapest needs a written reason, and that reason is kept. A quotation can also be disqualified with a reason. Over time, those reasons become a record that can be reviewed: if the same buyer keeps choosing the same more expensive supplier for "better availability", the owner can test whether availability was actually better.
A purchase order is then raised from the selected quotation of an approved requisition. The person who raised the order cannot approve it, and an approved order can be cancelled only with a reason. That builds a second pair of eyes into each order, which is the "four eyes" check the OECD describes.
What the integrity review flags
Achekam offers a procurement integrity review, sold as its own add-on. It raises questions about warning patterns such as competing quotations that share contact or bank details, or a supplier paid into an employee's bank account. Those are classic signs that the "competition" was not real, or that the supplier and the employee are closer than they should be.
The review raises questions; it does not decide that anyone is guilty. Every flag needs a person to look at it and either explain it or escalate it. One limit to know: its check for purchases split to stay under an approval threshold does nothing until a threshold is set, and the app cannot set one, so that particular test does not run today.
What the owner can do this month
- Pick a supplier that receives a large share of parts spend, and get fresh quotes for a sample of its regular parts.
- Read the written reasons on recent non-cheapest selections.
- Check that the person who raises orders is not also approving them.
- Compare comeback rates on parts from different suppliers.
- Ask staff to declare gifts and hospitality from suppliers, and keep the register.
For a wider view of fraud by employees, see occupational fraud schemes; for checking the cost of parts bought from abroad, read costing imported parts.
A parts buyer who knows every quotation will be read is a parts buyer with very little room to steer.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
