Newark Sherwood District Council Counter Fraud Training CounterFraud

Newark & Sherwood District Council Counter Fraud Training

Counter-Fraud Training • Objectives for today – Understand what fraud is – Be aware of the scale of the problem – Have an awareness of what is being done to tackle fraud – Be aware of potential warning signs that fraud is occurring – Understand your role in preventing/detecting fraud

What is fraud? A dishonest action designed to facilitate gain (personally or for another) at the expense of the Council, the residents of the district and or the wider national community Three main headings under the Fraud Act 2006 - Fraud by false representation - Fraud by (wrongfully) failing to disclose information - Fraud by abuse of position

Scale of Fraud Nationally National Fraud Indicator £ 73 billion whole UK £ 20. 3 billion – estimated public sector losses £ 2. 2 billion – local government

National estimate – annual fraud losses Estimated Local Government Fraud – £ 2. 2 billion q Housing Tenancy – £ 900 m q Procurement – £ 890 m q Payroll – £ 153 m q Council Tax – £ 131 m q Blue Badge – £ 41 m q Grant fraud– £ 46 m q Pension fraud – £ 5. 9 m

Local estimated annual fraud losses • Housing Tenancy – NSDC est. fraud losses: – Estimate – £ 700 k - £ 1. 2 m • Procurement – NSDC est. fraud losses: – Estimate – £ 210 k - £ 350 K • Payroll – NSDC est. fraud losses: – Estimate – £ 20 k - £ 40 k • Council Tax - NSDC est. fraud losses: - Estimate – £ 260 k - £ 440 k

Housing Tenancy Fraud - examples Unlawful sub-letting for profit Providing false information in a housing application Wrongful tenancy assignment and succession – property not occupied by original tenant Failing to use property as principal home, abandoning the property or selling of keys

Case Studies Housing tenancy fraud An individual failed to disclose a change of circumstances to a rural council regarding her application for social housing. She initially declared she and her 2 children were living with her mother. She gained extra points, moved up the waiting list & was allocated a home. The council found out she hadn’t been living with her mother & was privately renting under her maiden name. She was found guilty, had to pay a fine & costs and forced to give up her tenancy.

Procurement fraud – examples Price fixing Bid rigging Cover pricing False / duplicate / double invoicing Overpayments False payments Altered payment details / diverted payments Inferior / substandard products

Case Studies Procurement Fraud A whistleblower raised concerns about fees charged to vulnerable adults receiving support from a charitable provider, through a council contract. Further investigations found that the service users were being unlawfully charged for services and the provider had routinely submitted false performance information. The total value of the alleged fraud was calculated to be £ 500 k.

Payroll fraud – examples Overtime not worked False / inflated claims – relief workers Abuse of time Exaggerated / false mileage claims, travel fares, accommodation or subsistence Unauthorised changes to payroll Ghost employees

Case Studies Payroll Fraud A cleaning supervisor working for a government body had sole responsibility for recruiting employees. She used her position to set up several fictitious casual and part time employees with inflated pay rates on the payroll. She created bogus timesheets for these employees which she authorised along with timesheets for legitimate employees. The timesheets were then passed to the payroll section together with timesheets for legitimate employees. Pay cheques were issued based solely on the supervisor’s authorisation and without carrying out any appropriate checks. These pay cheques were then collected by the supervisor for issue to employees. She paid the cheques for the non-existent employees into bank accounts she had opened in the names of fictitious employees. The fraud was found when a payroll clerk questioned the hourly rate being paid to the fictitious employees.

Council Tax Fraud– examples • False claims for exemptions and discounts • Single Persons’ Discount is the main one • Not informing Council when children reach 18 An estimated 4% of claims are fraudulent

Case Studies Council Tax Fraud Norwich City Council and Norfolk County Council worked together to compare council tax records to the electoral register. They identified nearly 850 households who were wrongly claiming the 25 per cent single person discount on their council tax bills. As a result the city council is recovering a total of £ 280, 542, as well as preventing further losses being incurred had those erroneous discounts continued.

Pension Fraud – examples Failure to notify of death Relatives continue to cash pension Failure to notify a change in circumstances Returning to work Moving abroad Claiming occupational or state injury benefit – failure to notify

Case Studies Pension Fraud As a result of the pensions to deceased person’s data matching the Armed Forces pension scheme identified a pensioner whose death they had not been informed of. The overpayment totalled nearly £ 19, 000 and the pension scheme was able to recover almost £ 13, 000 from the pensioners bank account. However the remaining £ 6, 000 had already been withdrawn from the account via an ATM machine. The case was passed to the police for investigation.

Grant Fraud – examples • Applying for grants for projects that don’t exist • Inflating the costs in funding applications

Case Studies Grant Fraud A council provided grant funding to a local charity. Over 4 years the two people running the charity defrauded taxpayers of almost £ 48 k by diverting charity money for personal use - covering their tracks with false invoices and accounts. Both pleaded guilty received a suspended sentence and 150 day curfew and were ordered to repay the £ 48 k, plus £ 1 k costs & £ 6 k compensation to cover the investigation costs.

Emerging risks Business Rates Fraud Right to Buy Fraud Social Fund and Local Welfare Assistance Local Council Tax Support Fraud against schools Grants

Tackling Fraud -What is being done? Counter Fraud Task Force Fighting Fraud Locally Strategy 2012 NFI Audit Commission – Protecting the Public Purse annual survey • County wide initiatives • Local initiatives • •

Fraud detection since 1990/91

To minimise the risk of fraud… Good financial management Strong internal control systems Effective supervision Good management Raising public and employee awareness of fraud – zero tolerance Pro-active counter fraud work (prevention & detection) Robust whistleblowing procedures

What are the warning signs? Fraud happens. . . When the perpetrator spots an opportunity, has a motivation to commit fraud and feels able to justify their actions Motivation ! • Controls not functioning Fraud Risk • I’ve earned it • Nobody will suffer • It’s a ‘one off’ Justification • Pressure for results • Financial • Revenge Opportunity The Fraud Triangle • Staff changes/losses • Tolerance – no one will care

What can you do? • Look out for: • Invoices being submitted on non-headed paper – or documents that have been corrected. • Requests for payment for goods/services that have not been delivered. • Duplicate invoices. • Notification of an organisation’s bank details changing. • Duplicate claims/application forms • Details not easily checkable or difficult to read • Lack of receipts in support of expenditure/claims • Changes in normal patterns of cash takings

What can you do? Look out for: Seemingly living beyond their means Under constant financial or other stress Choosing not to take annual leave – so others can’t pick up their work • Always first to arrive and last to leave • Insistence on always dealing with the same person • •

What can you do? • Report any system weaknesses that could allow fraud to occur • Take care with authorising claims/invoices, etc • If you think a fraud has occurred: - make a note of your concerns, including dates, times, names, etc. - convey your suspicions to someone with the appropriate authority - don’t delay – NSDC could be losing money! • Don’t be afraid to speak out • Don’t make accusations to anyone directly • Don’t investigate it yourself • Don’t speak to anyone other than those with proper authority

Corruption is : The abuse of power by a public official for private gain. Includes bribery – offering payment for an advantage And bias – giving, allowing or receiving preferred treatment. Eg. appointing a friend to a vacant post Bribery could occur in: Procurement Grant Funding Licencing Monitoring and enforcement Housing allocation Planning

Summary • Fraud and Corruption are big issues – especially at a time of grant cuts • But a lot is being done to tackle the problem both nationally and locally • YOU have an important role to play • NSDC has a zero tolerance to Fraud and Corruption

Counter fraud • Any questions? • QUIZ