Prevention of fraud
Policy
The OFT, like other public bodies, has a duty to conduct its affairs in a responsible
and transparent way. It has a responsibility to HM Treasury, its employees,
suppliers and the public in general to take all reasonable steps to prevent the
occurrence of fraud.
Consequently, the OFT has a zero-tolerance attitude to fraud and will thoroughly
and promptly investigate all instances with a view to taking appropriate
disciplinary and/or legal action up to and including dismissal and criminal
prosecution. Every effort will also be made to recover all cash or assets lost or
misappropriated as a consequence of fraud.
Everyone in the OFT is expected to contribute to the management of fraud risk
and employees are encouraged to report any concerns or suspicions. The OFT
undertakes to ensure that they are able to do so without fear of reprisal and the
Public Interest Disclosure Act 1998
http://www.opsi.gov.uk/acts/acts1998/19980023.htm and the OFT's whistle-
blowing policy provide protection for those who voice genuine and legitimate
concerns through the proper channels. This policy applies to everyone employed
by the OFT regardless of whether on a permanent, temporary or consultancy basis
(referred to herein as 'employees').
Procedure
Key roles
The accounting officer is responsible for the OFT's system of internal control
which safeguards public funds and the OFT's assets. Employees responsible for
the management of the system and fraud investigation, are:
The chief operating officer, or 'risk owner' for fraud risks, is responsible for
ensuring that the OFT's overall arrangements for managing the risk of fraud are
appropriate. He personally approves the direction of each fraud investigation and
has delegated responsibilities for various functions as set out below.
The finance director is responsible for:
• the OFT's internal financial procedures and controls, including their review
in the light of reported frauds
• fraud policy, fraud risk management policy and procedures and liaison with
the National Audit Office (NAO) about issues relating to fraud and fraud
prevention
• managing fraud investigations and giving advice on the action to be taken in
specific cases of fraud and suspected fraud
• reporting frauds to Treasury
• policy on travel and subsistence, gifts, hospitality, procurement and
• whistle blowing
• physical security and inventory control of the OFT's assets.
Internal audit is responsible for:
• advice and assistance on control issues as necessary
• reviewing systems for the control, prevention and detection of fraud
• advice to divisions on cases of fraud
• assisting with investigation of fraud within the OFT.
Reporting fraud
Absolute proof is not necessary before a concern is reported and employees
should share their suspicions or concerns as soon as reasonably possible.
If an employee does not wish to disclose the information they have to the OFT, a
report can be made to a body prescribed by the Secretary of State for the
purposes of receiving such information. Further information is available on
http://www.pcaw.co.uk/legislation/p_regulators.html
Reports of suspected fraud must be discreet to ensure that no-one is harmed by
false accusations and that the perpetrator is not forewarned.
In the first instance employees should contact the finance director either in
person, by telephone, letter or e-mail giving:
• the background and history of the concern including relevant dates
• the reason for the concern
• whether the matter must be treated in confidence.
Where the suspected fraud is within the finance function it should be reported to
either the HR director or the chief operating officer. If the employee reporting the
incident has any personal interest they must declare it at this point.
All suspected frauds will be immediately reported to Treasury by the finance
director, HR director or chief operating officer as appropriate.
Investigation process
Employees suspected of fraudulent activity have certain rights under the law and
failure to follow established procedures in relation to investigating fraud can
invalidate disciplinary action and compromise the success of any future
investigation and/or prosecution. Consequently, no action should be taken without
prior consultation with HR.
The finance director will take immediate personal charge of the situation and
acknowledge receipt of the report in writing within 24 hours.
The suspect's work station and all documentation will be immediately secured and
made inaccessible to the suspect and any other unauthorised employee(s).
If an external contractor or consultant is suspected the finance director will
immediately suspend any payments due.
The finance director will undertake a preliminary review and present an interim
report to the chief operating officer and head of internal audit within 24 hours.
The chief operating officer and head of internal audit will decide whether a
thorough and formal investigation is required. At this point they will also decide
whether it is appropriate to suspend with pay those who are implicated.
The head of internal audit will immediately inform the NAO who will provide
advice to ensure that the investigation is carried out in accordance with robust
procedures and fraud policies. If the NAO considers that the nature of the
suspicion, or seniority of the employee involved, jeopardises the validity of the
investigation they may take control of the investigation.
Where a thorough and formal investigation is required it will normally be
undertaken by the head of internal audit, who will decide whether it is necessary
to engage the services of a specialist fraud investigator.
If the alleged fraud was committed using computers the IT manager will ensure
that any records on PCs or the OFT network relating to the fraud cannot be
accessed, destroyed or corrupted prior to the investigation.
Within five working days of a concern being raised, the finance director will
confirm in writing to the employee who reported the fraud:
• how the matter will be dealt with
• an estimate of how long it will take to provide a full response
• information on the support available
If the investigation requires input from any employee, they will be provided
support to minimise any difficulties. This will include the right to be accompanied
at any fact-finding meeting by a colleague or Trade Union representative.
Individuals under investigation may also be accompanied by a colleague or Trade
Union representative.
Within five working days of the completion of the investigation the head of
internal audit will submit a written report of his findings to the chief operating
officer who will, in consultation with the HR and finance directors, decide whether
there is a disciplinary and/or legal case to answer.
Penalties
Where the investigation finds that there is a disciplinary case to answer it will be
dealt with through the discipline policy and procedure.
Where there has been a failure of management, appropriate disciplinary action may
also be taken through the discipline policy and procedure.
In all cases the OFT reserves the right to involve the police and a criminal
prosecution may result.
In addition to any disciplinary or legal action taken, an employee who has
committed fraud will be invited to recompense the OFT. If this is refused, or the
employee is unable to comply, the OFT may take civil action to recover loss.
In the case of overpayment of salary, the loss may be recovered from salary.
To facilitate the recovery the finance director will, within five working days of the
completion of the investigation, prepare a statement for the employee, chief
operating officer and head of internal audit which:
• explains the results of the investigation and includes details of the
sums/assets lost
• seeks the employee's agreement to pay back or compensate the OFT for
the loss
• details the method of recovery. It should be borne in mind that recovery
through salary may not always be appropriate or even desirable.
If the fraud was committed by a contractor, agent, consultant or any persons
carrying out work for or on behalf of the OFT the finance director, on advice from
the OFT's legal advisors, will write to the most senior officer of the supplier to
notify them of the fraud, explain the amounts involved and seek recovery of any
losses incurred. He will also inform them of the OFT's intentions regarding police
involvement and any litigation that might be necessary to recover loss.
Appeals
Employees against whom action is taken through the discipline policy and
procedure as a result of a fraud investigation will have the normal right of appeal
provided for in that procedure.
Remedial actions
Following the investigation the finance director will review the OFT's internal
controls to decide whether they need to be strengthened. Recommendations for
action will be implemented quickly and progress reported to the audit committee.
In the OFT's annual return to the Treasury the finance director will give details of
all discovered cases of suspected and proven fraud, including attempted fraud in
the following categories:
• fraud committed by employees
• computer fraud whether committed by employees, contractors, agencies,
consultants or any other persons engaged to carry out work for or on behalf
of the OFT
• fraud by contractors arising from contracts placed by the OFT
• all other cases of fraud which reveal potentially significant system
weaknesses or exposure to the kind of loss that other government
departments might face.
If the losses cannot be recovered they will be written off in accordance with
chapter 36 of Government Accounting. This will be done by the finance director,
who will also determine whether the losses need to be reported to Treasury and/or
Parliament and included in the resource accounts.
Losses involving assets will also be reported to procurement, and to facilities
management and IT if the theft involves IT equipment, to enable relevant asset
inventories to be adjusted.