Archived decisions

                      Appendix 1

Corporate Anti-fraud

and Corruption Strategy

Index

Page

1

Introduction

1

2

Key principles and culture

1

3

Prevention

4

4

Deterrent and detection

8

5

Investigations

9

6

Monitoring

10

7

Conclusion

10

Appendices

A

Anti-Fraud and Corruption Policy

12

B

Prosecution and Recovery Policy

14

C

Whistleblowing Procedure - see confidential appendix 2

17

1 Introduction

1.1 Hampshire County Council is determined to discharge its responsibilities to safeguard public funds and is committed to fighting fraud and corruption whether attempted from inside or outside of the Authority. The Council is committed to the highest ethical standards and requires Members, Chief Officers and all other staff to comply with the ten principles of public life, as outlined below; the Council's anti-fraud and corruption policy; and codes of conduct as set out in the appendices to this corporate anti-fraud and corruption strategy.

1.2 The Council believes strongly in the honesty and integrity of its Members and employees and has achieved a reputation for maintaining effective systems of control. The Council also expects that all outside individuals and organisations, including suppliers, contractors and claimants, will act towards the Council with honesty and integrity. The Council will not tolerate fraud, corruption or other irregularities, regardless of the perpetrator. The Council is therefore determined to prevent, deter and detect all forms of fraud and corruption committed against it and take appropriate action where fraud or corruption is detected.

1.3 The Council's commitment to protecting public funds is set out in the anti-fraud and corruption policy statement shown at Appendix A and the Prosecution and Recovery Policy shown at Appendix B, which were approved by the Audit Committee on 22 December 2009.

1.4 The purpose of the anti-fraud and corruption strategy is to aim to put into place mechanisms that will prevent, deter and detect fraud and corruption. The strategy summarises the responsibilities of Members, Chief Officers and employees and outlines the process to be followed where there is suspicion of financial irregularity. The strategy applies equally to all organisations with which the Council has joint working relations.

2 Key Principles and Culture

2.1 The anti-fraud and corruption strategy endorses and adopts the ten principles of public life which are set out in the Relevant Authorities (General Principals) Order 2001. The ten principals are based on the Seven principals identified by the Nolan Committee in seeking to create a culture of honesty and opposition to fraud, corruption and irregularity:

Selflessness

Holders of public office should serve only the public interest and should never improperly confer an advantage or disadvantage on any person.

Honesty and Integrity

Holders of public office should not place themselves in situations where their honesty and integrity may be questioned, should not behave improperly and should on all occasions avoid the appearance of such behaviour.

Objectivity

Holders of public office should make decisions on merit, including when making appointments, awarding contracts, or recommending individuals for rewards or benefits.

Accountability

Holders of public office should be accountable to the public for their actions and the manner in which they carry out their responsibilities, and should co-operate fully and honestly with any scrutiny appropriate to their particular office.

Openness

Holders of public office should be as open as possible about their actions and those of their authority, and should be prepared to give reasons for those actions.

Personal Judgement

Holders of public office may take account of the views of others, including where relevant their political groups, but should reach their own conclusions on the issues before them and act in accordance with those conclusions.

Respect for Others

Holders of public office should promote equality by not discriminating unlawfully against any person, and by treating people with respect, regardless of their race, age, religion, gender, sexual orientation or disability. They should respect the impartiality and integrity of the authority's statutory officers, and its other employees.

Duty to Uphold the Law

Holders of public office should uphold the law and, on all occasions, act in accordance with the trust that the public is entitled to place in them.

Stewardship

Holders of public office should do whatever they are able to do to ensure that their authorities use their resources prudently and in accordance with the law.

Leadership

Holders of public office should promote and support these principles by leadership, and by example, and should act in a way that secures or preserves public confidence

2.2 Irregularities includes, theft, fraud and corruption:

      Definitions

      Theft is "the dishonest taking of property belonging to another person with the intention of permanently depriving the owner of its possession"

      Fraud is "the intentional distortion of the financial statements or other records by a person internal or external to the organisation which is carried out to conceal the misappropriation of assets or otherwise for gain"

      Corruption is "the offering, giving, soliciting or acceptance of an inducement or rewards which may influence the action of another person".

      Irregularity may also include, failure to comply with Financial Regulations, Standing Orders, national and local codes of conduct, Health and Safety Regulations and all other relevant laws and legislation that result in an avoidable loss to the Authority.

2.3 Honesty, openness and integrity are at the core of the Council's objectives, which positively encourage a culture that is opposed to fraud and corruption. Staff are expected, and are positively encouraged, to raise any concerns relating to fraud and corruption of which they become aware. These can be raised in any way that the employee prefers, including with their line manager, through a chief officer, internal audit, or through the guidance provided in the Council's Whistleblowing procedure shown at Appendix C. This sets out the means by which Members and employees may raise any concerns that they have on issues associated with the Council's activities. Whichever route is chosen the employee can be assured that concerns raised in good faith will be fully investigated and, wherever possible, the employee will be dealt with in confidence.

3 Prevention

3.1 The Council's corporate governance framework contributes to the prevention of fraud and corruption. Key elements include:

      · Codes of conduct for Members and Officers

      · Financial Regulations and Procedures, which include the anti-money laundering policy

      · Contract Standing Orders

      · Effective Internal Audit

      · Risk Management Policy

      · Whistleblowing (reporting concerns at work)

      · Complaints procedure

      · Disciplinary procedures

      · Prosecution and Recovery Policy.

      In addition, the Council is subject to external scrutiny from a variety of bodies. These include the Local Government Ombudsman, Audit Commission, Central Government Departments and Parliamentary Committees, HMRC and external inspectorates. Additionally internal scrutiny is overseen by the Standards Committee.

3.2 Responsibilities of Members

3.2.1 The elected Members of the Council have a duty to protect the funds and assets of the Council from all forms of abuse. This is achieved through the issue of the anti-fraud and corruption policy statement and implementation of this strategy, the effectiveness of which shall be monitored by the Audit Committee.

3.2.2 Members must maintain the highest standards of accountability and probity and therefore must comply, at all times, with the Code of Conduct for Members.

3.3 Responsibilities of the Monitoring Officer

3.3.1 The Monitoring Officer is appointed by the County Council under Section 5 of the Local Government Act 1989. The Monitoring Officer is responsible for ensuring lawful and fair decision making.

3.3.2 If the Monitoring Officer is of the opinion that any decision or omission would give rise to either unlawfulness or maladministration, the Monitoring Officer has a duty to either ensure that the situation is rectified or after consulting with the Head of Paid Service and the Chief Finance Officer report on the matter to full Council. In the event of the latter situation the effect of the Monitoring Officer's report will be to stop the act or omission until full Council has considered the matter.

3.3.3 The Head of Legal Services is also authorised by the County Council to commence, defend or participate in, any legal proceedings in any case, where necessary, to give effect to the decisions of the Council, or in any case where the Head of Legal Services considers it necessary to protect the Council's interests.

3.4 Responsibilities of Managers

3.4.1 Managers at all levels within the Council have a responsibility to ensure that there are sound systems of internal control. Managers are responsible for ensuring that their staff are aware of Financial Regulations and Procedures, and Contract Standing Orders and that these are being followed. Managers should ensure that staff know how to deal with concerns at work and that staff are aware of the Whistleblowing procedures.

3.4.2 For contracted out services and partnership arrangements, Managers should determine the risk of fraud and corruption and incorporate appropriate controls and safeguards within tender documentation, contracts and partnership agreements.

3.4.3 Managers should implement agreed audit recommendations within appropriate timescales.

3.4.4 Managers must report all suspicions of theft, fraud and irregularity to the Chief Internal Auditor immediately.

3.5 Responsibilities of employees

3.5.1 Employees must comply with the Council's Officers' Code of Conduct, the requirements of the Financial Regulations and Procedures and Contract Standing Orders. Employees are expected to maintain honesty and integrity at all times and act with propriety in the use of official resources and corporate funds.

3.5.2 Employees should always be aware of the possibility that fraud, corruption and theft may exist in the workplace and have a duty and a right to share any concerns they may have with management or through the Whistleblowing procedure.

3.5.3 The Whistleblowing Procedure gives alternative ways of raising concerns including externally, if employees feel unable to use the internal routes. Contact details listed include external audit and Public Concern at Work, which is a charity.

3.5.4 Staff are reassured that they will be protected from possible reprisals or victimisation if they have disclosed information in good faith. However if an allegation is made maliciously or for personal gain, disciplinary action may be taken against the individual. Managers will investigate all concerns raised by staff and the Whistleblowing procedures explain the courses of action that can be expected to occur.

3.6 Responsibilities of contractors, suppliers, customers and members of the public

3.6.1 The Council shall expect that contractors are able to demonstrate, through the tendering process, that they have adequate systems of control to ensure the prevention and detection of fraud and corruption in relation to services provided on behalf of the Council.

3.6.2 Suppliers, customers and members of the public are also encouraged to report concerns through the Whistleblowing Procedure.

3.7 Responsibilities of partnerships and voluntary organisations

3.7.1 All partnerships and joint working arrangements that are in receipt of Council funding or resources shall be expected to demonstrate appropriate mechanisms for control. Partnership agreements should refer to the adopted Financial Regulations and Codes of Conduct, which govern the partners and to the internal audit arrangements.

3.7.2 Voluntary organisations should be encouraged to follow the standards set by the Council and the Council's anti-fraud and the corruption strategy should be made available where the voluntary organisations is in receipt of grant funding.

3.8 Responsibilities of Internal Audit

3.8.1 Internal Audit is responsible for undertaking an annual risk assessment of the Council's framework of internal control and for producing an annual audit plan in accordance with the approved Internal Audit Strategy. The County Treasurer, as the s151 Officer to the Authority (Local Government Act 1972), should approve the annual plan.

3.8.2 In accordance with the annual plan, Internal Audit will review the Council's systems and where necessary, make recommendations to the appropriate level of management on improvements to control and agree an action plan. Whilst conducting their reviews, auditors will plan and evaluate their work so as to have a reasonable expectation of detecting fraud and identifying any significant weaknesses in internal controls. Internal Audit shall be responsible for assessing whether agreed actions arising from significant risks identified have been implemented.

3.8.3 The Chief Internal Auditor shall provide the departmental management teams with an annual audit opinion on the adequacy of the department's internal controls and provide an annual assurance statement to the Audit Committee on the overall effectiveness of the Council's framework of internal control, highlighting any serious weaknesses. The Chief Internal Auditor or representative will attend the departmental management team to present these findings.

3.9 Recruitment and induction

3.9.1 The Council recognises that one of the most important issues in relation to the prevention of fraud and corruption is the recruitment of appropriate staff. Managers should ensure that the correct HR procedures are followed during the recruitment process. http://intranet.hants.gov.uk/hr.htm

3.9.2 Managers should ensure that staff induction includes:

      · raising fraud awareness

      · the responsibilities of staff to report suspicious activity to their line manager or through the Whistleblowing procedures.

3.10 Register of interests and gifts and hospitality

3.10.1 All Members of the County Council are required to register their financial and other appropriate personal interests, in accordance with the provisions of the Code of Conduct applying to them, in a register maintained in the Chief Executive's department. The Chief Executive's department sends a reminder to all Members at least annually. Members are also required to declare any personal interests prior to the commencement of Council meetings or immediately before a matter in which they have a personal interest is discussed. If a member has a prejudicial personal interest in any matter coming before the Council they must not be present in the meeting room and must refrain from improperly influencing the decision.

3.10.2 A member must also, by virtue of the provisions of the Code of Conduct, within 28 days of receiving any gift or hospitality over the value of £25 provide written notification of such to the Monitoring Officer.

3.10.3 The Officers' Code of Conduct specifies the circumstances in which employees should decline offers of hospitality and in particular personal gifts from contractors and outside suppliers. There is a duty for all staff to act within statutory regulations including the Local Government Act 2000 particularly in relation to disclosing pecuniary interests, conflicts of interest, gifts and hospitality. A register is held by the Head of Business Advice and Members Support. Gifts/hospitality with a value of £25 or above are required to be registered. Chief Officers should ensure that staff are aware of this requirement.

3.10.4 Furthermore, for staff working in Adults Services who deal with the care of the old and vulnerable, there is a specific procedure relating to gifts and bequests which must be adhered to at all times.

4 Deterrent and detection

4.1 The Council has put in place systems and procedures to manage and discharge its functions in an efficient and effective way. These systems incorporate internal controls to prevent and deter fraud and corruption, including adequate separation of duties where appropriate.

4.2 Financial Regulations require that Chief Officers ensure that controls are properly maintained, that staff ensure that working practices comply with appropriate procedures and processes and that Internal Audit regularly check the existence, appropriateness and effectiveness of the controls.

4.3 Prosecution and recovery policy

4.3.1 The Council has adopted a Prosecution and Recovery Policy, which encompasses both internal and external fraud perpetrated against it. The Policy is designed to deal with proven wrongdoers in the strongest possible terms and deter others from committing offences against the Council. The Prosecution and Recover Policy is shown at Appendix B.

4.3.2 Where theft, fraud or corruption is proven and the Council has suffered a financial loss, then the Council will seek to recover the full value of any loss from the perpetrators. In some cases this may involve civil proceedings being instigated through the courts.

4.4 Disciplinary action

4.4.1 The Council will invoke formal disciplinary procedures against employees where there is evidence of theft, fraud or irregularity. Disciplinary action may result in dismissal from the Council's service. In addition, where evidence of criminal activity is identified, consideration will be given to referring to the police to instigate criminal proceedings and/or the Council instigating civil recovery, dependent on the circumstances of each case.

4.5 Publicity

4.5.1 The Council will publicise proven cases of theft, fraud and corruption referred to the criminal courts as a deterrent to others.

4.6 Proactive fraud initiatives

4.6.1 Internal Audit have developed a proactive fraud programme as part of the annual plan to deter and detect fraud and covers known areas of high risk.

4.6.2 Through Internal Audit, the Council participates in the Audit Commission's, National Fraud Initiative (NFI). Data from the Council' main systems is matched with data supplied from other Local Authorities and other external agencies to detect fraudulent activity. All NFI matching is done in compliance with the Data Protection Act.

4.6.3 Nationally, Internal Audit are members of Cipfa's Better Governance Forum which provides relevant updated training on fraud initiatives. Locally, Internal Audit is a member of the Hampshire Fraud Group, which consists of participating local authorities in Hampshire and aims to develop anti-fraud initiatives across the County.

4.7 Whistleblowing

4.7.1 It is the Council's policy that all employees have a duty to report irregularities and bad practice within the Council's operations and services. The Whistleblowing procedure gives a vehicle by which employees may voice concerns. This procedure is shown at Appendix C.

5 Investigations

5.1 Investigations into suspected and alleged acts of theft, fraud or corruption, will be undertaken professionally and sensitively by appropriately trained staff. The Chief Internal Auditor will manage and control all investigations. The decision on whether to invoke criminal proceedings will be made by the Monitoring Officer in conjunction with the Chief Internal Auditor. Investigations staff will be required to comply with the Council's Fraud and Irregularity Investigation Procedures and Investigators Code of Conduct.

5.2 Investigations staff will comply with the Council's policies and directives and all other relevant legal requirements. In particular, investigations staff must have regard to:

      · the Equalities Policy/Dignity at Work

      · observance of the Police and Criminal Evidence Act (PACE), where those suspected of committing a criminal act will be advised of their rights and evidence will be obtained, collated and secured in accordance with the Act

      · any surveillance that is deemed necessary will be conducted in accordance with the Council's policy on surveillance to comply with the Human Rights Act 1998 and Regulation of Investigatory Powers Act 2000.

5.3 Internal Audit will ensure that its investigators are fully trained in carrying out their responsibilities and that this training is maintained. Wherever possible, investigators will be encouraged to attain suitable, relevant qualifications.

5.4 Paragraph 3.4.4 of this document outlines the responsibilities of management to refer cases of suspected fraud and irregularity to the Chief Internal Auditor. It is essential that contact is made with Internal Audit as soon as any fraud or irregularity is suspected so that the investigation can commence and the risk of inappropriate action is minimised and evidence secured.

5.5 In addition, any significant weakness identified in any system or control should be identified immediately to the Chief Internal Auditor.

5.6 The scope of fraud and irregularity that should be referred to Internal Audit for investigation should not be limited to that which has a direct financial impact, but anything that could have a damaging or undermining effect on the County Council. For example, the unauthorised access and/or release of confidential information held on strategic decisions, commercial information relating to contracts let or being let and personal information on staff and/or customers.

5.7 Where there is evidence that County Council staff are committing fraud, Internal Audit will liaise with Human Resources and the appropriate manager from the department concerned. Where appropriate, disciplinary action will be taken.

5.8 Action must be taken to recover any loss of Council monies from the employee, and/or claim made on insurance funds. Where a criminal act has been committed against the Council, then prosecution will be considered in accordance with the Council's Prosecution Policy.

5.9 Where the Council is a victim of fraud by a third party, action will be taken to recover any loss of Council money and prosecution will be considered in accordance with the Council's Prosecution and Recovery Policy (Appendix B).

5.10 The Council will work jointly with other agencies and local authorities for the prevention and detection of fraud and corruption and will share intelligence with these agencies. These will mainly include:

      · Hampshire Constabulary

      · Neighbouring Local Authorities

      · The Audit Commission

      In addition, Internal Audit may liaise with the Department for Work and Pensions for the purposes of the prevention and detection of fraud and corruption.

6 Monitoring

6.1 The monitoring of the overall progress of the Council's anti-fraud strategy will be the responsibility of the Chief Internal Auditor, as part of the monitoring of the Internal Audit Annual Plan.

6.2 A half yearly report and annual report on significant issues arising from fraud and corruption investigative work will be incorporated within the Internal Audit reports presented to the Audit Committee.

7 Conclusion

7.1 The Council sets and maintains high standards and a culture of honesty, openness and integrity. This strategy fully supports the Council's desire to maintain an authority free from fraud and corruption.

7.2 The Council has in place a network of systems and procedures to assist in dealing with fraud and corruption when it occurs. It is determined that these arrangements will keep pace with any future developments in techniques to both prevent and detect fraudulent or corrupt activity that may affect its operation.

7.3 The Council will maintain a continuous review of all these systems and procedures through Internal Audit.

      Appendix A

      Anti-fraud and Corruption Policy

1

Introduction

Hampshire residents have the right to expect the highest standards of conduct from all County Council employees and Members. It is a relationship of trust, and if anyone breaks that trust, it damages public confidence in the whole Council. The Council takes this responsibility seriously and will not tolerate theft, fraud, corruption or wrongdoing, regardless of the perpetrator. All necessary action will be taken and the perpetrator will be dealt with in the strongest possible terms.

The Council believes strongly in the honesty and integrity of its Members and employees, but has a responsibility to protect the public funds that it administers. The Council is therefore determined to prevent, deter and detect all forms of fraud and corruption committed against it.

2

Responsibilities of Members, staff and outside bodies

The respective Codes of Conduct for Members and Officers govern standards of behaviour. The County Council expects that Members and Officers will lead by example and meet the highest standards of honesty, propriety, accountability and personal conduct at all times. The Council takes a serious view of incidents of fraud, theft, corruption or other irregular activity in the workplace or during working time. All cases will be investigated and appropriate action taken. This could result in dismissal and prosecution.

The Council also expects outside organisations and individuals to behave honestly and maintain the same high standard, especially those in receipt of money, grants or other resources. If fraud or other wrongdoing is discovered, the Council will take the necessary action to recover any losses and to prosecute where appropriate.

3

What to do if you think something is wrong

Staff who know, or, suspect that a colleague is committing an offence or breaking the Officers' Code of Conduct, must tell their line manager, personnel officer or the Chief Internal Auditor immediately. The Council will fully investigate all allegations made by any source.

The Council has set out its Whistleblowing procedure to enable employees to raise concerns outside of their normal management reporting lines. Every effort will be made to protect the informant's identity, where requested, when the informant is acting in good faith. Good faith in this case means that they believe the information to be true and are not acting maliciously or making false accusations to seek personal gain.

Where Members have concerns that an offence is being committed, this should be reported to the Chief Executive, Monitoring Officer, or the Chief Internal Auditor. Any breach of the Code of Conduct by Members, must be reported to the Council's Standards Committee, who will decide whether to carry out an investigation.

4

Responsibility for the investigation of fraud and corruption

The responsibility for the investigation of fraud and corruption against the Council rests with the Chief Internal Auditor. The Chief Internal Auditor will notify the Chief Executive, the Treasurer and the Monitoring Officer of all serious allegations.

5

Anti-fraud and corruption strategy

The Council is committed to the prevention, deterrence and detection of theft, fraud and corruption. The measures adopted by the Council in pursuit of the aim is set out in detail in the Council's anti-fraud and corruption strategy.

The Audit Committee will keep this policy under review in order to take account of any changes in Council Policy and Government legislation. The effectiveness of this policy will be monitored through review of outcomes

    Appendix B

    Prosecution and Recovery Policy

1

Prosecution and recovery statement

1.1

Hampshire County Council is committed to protecting the public funds that it administers. The Council may use information received for the purposes of the prevention and detection of fraud. It may also share this information with other bodies administering public funds solely for these purposes.

1.2

As a general rule, the Council will seek full redress through the legal processes available to counter any internal or external fraudulent activity perpetrated against it. This redress will be actioned through either the Criminal and/or Civil Courts as is deemed appropriate. The Council will also consider alternative actions to prosecutions where it believes it would be in the best interests of the Council to do so.

2

Decision to prosecute

2.1

A decision to prosecute will be taken by the Monitoring Officer and other relevant internal and external parties as appropriate.

2.2

Before any such prosecution is undertaken, the Monitoring Officer will consider the evidence against potential defendants. The Monitoring Officer must seek to be fair, independent and objective in assessing whether a prosecution should be brought. The circumstances of each case will be considered with due regard to Council's policies and compliance with relevant legislation.

2.3

The Monitoring Officer will, in particular, need to apply two tests before a prosecution is brought. These are:

      · the evidential test, and

      · the public interest test.

2.4

The evidential test means that the Monitoring Officer must be satisfied that there is enough evidence to provide a "realistic" prospect of a conviction. It means that a criminal case will need to be proved "beyond reasonable doubt" rather than on the balance of probabilities as with a civil case. A realistic prospect of conviction would mean that a Jury or Bench of Magistrates, properly directed in accordance with the law, is more likely than not to convict the defendant of the alleged charge.

2.5

The public interest test, which may affect the decision to prosecute, will depend on the seriousness of the offence and /or the circumstances of the offender. Some factors may increase the need to prosecute, but others may suggest that another course of action would be more appropriate.

2.6

The types of factors which could influence in favour of a prosecution include:

      · the clarity and availability of evidence to support the prosecution

      · the size (including monetary value) and seriousness of the offence

      · the previous history of the defendant, where the defendant has previously been warned or committed a similar offence

      · the defendant is in the public eye or holds public office or is employed by the Council

      · the evidence shows that the defendant was part of a larger conspiracy or organised criminal activity

      · there are grounds for believing that the offence is likely to be continued or repeated

      · the offence is alleged to have occurred over a long period of time involving more than one act of deception.

2.7

The types of factors which could influence in favour of not pursuing a prosecution include:

      · the defendant was at the time of the offence suffering from significant mental or physical ill-health, or is incapacitated

      · whether there were exceptional circumstances that allowed the offence to occur

      · the defendant has put right the loss or harm caused to the Council (but defendants should not necessarily avoid prosecution simply because they have reimbursed the Council)

      · the loss or harm can be described as very minor and was the result of a single incident, particularly if caused by misjudgement

      · details may be made public that could harm sources of information.

2.8

An assessment process must be decided upon to determine how important each factor is in the circumstances of each case in order to make an overall decision.

2.9

The Monitoring Officer will make the final assessment as to whether a prosecution should be brought.

3

Action other than prosecution

3.1

Where the Council has suffered a financial loss, then the Council will seek to recover the full value of any loss from the perpetrators. In some cases this may involve civil proceedings being instigated through the courts.

At the point where a fraud, theft or other irregularity is believed to have been perpetrated by an employee resulting in a financial loss to the Council, Audit Services must report this immediately to the Insurance team within the Chief Executives Department to consider whether a claim can be processed under the Council's Fidelity Guarantee Insurance.

3.2

Incidents of fraud, theft, corruption or other criminal activity by employees in the workplace or during working time, will be dealt with through the application of the Council's Disciplinary Procedures, which could result in dismissal.

4

Compliance with legal requirements

4.1

The Monitoring Officer shall ensure that, throughout the investigative process, there is compliance with the relevant requirements of:

      · The Police & Criminal Evidence Act 1984

      · The Criminal Justices Act 1967

      · The Human Rights Act 1998

      · The Data Protection Act 1998

      · The Regulation of Investigatory Powers Act 2000

      · And all other relevant legislation or codes of practice