Anti-Fraud
and
Corruption
Policy
Internal Audit Division
January 2009
Anti-fraud and Corruption Policy
Contents
Page
1.
Introduction
1
2.
Our Written Rules
2
3.
Expected
Behaviour
2
4.
Preventing
Fraud
and
Corruption
3
5.
Whistleblowing
4
6.
Detecting and Investigating Fraud and Corruption
5
7.
Suspicions
of
Money
Laundering 6
8.
Training
7
9.
Conclusion
7
Appendix
1:
Fraud
Response
Plan
8
Appendix 2: The Seven Principles of Public Life
13
Anti-Fraud and Corruption Policy 1. Introduction
1.1 We employ approximately 8,500 staff and have gross expenditure in
the region of £935 million. As with other large organisations, the size
and nature of our services puts us at risk of loss due to fraud and
corruption both from within the council and outside it.
1.2
Camden adopted its approach to dealing with fraud and corruption
in 1999. This has contributed to a reduction in and detection of a
large number of frauds and irregularity. As a result Camden has
achieved significant savings and recovery of funds which
contributed to Camden achieving a ‘4’ Star rating and reputation for
sound financial control.
1.3
We are committed to making sure that the opportunity for fraud and
corruption is reduced to the lowest possible risk. Where there is the
possibility of fraud, corruption and other problems, we will deal with it
in a firm and controlled manner.
1.4 An important part of this approach is an established anti-fraud and
corruption strategy, which we use to advise and guide Members and
staff on our approach to the serious issues of fraud and corruption.
This document provides an overview of our approach in this matter
and includes a 'Fraud Response Plan' which provides more detailed
guidance on how to deal with fraud and corruption.
1.5 The main message is that we expect all Members, employees and
workers (e.g. volunteers, consultants, agency staff, contractors) to be
fair and honest, and to give us any help, information and support we
need to deal with fraud and corruption.
1.6
The policy set out in this document covers the following areas:
Our written rules
Expected behaviour
Preventing fraud and corruption
Detecting and investigating fraud and corruption
Training
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2.
Our written rules
2.1 We have a number of procedures and rules to make sure that our
financial, working and organisational procedures are properly
controlled. These are an important part of our internal control
process, and it is important that all members and staff know about
them.
2.2
The most important of these are as follows.
Constitution
Standing Orders
Financial Standing Orders
Financial Regulations
Officer Code of Conduct
Member Code of Conduct
IT Code of Conduct
National Code of Local Government Conduct
Money Laundering Policy
Whistle blowing Guidelines
2.3 Individual departments have also introduced their own measures,
which are designed to control their activities. Examples include
schemes of delegation, accounting control procedures and
procedural/operational manuals.
2.4 Managers must make sure that all staff have access to these rules
and regulations and that staff receive suitable training.
2.5 Members and staff must make sure that they read and understand
the rules and regulations that apply to them, and act in line with
them. (Staff in this context relates to direct employees as well as
other ‘workers’ e.g. volunteers, agency and contract staff, etc)
2.6
If anyone covered by this policy breaks these rules and regulations
the Council may take formal action against them. This could include
formal disciplinary action or legal action.
3. Expected
behaviour
3.1 We expect all people and organisations that are in any way
associated with us to be honest and fair in their dealings with us and
our clients and customers. We expect our Members and employees
to lead by example in these matters.
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3.2 Our Code of Conduct sets out an approach to work that is both
honest and fair. Employees must act in line with the code at all times.
3.3 Our employees have an important part to play in combating fraud
and corruption and we will encourage our staff to warn us and
provide information if they suspect a case of fraud. (for the purposes
of this policy this is an al encompassing word which wil also be taken
to include, financial irregularity/misappropriated, corruption, etc).
Guidance on reporting such matters is available in Appendix 1.
3.4 We will deal with all referrals fairly and confidentially and as far as
possible we will not reveal the names of the people who reported the
matter to us. However, confidentiality cannot be guaranteed, e.g. if
an investigation leads to a prosecution and the person who reported
the matter is required to give evidence in court. Section 6 below and
the Council’s Fraud Response Plan attached
(Appendix 1) gives
more advice on this issue for both managers and staff.
3.5
The Nolan Committee sets out the seven guiding principles that apply
to people who serve the public. We have developed our working
behaviour around these principles, attached as
Appendix 2.
3.6
We expect our managers to deal firmly and quickly with anyone who
is responsible for fraud or corruption. We may refer matters to the
police if we suspect any criminal activity has taken place.
4.
Preventing fraud and corruption
4.1 We believe that if we are to beat fraud and corruption, we must
prevent it from happening in the first place. It is essential that we
have clear rules and procedures, within which Members, employees,
consultants and contractors can work. These include the main
corporate rules, which are set out in Section 2.2 above.
4.2 We will regularly review and update our written rules.
4.3
Managers must make sure that suitable levels of internal checking
are included in working procedures, particularly financial procedures.
It is important that duties are organised so that no one person can
carry out a complete transaction without some form of checking
process being built into the system.
4.4 Managers are responsible for ensuring that pre-employment checks
appropriate to the nature of the post are carried out. These may
include checks on: identity, qualifications, previous employment,
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permission to work in the UK, credit status and CRB'. This applies to
both temporary and permanent staff.
4.5 We are committed to working and co-operating with other
organisations to prevent organised fraud and corruption. Wherever
possible, we will be prepared to help and exchange information with
other councils and organisations to deal with fraud.
4.6 This kind of work needs to be tightly controlled particularly in relation
to data protection issues. The Internal Audit Division wil work within
the rules of the Data Protection Act (DPA) when providing help and
exchanges of information.
4.7 We have confidential facilities available for people to give us
information that may prevent fraud and corruption. These include
telephone hotlines, which members of the public can use to give us
information about specific services.
5. Whistleblowing
5.1 The decision to report a concern can be a difficult one to make. If
what you are saying is true, you should have nothing to fear because
you will be doing a duty to the public and to the organisation.
5.2 Camden will not tolerate any harassment or victimisation (including
informal pressures) and will take appropriate action to protect you
when you raise a concern in good faith. Any investigation into
allegations of potential malpractice will not influence or be
influenced by any disciplinary, capability, redeployment or
redundancy procedures that already affect you.
5.3 We maintain a ‘whistleblowers’ hotline for staff. The hotline is
managed by an independent external organisation ’Expolink’ to
provide staff with a confidential ‘protected’ means of reporting
suspicious activity. You can contact Expolink on
0800 374199.
5.4 Details of ‘hotline’ and whistleblowing facilities are widely published
to Members, staff and the public and all information we receive in
this way is investigated and dealt with.
5.5 Concerns that are expressed anonymously will be considered
however factors taken into account when deciding on appropriate
investigation action would include: -
• The seriousness of the issues raised
• The credibility of the concern
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• The likelihood of confirming the allegation from attributable
sources
5.6
If you make an al egation in good faith, but it is not confirmed by the
investigations, no action will be taken against you. However, if during
the investigation it is found that you made an allegation frivolously,
maliciously or for personal gain, disciplinary action may be taken
against you.
5.7 Further information regarding malicious/frivolous allegations and
victimisation of a whistleblower is available in the Council’s
Disciplinary Policy.
6.
Detecting and investigating fraud and corruption
6.1
This section in conjunction with our Fraud Response Plan
(Appendix
1).
6.2 Under our Code of Conduct and Financial Regulations employees
must report any suspected cases of fraud and corruption to the
appropriate manager, or, if necessary, directly to the Head of
Internal Audit & Investigations. Reporting cases in this way is essential
to the Anti-Fraud and Corruption Strategy and makes sure that:
Suspected cases of fraud and corruption are investigated
properly;
The fraud response plan is carried out properly;
There is a standard process for dealing with all suspected cases
of fraud/corruption and money laundering;
There is a corporate process for dealing with surveillance
activity; and
Individuals and the Council’s interests are protected.
6.3 The Head of Internal Audit & Investigations wil work with managers
and where appropriate the Chief Executive to decide on the type
and course of the investigation. This will include referring cases to the
police where necessary. We will press for prosecution of offenders.
6.4 If we refer cases to the police, we may also take action under the
Council’s Disciplinary Policy & Procedure although the Head of
Internal Audit & Investigations wil advise in these cases.
6.5
Should surveillance be considered necessary during the course of an
investigation this must be conducted in line with the Regulation of
Investigatory Powers Act 2000 (RIPA) and the Council’s corporate
policy which is available on the intranet. Failure to follow this policy
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could have severe consequences for the Council and only officers
trained in this specialist area of investigations should carry out this
role. The Head of Internal Audit and Investigations is responsible for
maintaining the Council’s corporate system regarding RIPA
authorisations.
6.6 We will take all steps available to us to recover any monies
misappropriated from the Council.
6.7 We will communicate the outcomes of our investigations via internal
newsletters and in the press if appropriate.
6.8 The External Auditor also has powers to investigate fraud and
corruption.
7.
Suspicions of Money Laundering
7.1 This section should be read in conjunction with the Council’s Money
Laundering Policy.
7.2
All employees have a clear obligation under the Terrorism Act 2000,
the Proceeds of Crime Act 2002 (POCA) and the Money Laundering
Regulations 2003 to report suspicions of money laundering and there
can be severe penalties for individuals who fail to act in accordance
with the legislation.
7.3 Employees must report any suspicions of money laundering to the
Money Laundering Reporting Officer (MLRO). Reporting suspicions in
this way is essential to ensure that:
Suspected instances of money laundering are investigated
properly
There is a standard process for dealing with suspected cases of
money laundering
Individuals and the Council’s interests are protected
7.4 The MLRO will ensure that legislative requirements for investigating
and reporting suspicions of money laundering are followed.
7.5
It is essential that employees do not do anything that could result in
the suspect being alerted (known as ‘tipping off’) to the fact there is
a suspicion regarding their activity or that the matter has been
reported.
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8. Training
8.1 We understand that the key to introducing a successful anti-fraud
culture and making sure it continues to apply depends on
programmed training and the way all our employees respond.
8.2
We support the principle of providing training for our employees who
are involved in, or managing, internal control systems, to make sure
that their responsibilities and duties are regularly reviewed and
reinforced.
8.3
We are also committed to training and developing our staff who are
involved in investigating fraud and corruption, and we will provide
suitable training.
9. Conclusion
9.1 We are committed to tackling fraud and corruption whenever it
happens. Our response will be effective and organised and will rely
on the principles included in this document.
9.2 This policy supersedes the Anti-fraud and Corruption Strategy
published in July 1999 and will take immediate effect. We wil
continue to review our rules and procedures and will make sure that
this document is regularly reviewed to ensure it remains effective.
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Appendix 1
London Borough of Camden
Fraud
Response Plan
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1. Introduction
1.1
It is important that we do all we can to prevent and detect fraud to
make sure that we can provide services to our clients honestly and
efficiently.
1.2 Our Anti-Fraud and Corruption Strategy document sets out the
principles we are committed to in relation to preventing, reporting,
detecting and managing fraud/corruption and money laundering.
1.3
The Audit Commission has produced guidelines, which tell employees
and managers what they must do if they suspect fraud/corruption
and money laundering. These guidelines have been incorporated
into our own fraud response plan.
2. Definitions
Fraud:
The Fraud Act 2006 created an offence of fraud which can be
committed in three separate ways: -
(i)
by false representation
A fraud will be committed if a person dishonestly makes a false
representation to another and when doing so intends to make
a gain or cause loss (or a risk of loss) to another.
(ii)
by failing to disclose information
A fraud will be committed if a person dishonestly fails to
disclose information to another where there is a legal
obligation to do so.
(iii)
by abuse of position
A person will commit fraud by abuse of position if: he occupies
a position in which he is expected to safeguard, or not act
against, the financial interests of another person; he dishonestly
abuses that position; and in doing so intends to make a gain or
cause loss.
Corruption:
“The offering, giving, soliciting or acceptance of an inducement or
reward, which may influence the action of any person”.
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Money Laundering:
As defined in the Proceeds of Crime Act 2002 (POCA):
“Concealing, disguising, converting, transferring criminal property or
removing it from the UK;
Entering into or becoming concerned in an arrangement which you
know or should reasonably suspect facilitates the acquisition,
retention, use or control of criminal property by or on behalf of
another person; and
Acquiring, using or possessing criminal property.”
3.
Procedures for reporting suspected fraud and corruption
3.1 We rely on our staff to help us to prevent and detect fraud and
corruption or suspicions of money laundering. It is often members of
staff who are in a position to spot any possible cases of
fraud/corruption and money laundering at an early stage.
3.2
We require staff to tell us if they suspect fraud/corruption and money
laundering. Paragraph 32.1 of the Financial Regulations says:
“If any employee of the Council knows of or suspects any losses or
irregularity involving staff, cash, assets or other financial matter, they
must inform the Head of Internal Audit & Investigations immediately”.
3.3
We have specific reporting lines for fraud. You should first report the
matter to your line manager. If this is not appropriate, you should
inform the Head of Internal Audit & Investigations.
3.4 We also have a ‘whistleblowers’ telephone hotline, run for us by an
independent organisation, so the people who call can be protected
and remain anonymous. You can phone the whistleblower’s hotline
if you have information about a suspected case of fraud, but you do
not want to follow the normal reporting procedures.
3.5 The action that you take when you first find out about a suspected
case of fraud or money laundering might be vital to the success of
any investigation that follows, so it is important that your actions are
in line with the information given in this document.
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4.
Action by employees
4.1
If you suspect fraud, corruption or money laundering anywhere within
the council, you should do the following:
(i) Write down your concerns immediately. Make a note of all
relevant details, such as what was said in phone or other
conversations, the date, the time and the names of anyone
involved.
(i )
In cases of suspect fraud or corruption, report the matter
immediately to your line manager, or the Head of Internal
Audit & Investigations. Give that officer any notes you have
made or any evidence you have gathered. Don’t tell anyone
else about your suspicions.
(iii)
In cases of suspected money laundering, immediately advise
the Head of Internal Audit & Investigations who is the Council’s
designated Money Laundering Reporting Officer (MLRO).
(iv) Help Internal Audit or authorised organisations in any
investigation.
4.3 Under no circumstances should you try to carry out an investigation
yourself without first consulting the Head of Internal Audit and
Investigations first. This may damage any Internal Audit or criminal
enquiry.
5.
Action by managers
5.1 If you find out about suspected fraud, corruption or money
laundering in your work area, you should do the following:
(i)
Listens to the concerns of your staff and treat every report you
receive seriously and sensitively. Do not ridicule suspicions
raised by staff.
(i )
Make sure that all staff concerns are given a fair hearing. You
should also reassure staff that they will not suffer victimisation
because they have told you of their suspicions.
(iii)
Get as much information as possible from the member of staff,
including any notes and any evidence they have that may
support the allegation. Do not interfere with any evidence and
make sure it is kept in a safe place.
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(iv) Assess whether the suspicions are justified before you take the
matter further.
5.2
Do not try to carry out an investigation yourself without consultation
with Internal Audit first. This may damage any Internal Audit or
criminal enquiry.
5.3 Report the matter immediately to the Head of Internal Audit &
Investigations. Do not tell anyone else about your suspicions.
5.4 Help Internal Audit or authorised organisations/individuals in any
investigation.
6. Internal
Audit
6.1 Internal Audit is normally the appropriate unit to investigate cases of
suspected fraud or corruption, so it is important that every case of
suspected fraud is reported to the Head of Internal Audit &
Investigations.
6.2 We will investigate all referrals received although if anonymous
referrals are received they are much harder to pursue so we would
encourage anyone with concerns to refer the matter directly to the
Head of Internal Audit & Investigations if they do not feel they can
raise the matter with their manager.
6.3 The Head of Internal Audit & Investigations will decide how any
enquiry will be carried out, and whether we need to tell outside
organisations such as the police.
6.4 Experienced audit staff will manage fraud and corruption
investigations. Any investigation Internal Audit carries out will be in
line with the Audit Commission’s Guidelines, Code of Practice and
relevant legislation.
6.5
The Head of Internal Audit & Investigations will tell the managers of
the appropriate department the results of any investigation, and
advise them what action they need to take.
6.6
If appropriate feedback will also be provided to the person who
initially raised the concerns.
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Appendix 2
The Seven Principles of Public Life
Selflessness Holders of Public office take decisions in terms of the public interest. They
should not do so in order to gain financial or other material benefits for
themselves, their family, or their friends
Integrity Holders of public office should not place themselves under any financial or
other obligation to outside individuals or organisations that might influence
them in their performance of the official duties.
Objectivity In carrying out public business, including making public appointments,
awarding contract, or recommending individuals for rewards and benefits,
holders of public office should make choices on merit.
Accountability Holders of public office are accountable for their decisions and actions to
the public and must submit themselves to whatever scrutiny is appropriate
to their office.
Openness Holders of public office should be as open as possible about all the
decisions and actions that they take. They should give reasons for their
decisions and restrict information only when the wider public interest clearly
demands.
Honesty Holders of public office have a duty to declare any private interests relating
to their public duties to take steps to resolve any conflicts arising in a way
that protects the public interest.
Leadership Holders of public office should promote and support these principles by
leadership and example.
......................................................................................................................………...
Note
These principles are a direct extract from the Nolan Committee report
Internal Audit Division January 2009
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