ANTI-FRAUD AND CORRUPTION POLICY An Open and Honest Authority

1. Introduction
I a mis r g i rs o s ii ,A e V ly B ru h C u c (h n d n t i t e p n ile ie n s bi s mb r ae oo g o n i e t l l t C u c wlc ni et efc arb s s n ea a s f u o c r pi , o n i i o t u o f t o u t t c g i tr d r or t n l l ) n e a n a u o irrespective of whether it is attempted internally or externally. The Council is committed to this Anti-Fraud/Corruption Policy that has been designed to: encourage prevention; promote detection; identify a clear pathway for investigation; and foster disciplinary action and/or prosecution, where warranted. T eC u c e p c t no po r t a da c u tbi i ta Me es h o n i x e t i n rpi y n co na iy s h t mb r l s ao e l t and staff at all levels will lead by example in ensuring adherence to rules, procedures, codes of conduct and recommended practices. The Council also expects that individuals and organisations (e.g. suppliers/contractors) with whom it comes into contact, will act with integrity and without thought or actions involving fraud or corruption. The Council is committed to the following values to support the delivery of all of its services: Being Co-operative and Helpful - by treating our customers with respect, listening to, consulting with, and encouraging individual and community involvement Working in Partnership - with statutory, voluntary and private sector partners to improve the quality of life of residents and visitors to the Borough Safeguarding the Environment - by striving to improve our environment and seeking sustainable and environmentally sound working practices

Providing Value for Money - by identifying the needs of our communities and using our resources thoughtfully and to best effect Valuing Our Employees - by continuing to recognise our most important asset and ensure their development leads to improving Council services Promoting Equality - by endeavouring to be fair, ensuring equality and inclusiveness in all we do Continuously Improving - by continuing to aim to provide the highest possible service standards, measuring and publicising our performance and regularly reviewing the services we deliver Ensuring Ethical Practice - by being committed to the highest standards of behaviour from both Members and Officers, demonstrating Selflessness, Integrity, Objectivity, Accountability, Openness, Honesty and Leadership. These values are underpinned by the Council being an open and honest authority and this policy is intended to reflect this.

2. Background
Over recent years, there have been a number of reviews and reports regarding standards of conduct both in the private and public sectors. These have included: The Nolan Committee (Report on Standards in Public Life) The Cadbury Report (Corporate Governance) and T e A d C mmi i Poe t g te P bcP re (o ai Fa d h u i o s o s rtcn h u l us c mb t g ru t sn i i n and Corruption in the Public Sector) The Turnbull Report T eP bc nee t i l ueA t 9 8( il l i h u l Itrs Ds o r c 1 9 se o n ) i cs Wh t -b w g National codes of conduct for councillors and public sector employees In addition, over the last few years there has been a rise in media coverage depicting Town Halls as places riddled with malpractice. This sort of atni afc te p bc p re t n o, a d c ni n e i l a t t n f t h u l ec pi e o es is o f n o fe c n o l d , c authorities. The last decade has seen fundamental changes to the nature, operation and extent of local authority services. These changes have shifted authorities towards a more commercially orientated environment. These have included the introduction of: -

 Market Testing S As S ri L v l ge me t L (ev e e e A re ns c ) Trading/Business Units Best Value Prudential Code National Procurement Strategy Public Finance Initiatives (PFI) Public/Private Partnerships Joint Procurement amongst local authorities Public sector electronic market places. Public sector electronic tendering (e-tendering) Anti money laundering regulations New trading powers Gershon Efficiency Review All these changes have taken place in a period of severe financial constraint with an ever intensifying and critical spotlight being placed on levels of public expenditure. Consequently, the perception of risk in local authorities has increased which, in turn, affects public confidence.

3 Present Situation
At present, Amber Valley Borough Council has in place a variety of rules and procedures to help ensure that the highest standards of conduct are practised by members, employees and those with whom the Authority deals. These rules and procedures are laid out in a variety of documents i.e.: Me es C d O L c l o en n C n u t mb r o e f o a G v rme t o d c Financial Regulations Standing Orders Financial Procedures O f es C d O L c l o en n C n u t fc r o e f o a G v rme t o d c i Member/Officer Protocol The Council is also aware of the high degree of ongoing external scrutiny of its affairs by a variety of agencies including: The Local Government Ombudsman The External Auditor The Audit Commission Central Government Departments/Parliamentary Committees HM Customs and Excise The Inland Revenue

 The Department of Work and Pensions (DWP) The Benefit Fraud Inspectorate (BFI)

4. POLICY STATEMENT
This document presents the Council with a Policy for an Open and Honest Authority. It consists of an overall policy statement and a number of detailed codes of conduct, which sets out the culture, tone and standards of Amber Valley Borough Council. The Policy will need to be endorsed by the Council. All members, staff, and existing and future clients will be made fully aware of its content and meaning. The following policy statement is recommended: In administrating its responsibilities, the Council will continue to effect a robust stance against any form of malpractice or irregularity, irrespective of whether it is attempted internally or externally. The Authority is committed to operating in an open and honest way in order to:Encourage the prevention of malpractice Promote the detection of fraud and corruption Identify a clear pathway for investigation. It is expected that Members and staff at all levels will lead by example in ensuring adherence to legal requirements, rules, codes of conduct, procedures and practices. The Council also expects that individuals and organisations with whom it comes into contact, will act towards the Authority with integrity and without thought or actions involving malpractice. This Policy Statement will be underpinned by various codes of conduct that will be more service-specific. It sets out the open and honest culture that the Authority is continuing to foster together with a framework for the prevention, detection and investigation of any malpractice or irregularity. This Anti Fraud/Corruption Strategy is based on a series of comprehensive and interrelated procedures that are designed to frustrate any attempted fraudulent or corrupt act. These cover: Culture Prevention

 Detection & Investigation Training Prosecution Policy

4.1 CULTURE The Council has determined that the culture and tone of the organisation will continue to be one of honesty and opposition to fraud and corruption. There is an expectation and requirement that all individuals and organisations who are associated with the Authority in any way will act with i e rya d ta C u c me esa d s f a a l e , i l d b n gi n h t o n i t t l s mb r n t f t l e l wl e a, l vs l a y example in these matters. T e A toi s f ae a i otn e me tn i s n e o f u a d h uh ry t f r n mp r t l n i t t c n r d n ts a a e s a a corruption. An integral part of this culture will be the education of employees. Staff will be informed of: What constitutes malpractice within the Authority and how it affects their jobs and the service they provide. Impress how seriously the Council deals with all forms of malpractice. (If employees do not have the confidence that the Authority will tackle the problem they may not come forward). What practices are not acceptable. (Staff should be encouraged to ask managers if something is appropriate before, not after, the event). In return, the Council will be open and responsive to any concerns raised. The Authority will ensure that management is ready to listen and respond since it is not easy for people to report concerns about irregularities. The Council will continue to ensure that concerned employees are given full support and every precaution is taken to protect anonymity, as required under the Public Interest Disclosure Act 1998. In addition, defined routes to express employee concerns will be sustained and built upon i.e. via Chief Officer, line manager or Audit Manager. It is possible that if the Authority does not develop a culture that is open and honest and where concerns can be raised, then either the issue will remain unaddressed which may have potentially serious implications for the organisation as a whole, or the individual may feel compelled to voice their concerns outside of the Council i.e. to the media.

E ly eC n en (Whsl-Bo ig ) mpo e o c rs it lw n e T eC u cl a a o tdafr l rc d r c l dasn C n en h o n ih s d pe oma po e ue al R iig o c rs e a A e V l y, ic roaig b s pa t e a d da t mb r al n op rt e n e t rci , n c rwn u i p n consultation with Public Concern at Work. It has been issued to all staff. It identifies the way in which employees can and should raise their concerns under the Public Interest Disclosure Act 1998 as regards any form of malpractice that comes to their attention. Money Laundering Regulations 2003 The Proceeds of Crime Act 2002 The Council has a separate Anti Money Laundering Policy that bans all forms of money laundering and any recycling of the proceeds of crime through its accounts. Any suspicions will be reported directly to the national authorities. Third Party Concerns (Complaints Procedure) The Council has a clearly defined complaints procedure - see the Helping You leaflet on Complaints. Members of the public are also encouraged to report concerns through this route. Senior Management are responsible for following up any allegation of fraud or corruption received and will do so, in accordance with the requirements of the Financial Regulations, by immediately informing the Audit Manager and Executive Director (Financial Services). The investigating officer (usually the Audit Manager) will: Deal promptly with the matter Record all evidence disclosed Ensure that all such evidence is sound and adequately supported Ensure the security of all evidence collected Ensure that, where appropriate, adequate consideration is given to the need to liaise with any other agency (e.g. the Police) E s r ta te C u c i ues ae n te o te su t n a te n ue h t h o n i n rr r oi d f h i ai t h l s s f i t o earliest opportunity. Report the outcome of any investigation promptly, in accordance with the rq i me t o teC u c Fn n i R g l i s s ta a po r t e u e ns fh o n i i c l e u t n , o h t p rpi e r l s a a ao a a t n c n b tk n o i f d g ( c d g i o i te C u c co a e a e n t i i s i l i n k g h o n i i s nn nun v n l s disciplinary procedures). The expectation is that senior management will deal swiftly and firmly with those who defraud the Council, or who are corrupt. The Authority should be considered as robust in dealing with financial malpractice.

There is, of course, a need to ensure that any investigation process is not misused and, therefore, any such abuse (e.g. the proven malicious raising of allegations known to be unfounded) may itself be dealt with as a disciplinary matter. Benefits Investigations Unit The Benefits Investigations Unit has devised a similar anti-fraud policy to deal specifically with housing and council tax benefit fraud and corruption. Cabinet approved that policy on 17th September 2003. 4.2 PREVENTION

Employees
Recruitment Procedures The Authority recognises that a key preventative measure in the fight against fraud and corruption is to take effective steps at the recruitment stage to establish, as far as possible, the previous record of potential employees in terms of propriety and integrity. In this regard, temporary and contract staff have to be treated in the same manner as permanent staff. Employee recruitment is therefore required to be in accordance with the C u c s l t npo e ue .Ii p rc l l i otn,nti c ne tt o n i e co rc d rs ts atu r mp r ti h o tx o l s ei i ay a s , obtain written references regarding the known honesty and integrity of the potential employee. The Council has already adopted a comprehensive recruitment procedure that includes the taking up of references in all cases before an appointment is made. (The Organisational Development Unit has formalised this procedure in a guide on recruitment, which includes guidance on the extent to which references should be verified with the referees or cross-checked with professional bodies to confirm membership.) Membership of Professional Bodies Staff of the Council are expected to comply, at all times, with the requirements of any Code(s) of Conduct relating to their personal membership of any professional institute. Disciplinary Procedure The Council has a disciplinary procedure in place. Staff Induction T e rl ta a po r t s f ae e p c d t p y i te A toi h o h t p rpi e t f r x e t o l n h uh ry e a a e a ts framework of internal control will feature in staff induction and re-induction procedures.

Fidelity Guarantee Insurance I lewt terq i me t o teA toi f et g aa tei ua c n i i h e u e ns fh uh ry i l u rne n rn e n h r ts d i y s policy, the attention of senior management should be triggered where staff regularly do not take annual leave, or, for example, where through sickness and vacancy levels, recognised checking mechanisms break down. The Council has insurance cover to specifically provide for any possible loss of money or property as a direct result of fraud or any act of dishonesty c mmi db e l e s T eC u cc v rspo i dfr l mp y e , o t t y mp y e . h o n i o e i rv e o a e l e s e o l s d l o although for certain staff in high-risk areas the cover is extended to reflect this. Standing Orders Saf r a ormi e ta u d rh C u c s n i od r te mu t tfae l e n d h t n e te o n i t d g res h y s s d l a n s operate within Section 117 of the Local Government Act 1972, regarding pecuniary interests in contracts relating to the Borough Council or fees and rewards other than proper remuneration. Codes of Conduct - Officers In January 1996, Internal Audit published a local code which stipulated that gifts and hospitality be not accepted. Where non-acceptance is not possible, they have to be recorded in the departmental registers and disposed of to the benefit of the Council. The registers have to be checked by Chief O fes T i c d flw dg i le a e d p bs e i teC u c f r. h o e oo e u en s l a y u lh d n h o n i i c s l di r i l s Financial Regulations and Standing Orders relating to Contracts. A new national code that the Council will adopt has just been released nationally. Conflict of Interest Officers are also required to declare any outside or conflicting interests (for example, other employment or association with bodies that receive or supply goods or services to the Council) in the Register of Interests maintained by the Assistant Chief Executive. Relationships Officers are required to declare relationships that may serve to prejudice the proper handling of any transaction or conduct of any business on behalf of the Council. The Codes are issued to all new starters and reference to the key parts of te d c me t i rs td i te i rd co b o l trn Wok a h o u ns s e t e n h n o u t n o k t Sat g a t i e i r t A e V ly. mb r ae l

Members
Codes of Conduct - Members Members are required to operate within:-

 T eB ru hC u cl Sa dn O d r h oo g o n is tn ig res The National Code of Local Government Conduct Sections 94-96 of the Local Government Act 1972 T eL c l uh risMe e Itrs R g lt n 1 9 (l 1 ) h o a A toie t mb r nee t e uai s 9 2 S. 8 s o 6 T eC u cl C d o C n u to C u cl r a dO f esD aig h o n is o e f o d c fr o n ios n fc r e l l i n With Planning Matters Member/Officer Protocol These matters are specifically brought to the attention of members in the induction pack and official Borough Council diary, and include the declaration and registration with the Assistant Chief Executive of any potential area(s) of c nlt ew e me es c u c d t sa drs o s ii a da yoh r o f b te n mb r o n i ui n e p n ile n n te i c l e bi s t areas of their professional or personal lives.

Systems
The Council has financial regulations in place that require staff, when dealing wt teA toiafi ,oa t a c ra c wt b s pa te i h uh ry f r t c i cod n e i e t rcc . h ts a s n h i There is a statutory responsibility under Section 151 of the Local G v rme t c 1 7 t e s r tepo e a mis ai o teA toi o en n A t 9 2 o n ue h rp r d n t t n fh uh ry ir o ts financial affairs. Financial procedures and accounting instructions which outline the procedures and responsibilities of staff in relation to the Borough C u c f a c l cvyh v b e d v l e . T e E e ui Drc r o n i i n i a ti a e e n e e p d h x c te i t l n a s it o v eo (Financial Services) exercises, amongst other things, quality control on f a c l d n t t n b i teC u cS co 1 1O fe. i n i a mis ai , e g h o n i e t n 5 fc r n a ir o n l s i i In dealing with allegations of electoral fraud, the Council will continue to follow best practice guidelines issued by the Electoral Commission. All polling staff shall be briefed on electoral fraud and reporting mechanisms. Allegations of electoral fraud or malpractice shall be referred to the police for investigation. The Council has developed, and is committed to continuing with, systems and procedures that incorporate efficient and effective internal controls and which include adequate separation of duties. It is required that all chief officers in departments ensure that such controls (including those within systems operating in a computerised environment) are properly maintained a dd c me td T eA toi Itra A d B s e sU ii e e d nl n o u ne . h uh ry nen l u i u i s n n p n e t ts t n td y monitors their existence and appropriateness. The Internal Audit 5-year plan is agreed annually by the Management Team. Individual reports issued in the course of the year are circulated to a po r t O fes T eS rt yC mmi eo teC u c a o l i p rpi e f r. h cui o t a i c n t fh o n i l c l n e l s as various reports.

4.3 INVESTIGATION and DETECTION The array of preventative systems, particularly internal control systems, within the Authority has been designed to provide indicators of any fraudulent activity, although generally they should be sufficient in themselves to deter fraud. It is often the alertness of members, staff or the public that enables detection to occur and the appropriate action to be initiated when there is evidence that fraud or corruption may be taking place. However, despite the best efforts of financial managers and auditors frauds aed c v rdb c a c o a ters lo a ofa dteC u c h s r i o ee y h n e r s h e u f t f n h o n i a s t i p l put in place arrangements to enable such information to be properly dealt with. Staff of the Council are required under financial regulations to report all suspected irregularities to the Audit Manager and the Section 151 Officer i.e. the Executive Director (Financial Services). Prompt reporting of such a situation is essential to this Anti-Fraud/Corruption Strategy and: Ensures the consistent treatment of all information concerning potential fraud or corruption Facilitates effective, objective and professional investigation by an experienced auditor Ensures the proper implementation of a fraud-response investigation plan. Depending upon the nature and the anticipated extent of the alleged irregularities, the Internal Audit Business Unit will normally work closely with management to ensure that all allegations and evidence are properly investigated, assessed and reported upon. (Please refer to Appendix A attached to this document below). T e C u c d c lay po e ue wl b i l ne w ee te h o n i i ii r rc d rs i e mp me td h r h l s pn s l e outcome of an investigation indicates improper behaviour. 4.4 TRAINING The Council recognises that the continuing success of its AntiFraud/Corruption Strategy, and its general credibility, will largely depend upon the effectiveness of programmed training and responsiveness of staff throughout the organisation.

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To facilitate this, the Council supports the concept of induction and reinduction training for members and, particularly for staff involved in internal control systems, to ensure that their responsibilities and duties in this respect are regularly highlighted and reinforced. Staff who ignore such training and/or guidance may face the possibility of disciplinary action. The investigation of alleged fraud and/or corruption centres upon the C u c Itra A d B s e sU i I i teeoe a p rn ta s f o n i nen l u i u i s n . ts h rfr p ae t h t t f l s t n t a involved in this work should also be effectively and regularly trained. The training plans of Audit staff will reflect this requirement. 5. PROSECUTION POLICY The Council will normally wish the police to be made aware of, and to independently investigate and prosecute, offenders where financial impropriety is suspected or discovered. Referral to the Police is a matter for the Chief Executive, after consultation with the Section 151 Officer, relevant Chief Officer(s) and the Audit Manager under the C u cl a re po e ue o n is ge d rc d r. Where the Council refers the matter to the police the consideration of s san bly i tk n o t o te A toi h n s a ti te u tia it s a e i u fh uh rys a d s hs h n t becomes a matter for the Crown Prosecution Service to consider. Before any prosecution is brought, it must be considered to be in the public interest. 5.1 Various factors will be taken into account when considering whether a prosecution is in the public interest such as: The amount of the alleged misappropriation. The age and, physical or mental health of the accused. The length of time that has elapsed since the offence was alleged to be committed. Whether the accused was in a position of trust. Whether others are alleged to be involved. Whether there are several instances of the alleged offence. The Council may consider the option to prosecute more likely if: The offence was deliberate and not caused by a genuine mistake or misunderstanding. There is evidence of collusion. T ed fn a t a an l d ro og n e o teae e ofn e h ee d n w s r g a e r ra i r fh lg d f c . i e s l e

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 The defendant was in a position of trust or authority. The Council may consider the option of prosecution less likely if: The loss to the Council was minor. There was no planning or intent involved in the process. The above criteria are not exhaustive and do not cover all situations.

5.2 Where the Authority refers the matter to the Police, the public interest consideration is taken out of the hands of the Authority and put in the hands of the CPS 5.3 In cases of alleged fraud by a member of staff or councillor, the Council may take the view that it is a significant breach of trust and hence always in the public interest to prosecute. 5.4 Benefit Fraud committed by members of the public is already covered under the Benefit Fraud Prosecution Policy, which has already been approved and adopted by the Council.

6. Conclusion
The Authority has in place a clear network of systems and procedures to assist it in implementing safeguards against fraud and corruption. It is determined that these arrangements will keep pace with any future developments in both preventive and detection techniques relating to fraudulent or corrupt activity that may affect its operation. To this end, the Authority maintains a continuous overview of such arrangements and, in particular, through its financial regulations, financial procedures, standing orders and audit arrangements. This policy statement will be subject to ongoing review to ensure its currency.

AAM/Amber Valley Internal Audit Business Unit March 2005

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APPENDIX A

FRAUD INVESTIGATION PROCEDURES

1. All cases of suspected fraud, misappropriation of money, materials or equipment, or any mismanagement of money or other assets, or any other irregularities, will be reported immediately to the Audit Manager and the Section 151 Officer i.e. the Executive Director (Financial Services). 2. Each case will be treated on its merits and will not be pre-judged. 3. E a ai o teae ai swlb p r r db terl a t e at n v l t n fh lg t n i e ef me y h e v n d p r u o l o l o e me t s Chief Officer/Divisional Head and the Audit Manager along the following lines: Credibility of the person making the allegations Existence of a motive on the part of the suspect Existence of an opportunity Feasibility e.g. access available to the suspect Significance of suspected fraud i.e. size of loss Cost of conducting a full scale investigation Availability of information and proof 4. Once a decision has been made to proceed with the investigation, consideration will be given as to whether to suspend the suspect pending the outcome of the investigation to refer the matter to the police 5. Any investigation will be carried out by the Audit Manager, who will agree with the relevant Chief Officer/Business Unit Head the terms of reference and scope of the investigation. Any variation in the scope will be discussed with the relevant Chief Officer/Business Unit Head, but the Audit Manager has a professional duty to extend the scope of any investigation where evidence gathered demonstrates the need to do so. 6. Al i e t ai s wl b c re o t i e e d nl o te s s e t l n sg t n v i o i e ar d u n p n e t f h u p cs l i d y management, who will receive verbal progress reports at agreed intervals, and interim written reports where the investigation is protracted. 7. All documents required by the Audit Manager will be made available to him/her on request and will be held by him/her (where appropriate) until the conclusion of the investigation.

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8. Any interviews that take place as part of the investigation will be carried out under the auspices of the Police and Criminal Evidence Act 1984, where appropriate. Interviewees must be informed, prior to the interview taking place, whether this applies or not. 9. At the conclusion of the investigation an audit report will be issued to the relevant Chief Officer/Business Unit Head, the Section 151 Officer and the Chief Executive, detailing the purpose and scope of the investigation, how it was performed, the evidence that had been gathered, and the findings of the investigation. This report will be used in any further proceedings i.e. internal disciplinary/referral to the police. 10. The Auditor who carried out the investigation will be available to provide factual evidence for any subsequent disciplinary proceedings, and will advise on any breach of the C u c rg l i s T ma ti i e e d n e o ni e u tn. o l s ao ia n p n e c, n n d however, Internal Audit cannot be involved in preparing the prosecution case. 11. It will be a matter for the Chief Executive, in consultation with relevant Chief Officers and the Audit Manager, to decide whether to refer the case to the police. 12. As a matter of course, any losses sustained by the Council should be reclaimed from the perpetrator. 13. A separate audit report will be issued at the end of the audit, where appropriate, detailing any control weaknesses that have been highlighted in teC u c o eai sa p ro tei e t ai , n rc mme d t n h o n i p rt n s at fh n sg t n a d e o l s o v i o n ai s o made to eliminate such weaknesses. 14. T e c s o Itra A d t i c r i o tte i e t ai wlb h o t f nen l u i i n ar n u h n sg t n i e t me s yg v i o l c ag dt terl a t h f f eb d e. h re o h e v n C i O f r u g t e e i s c

AAM/Internal Audit March 2005

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