Fraud & Corruption Policy
Identifying fraud and corruption, how to detect fraud and how to manage and finalise fraud cases
1. Key details
Policy prepared by: Anders Hofstee
Approved by management on: 1 July 2019
Policy became operational on: 1 July 2019
Next review date: 1 July 2024
2. Introduction
Fraud and corruption is dishonestly obtaining a benefit, or causing a loss, by deceptions or other means. This includes:
Theft;
Obtaining property, a financial advantage or any other benefit by deception;
Causing a loss, or avoiding or creating a liability by deceptions;
Providing false or misleading information to the Catalpa and/or Commonwealth or failing to provide information where there is an obligation to do so;
Making, using or possessing forged or falsified documents;
Bribery, corruption or abuse of position;
Unlawful use of Catalpa and/or Commonwealth computers, vehicles, telephones and other property or services;
Divulging confidential information to outside sources;
Hacking into, or interfering with a Catalpa and/or Commonwealth computer system; and
Any offenses of a lake nature to those listed above.
Common types of fraud occurs in Timor Leste:
Falsifying or doctoring receipts
Invoicing for goods or services under-delivered or not delivered
Billing for a quality/standard of product and delivering another lower quality/standard.
Forged or altered documents for scholarships
2. Facilitation Payments
DFAT has responded to the added risk of delivering functions, programs and services in challenging overseas environments by adding to the Commonwealth definition, to expressly forbid all facilitation payments.
Facilitation payments are defined under section 70.4 of the Australian Criminal Code Act 1995. The code defines these as payments to foreign public officials for the ‘sole or dominant purpose of expediting or securing the performance of a routine government action of a minor nature.’ This includes:
Payments made outside normal business process (outside terms of contracts, agreements or official procedures).
Not widely communicated (informal/unofficial or secretive).
Made to individual, not organizations.
It is different to bribery. The different is:
bribery is paying an official to do something outside normal duties
Facilitation payment is paying an official to do something within normal duties
3. Corruptions
It is an abuse of entrusted power for private gain. Corruption can be large or small scale, political in nature and usually perpetrated for financial gain.
RELATED POLICIES, PROCEDURES, AND GUIDELINES
HR Manual
Financial Management Policy
Reimbursement Policy
Conflict of Interest Policy
Procurement Policy
Operations Manual
Confidential and Privacy Policy
Commonwealth Fraud Control Framework 2014
Public Interest Disclosure Act 2013 (PID Act)
I. Detection of Fraud ‘ Red Flags’
Weak internal control within organization
Figures ( statistical) stand out as different or unusual
Strange or changed behavior of employee
II. Report Fraud
1. Responsibilities of Operational Director
Report within 5 working days all cases of attempted, alleged, suspected and detected fraud. The “What to Report’ form can be competed later.
Promptly report all attempted, alleged, suspected or detected fraud to DFAT’s Fraud Control Section fraud inbox [email protected] (You do not require proof reporting suspicions). The ‘What To Report’ form can be competed and follow later
For ANCP funds -cc DFAT ANCP [email protected].
2. Report External Fraud
Make a note of any suspicious activity that you witness or hear and retain where possible any documents legally obtained through the normal course of your work.
Maintain confidentiality (including by use of specifically addressed emails).
3. Who Should be Told?
3.1 Public Interest Disclosure Act 2013 (PID Act):
encourage disclosure of information about suspected wrongdoing (whistleblowing).
protects people who make disclosures (whistleblowers).
requires agencies to take action.
3.2 The PID Act requires proceeding with caution and confidentiality when dealing with personal information.
3.3 Confidentiality is vital, given sensitivity of issues and to ensure effective management of reported fraud, only those with a need-to-know should be told.
3.4 Person against whom allegations are made are presumed innocent until such time as it it proven otherwise and are to be treated fairly and without discrimination.
III. Manage Fraud Cases
1. Zero Tolerance Approach
For all instances of attempted, alleged, suspected or detected fraud, Catalpa requires an investigation of the matter.
If fraud is identified, then Catalpa will:
apply administrative or contractual penalties;
seek prosecution of offenders; and
seek the recovery of fraud losses.
Catalpa expects that fraud controls are strengthened in order to prevent future reoccurrence.
2. Investigation
All reported matters are investigated to determine if fraud has occurred and if so will confirm the nature and extent of the fraud.
Develop an investigation plan, in consultation with DFAT, before commencing and investigation (guidance including terms of reference for investigation).
The type of investigation that is involved, might be in the form of:
audit.
forensic audit
investigation.
Investigation must be managed in a pro-active and timely way (whether the investigation is conducted by internal staff, audits, or external investigator).
3. Administrative or Contractual Penalties
Zero tolerance approach to fraud requires that appropriate administrative or contractual penalties are applied. This may include;
termination of agreement.
termination of contract
termination of employment
disciplinary action’
suspension
demotion
fines
4. Reporting to Police/local authorities
All proven cases of fraud must be reported to local authorities/police (obtain police report number and/or copies of reports).
Catalpa requires follow-up with local authorities/police (at least once within six months of initial reporting).
Exemption fro reporting to local authorities/police in exceptional circumstances (e.g. life or safety of informant or staff is at risk).
5. Recovery of funds or assets
Catalpa will attempt to recover losses through the following avenues:
offender/s, and
insurance
Approval for non-recovery of funds can be sought when all avenues have been exhausted.
VI. Closing fraud cases
Cases can be closed when all elements of the zero tolerance approach have been satisfied.
The delegation to close fraud cases rest with DFAT-Director, Fraud Control Section (FCS).
1.1 How Manage and close fraud Cases
Report and attempted. alleged, suspected or detected fraud to DFAT promptly.
Implementing partners to investigate the fraud and develop an investigation plan
Ensure corporate records are well maintained.
Understand and reinforce your contract provisions
Review and take action on audit and investigation reports.
Regularly advise DFAT FCS of the progress or lack thereof.
Report to police/local authorities
Recover funds or assets misappropriated.
Ensure preventative controls have been implemented
Request the DFAT delegate to close the case
Last updated