Procurement's Blind Spot: Inside Intel’s Million-Dollar Fraud Scheme
How overlooked weaknesses in services procurement led to ongoing fraud—and why tech alone isn't enough
In May 2025, Intel uncovered an internal fraud scheme involving former employee Natalia Avtsin and supplier Yafim Tsibolevsky, who allegedly conspired to steal nearly a million dollars by exploiting gaps in services procurement oversight. This case highlights glaring vulnerabilities in procurement processes, particularly when human oversight is overshadowed by reliance on automated systems.
Exploiting the Loopholes
The alleged fraud was deceptively simple:
Avtsin, overseeing procurement at Intel Israel, regularly requested quotes for hardware components from Tsibolevsky’s company, Energy Electronics 2000.
Once her manager approved these quotes, Avtsin changed the purchase category from "components" to "services," bypassing stricter verification processes.
Tsibolevsky could then submit invoices up to Avtsin's self-approval limit ($20,000), enabling repeated payments without detection.
According to Intel, transactions for components require verification like delivery notes, but service invoices do not—allowing the scheme to persist undetected for over a year, accumulating $842,000 through approximately 42 transactions.
The Human Factor: How Did Intel Miss This?
Intel’s oversight was minimal, largely because procurement roles allowed both buying and invoice approval responsibilities. As Christopher Ayscough, Chief Procurement Officer, emphasized, this fundamental lack of separation of duties is a critical flaw: "Good role and system design can prevent these simple abuses."
Mark Trowbridge, a seasoned procurement consultant, noted that corporate theft remains rampant, often facilitated by automated systems lacking stringent checks. “Automation sometimes makes internal fraud easier,” he warns, highlighting the need for ongoing, proactive human vigilance.
Jon W. Hansen, a strategic procurement advisor, underscored another angle: excessive reliance on technology. He observed, "Intel made the mistake of leading with technology instead of adopting a human-led model."
The Bigger Picture: Services Spend as a Blind Spot
This incident emphasizes how services spend often falls under less scrutiny compared to goods. Rose Stanbridge, a procurement expert, noted, "Services procurement often flies under the radar when it comes to risk and accountability." Unlike tangible goods, services rarely trigger rigorous verification, making them vulnerable to abuse.
Ben Laker, specializing in services procurement, echoed this point, "It just shows how easily services spend slips through the cracks without proper controls."
AI and Procurement Oversight
Ironically, the fraud at Intel occurred precisely when investors were expecting tighter controls under new leadership focused on leveraging AI. Matt Miller, CEO of a strategic sourcing firm, pointed out, "AI can spot patterns, but humans must still direct and interpret results." His observation aligns with recent studies indicating AI improves performance only when coupled with active human oversight.
Intel's discovery of the scheme, though embarrassing initially, signals a potential turning point. The prompt detection after Avtsin’s departure suggests new leadership is taking proactive steps toward improved oversight and control.
Lessons Learned: Preventing Procurement Fraud
The Intel case serves as a powerful lesson in procurement oversight:
Separation of Duties: Clearly defined roles are essential to prevent internal collusion.
Enhanced Verification for Services: Implementing robust checks for services procurement can close gaps exploited by fraudsters.
Balanced Human-AI Approach: Technology aids detection, but human oversight ensures anomalies aren't overlooked.
As procurement expert Eric Georges advised, regular internal and third-party reviews can further strengthen safeguards and deter exploitation attempts.
Ultimately, Intel's experience reinforces that while technology revolutionizes procurement, vigilance, good governance, and thoughtful process design remain paramount. Without these, even the most advanced systems remain vulnerable.
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