Fraud Response Plan

Contents

1. Introduction
2. Aims and objectives
3. Prevention and detection
4. Reporting suspicions
5. Actions by employees
6. Actions by managers
7. Actions by councillors
8. Actions by members of the public or other agencies
9. Investigation process
10. Employee investigations
11. Liaison with police
12. Sanctions and recovery of losses
13. Review 

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1. Introduction

1.1 Gateshead Council recognises that it has a responsibility to protect the public purse. To meet these responsibilities, the council has an effective Counter Fraud and Corruption Strategy which works towards creating a zero tolerance culture.

1.2 The purpose of a Fraud Response Plan is to define responsibilities for action and reporting lines in the event of suspected fraud or corrupt activity. The use of the Plan should enable the council to prevent loss of public money, recover losses and establish and secure the evidence necessary for any civil, criminal or disciplinary action.

1.3 The Response Plan should also provide direction to take appropriate action against those responsible for any fraud or corrupt act.

1.4 The Response Plan complements the Counter fraud and corruption policy 2025 (PDF, 247 KB)(opens new window) and forms part of the overall Corporate fraud and corruption strategy 2025 (PDF, 225 KB)(opens new window).

1.5 The council's elected members and employees play an important role in creating and maintaining a culture of zero tolerance to fraud and corruption. They are positively encouraged to raise concerns regarding fraud and corruption, immaterial of seniority, rank or status, in the knowledge that such concerns will, wherever possible, be treated in confidence.

1.6  The public also has a role to play in supporting the council's zero tolerance approach to fraud and corruption and should inform the council if they suspect that fraud or corruption may have occurred.

2. Aims and objectives

2.1      It is important to ensure that a structured and consistent approach is implemented by the council for the investigation of any cases of fraud, bribery and corruption. This Fraud Response Plan sets out the council's approach to ensure:

• councillors and staff are aware of how to report any allegations of fraud, bribery or corruption;
• there is a clear understanding of who will lead investigations and appropriate staff are informed and involved;
• information about the investigation is retained by officers involved in the case in accordance with the council's retention policies;
• further losses of funds or assets where fraud may have occurred are prevented and the recovery of losses is maximised;
• evidence necessary is gathered to support an allegation, inform further action and secured;
• any adverse effects or publicity on the business of the council or any other partner organisations involved are minimised; and
• a review is undertaken of the reasons for the incident and action taken to improve control, strengthen procedures and prevent recurrence.

3. Prevention and detection

3.1    In some circumstances it is not possible to deter fraudsters, so the next most preferable course of action is to prevent fraud from succeeding before there is any loss to council funds. This can be achieved by developing systems with administrative or technical features, which make them less vulnerable to fraud, referred to as Internal Controls.

3.2    It is management's responsibility to establish and maintain systems of internal control and to ensure that the council's resources are applied appropriately. The Internal Audit and Risk Service operates as an aid to management to give assurance as to the effectiveness of internal control and to make recommendations for improvement. Management should strive to design the potential for fraud out of all new policies and procedures.

3.3    It is recognised that in organisations in which fraud occurs, frauds are often perpetrated by employees who familiarise themselves with controls in order that they can circumvent these controls for personal gain. The honesty and integrity of employees is therefore paramount. It is management's responsibility to ensure that in line with the council's recruitment and selection process appropriate pre-employment screening is operated diligently to prevent unsuitable candidates from securing positions within the council. This responsibility includes agency staff.

3.4    The council is committed to the exchange of data with external parties such as other local authorities and other public bodies which are aimed at detecting fraud. In line with the requirements of the Data Protection Act, the council has in place fair processing notices to facilitate this data exchange. Gateshead Council fully participates in the Cabinet Office's National Fraud Initiative (NFI); a biennial data matching exercise aimed at detecting fraud.

3.5    All Internal Audit reviews will have regard to the possibility of fraud. In addition, a series of pro-active counter fraud reviews are undertaken annually in areas of known fraud risk.

4. Reporting suspicions

4.1    The council relies on its employees, the public and its agencies to help prevent and detect fraud and corruption and these parties should report any concerns without fear of recrimination.

4.2    There are a variety of ways of making reports, both personally and anonymously as follows:

• reporting to management
• fraud telephone hotline: 0191 433 2805
• email: [email protected]
• online: Report suspected fraud 
• in writing to: Corporate Fraud Team, Internal Audit and Risk, Gateshead Council, Civic Centre, NE8 1HH (Please mark your correspondence as Private and Confidential).

4.3    All concerns will be treated in confidence and will be investigated promptly and fully in a professional manner, in line with this Fraud Response Plan. It should be noted that an allegation does not mean the individual person or organisation is guilty of any wrong-doing, and so they will not be treated as such until the case is proven.

4.4    There is a need to ensure that the investigation process is not misused, therefore, if it is found that an allegation has been made in bad faith, maliciously, or for personal gain, then disciplinary action may be taken against that employee.

4.5    Council employees and Members should report any concerns they may have regarding fraud, bribery and corruption, whether it relates to dishonest behaviours by council employees, Members or by others.

4.6    The action taken when a suspected case of fraud, bribery, or corruption is first found might be vital to the success of any investigation that follows, so it is important that employees' actions are in line with the information given in this document.

4.7    Please note that the council is not trying to encourage employees/councillors to spy on colleagues or to create an acrimonious environment of suspicion and counter claim.

4.8    The procedures detailed below should be followed for all suspected cases of fraud, bribery and corruption involving council staff, its partners and suppliers.

5. Actions by employees

In the first instance, any suspicion of fraud, theft or corruption should be reported, as a matter of urgency, to your immediate manager or their superior. If this is not appropriate, your concerns should be reported to one of the following persons:

• Service Director
• Strategic Director, Resources and Digital
• Chief Executive
• Chief Internal Auditor
•  Corporate Fraud Manager
• Any Strategic Director
• Corporate Fraud Team

5.2       Alternatively, you may choose to report your concerns or suspicions via the council's whistleblowing reporting procedures outlined in the Whistleblowing Policy. The council's Whistleblowing Policy has been written to protect those reporting their concerns and encourages people to report any suspected incidents of fraud. The council recognises that the employee may want to raise a concern in confidence. If confidentiality is requested, all reasonable efforts will be made to avoid revealing the employee's identity, unless disclosure is a requirement by law.

5.3       If you suspect a colleague is committing fraud, under no circumstances confront them with accusations of wrongdoing. This may allow the destruction of evidence and in extreme cases may expose you to physical danger. If your suspicions are mistaken, then workplace relationships may be poisoned irretrievably. The official investigators are best placed to interview suspects.

5.4       The important thing is that you don't ignore your suspicions or concerns. Seek advice and don't be afraid to raise your concerns.

5.5       Employees with concerns should avoid discussing their suspicions with anyone other than the officer with whom they formally raised the issue. Under no circumstances should any employee attempt to investigate any matter on their own.

5.6       Once you have reported the incident, you may be contacted further by Internal Audit as part of the ongoing investigation. You should provide them with as much information as possible to enable the investigation to be effectively progressed.

6. Actions by managers

6.1      If you have reason to suspect fraud, bribery or corruption in your work area, or a concern has been reported to you by a member of your staff, you should do the following:

• listen to the concerns of your staff and treat every report seriously and sensitively. Reassure staff that their concerns will be taken seriously and passed on to the appropriate officer
• obtain as much information as possible from the member of staff, including any notes or evidence to support the allegation. Do not interfere with this evidence and ensure it is kept securely
• Ddo not attempt to investigate the matter yourself or attempt to obtain any further evidence as this may compromise any internal audit, disciplinary or police investigation
• report the matter immediately using one of the reporting methods listed in section 4.2 or 5.1

7. Actions by councillors

7.1      If a councillor has suspicions about fraud, bribery or corruption whether it be a fellow elected councillor, officers of the council, partner organisations of the council or member of the public they should report this using one of the reporting methods listed in section 4.2 or 5.1.

8. Actions by members of the public or other agencies

8.1      The council encourages members of the public and other agencies who suspect fraud and corruption to report their concerns to the council's Corporate Fraud Team.

8.2      The Corporate Fraud Team operates independently of all other council services and includes trained fraud investigators.

8.3      External parties can report concerns using one of the methods listed:

• fraud telephone hotline: 0191 433 2805
• email: [email protected]
• online: Report suspected fraud 
• in writing to: Corporate Fraud Team, Internal Audit and Risk, Gateshead Council, Civic Centre, NE8 1HH (Please mark your correspondence as private and confidential).

8.4       Alternatively, concerns or suspicions can be reported via the council's public whistleblowing reporting procedures outlined in the Whistleblowing Policy - arrangements for the public.

8.5       A complaints procedure also exists if your concern does not relate to fraud and/or corruption. See Complaints.

9.  Investigation Process

9.1      Any suspicion of fraud will be treated and investigated in an independent, open-minded and professional manner with the aim of protecting the interests of both the council and the suspected individual(s).

9.2      The council's Corporate Fraud Team reviews and investigates suspicions of fraud.

9.3      Where necessary, the council will work in co-operation with other organisations such as the Police, Department for Work and Pensions, Home Office, Her Majesty's Revenue and Customs, UK Borders Agency, and other Local Authorities.

9.4      Investigations into suspected fraud or corruption will be conducted in a professional manner in accordance with the relevant statutory provisions and local protocols to ensure any actions are carried out both fairly and lawfully. This will include, but is not limited to:

• Police and Criminal Evidence Act 1984 (PACE)
• Criminal Procedure and Investigations Act 1996 (CPIA)
• Human Rights Act 1998
• Regulation of Investigatory Powers Act 2000 (RIPA)
• All evidence gathering will comply with the Data Protection Act 1998

9.5       If sufficient evidence is established, the case will be reviewed to decide on the appropriate course of action to be taken. The council's Corporate Fraud Sanction Policy provides further guidance of what appropriate action will be taken against the persons concerned. The council's Counter Fraud and Corruption Strategy gives a strong message that the council will not tolerate fraud and corruption, and fraudsters will be punished.

9.6       In order to provide a further deterrent, fraud prosecutions will be published on the council's website and other council communications. Fraud prosecutions will also become public domain and therefore could also be featured in media reports. 

10. Employee Investigations

10.1  Where it is appropriate to do so initial enquiries may be made by the manager or the Corporate Fraud team, as agreed with the Chief Internal Auditor, to determine if there does appear to be an issue of fraud or other irregularity.

10.2      During the initial enquiries, managers should:

• determine the factors that gave rise to the suspicion
•  examine the factors to determine whether a genuine mistake had been made or whether a fraud or irregularity has occurred
• where necessary, carry out discreet enquiries with staff and / or review documents; and
• contact the Chief Internal Auditor to discuss the allegation and agree any proposed action

10.3      An evaluation of the case should include the following details:

• outline of allegations
• officers involved, including job role and line manager
• amount involved / materiality / impact
• involvement of any other parties
• timescales - one off or ongoing; and
• evidence - where held and access

10.4    In accordance with the Counter Fraud and Corruption Strategy, without prejudice to any action required of Chief Officers under any disciplinary codes, procedures or regulations, the Chief Internal Auditor will, in consultation with the Strategic Director, Resources and Digital, and the Monitoring Officer, make a decision on the action to take, including any preliminary audit investigation or referral to the Police.

10.5    All suspicions of employee misconduct in relation to fraud, irregularity and theft should be reported to the Chief Internal Auditor, even where initial enquiries are conducted by the Service.

10.6    The Chief Internal Auditor should be informed of the results of the initial enquiry so that the case can be closed or a more detailed investigation organised. Internal Audit and Risk staff have the power to access documents and obtain information and explanations from any officer for the purpose of audit.

10.7    Where the initial enquiry appears to indicate misconduct by a council employee the manager should inform Internal Audit and Risk of:

• all the evidence gathered; and
• the actions taken with regard to the employee (e.g. suspension or redeployment) or any other action taken to prevent further loss.

10.8    The manager should liaise with Human Resources and be aware of the council's requirements regarding the disciplinary process. If suspension is necessary, this requires the prior approval from the Service Director.

10.9    Depending on the size of the fraud or the circumstances of its perpetration, the Chief Internal Auditor will consider whether the Corporate Fraud team should undertake the investigation. If appropriate, advice and guidance will be provided by Internal Audit and Risk and Human Resources to enable an investigation to be undertaken by an appropriate officer within the service area.

10.10  Internal Audit and Risk will review the outcome of the investigation (irrespective of whether undertaken by its own staff or the staff from the service area), to ensure that appropriate action is taken to help detect/prevent similar frauds and make recommendations to strengthen internal control systems.

10.11  The Investigating Officer will:

• ensure the investigation is conducted in line with the Regulatory Powers Act 2020
• deal promptly with the matter
• record all evidence that has been received
• ensure that evidence is sound and adequately supported
• secure all the evidence that has been collected
• where appropriate, contact other agencies
• when appropriate, arrange for the notification of the council's insurers
• report to senior management, and where appropriate, recommend the action to be taken by management in accordance with the Counter Fraud and Corruption Strategy and the council's Disciplinary Procedure; and
• if a criminal act is being investigated seek advice from the Monitoring Officer to ensure that the investigation is undertaken in accordance with the Police and Criminal Evidence Act 1984 (PACE)

10.12  Where circumstances merit, close liaison will take place between the Investigating Officer, Internal Audit and Risk, Strategic Director, Resources and Digital, Monitoring Officer, the respective Service/Directorate and Human Resources as appropriate.

11. Liaison with Police

11.1    Investigations will try to establish, at an early stage, whether it appears that a criminal offence has taken place. This will shape the way the investigation is handled and determine the likely outcome and course of action.

11.2    The police generally welcome early notification of suspected fraud, particularly that of a serious or complex nature. Some frauds will lend them themselves to automatic reporting to the police (such as theft by a third party).

11.3    For consistency, the Chief Internal Auditor, following consultation with appropriate officers, will agree when the matter should be referred to the police.

11.4    Where there is a possibility of criminal action, the police will be consulted for advice and guidance and, if necessary, assistance where interviews are to be conducted under caution in compliance with the Police and Criminal Evidence Act (PACE) which governs the admissibility of evidence in criminal proceedings.

11.5    The circumstances of the case may dictate that both a criminal and disciplinary investigation be conducted in parallel. Criminal investigations and prosecution can often take substantially longer to undertake than disciplinary investigations and consequently any disciplinary investigation should not be delayed pending the outcome of any criminal investigation, unless the police advise otherwise.

11.6    One key difference which should be borne in mind between internal disciplinary proceedings and criminal proceedings is the burden of proof. There is no requirement under an internal disciplinary investigation for a fact to be established beyond reasonable doubt. Instead, the disciplinary investigation needs only be satisfied, 'on a balance of probabilities', that the misconduct has been committed before taking any disciplinary action. This means that while the police or Crown Prosecution Service may decide that there is insufficient evidence to uphold a criminal conviction, the council may still take disciplinary action.

11.7  All members and employees will co-operate fully with any police or external auditors which may have to take precedence over any internal investigation or disciplinary process. However, where possible, teams will co-ordinate their enquiries to maximise the effective and efficient use of resources and information.

12.2.  Sanctions and recovery of losses

12.1  The council will seek the strongest sanctions against individuals/organisations who commit fraud against the council in line with the Corporate Fraud Sanction Policy.

12.2    The forms of sanction available are:

• no further action taken
• warning letters
• cautions
• civil proceedings
• administrative penalty
• criminal proceedings
• disciplinary action

13. Review

13.1    The Plan will be subject to regular review to ensure it remains current and effective.