How DFID tackles fraud inquiry
Closed
What the inquiry looked at
“The National Audit Office has recently published findings from their investigation into the Department for International Development's (DFID) approach to tackling fraud. The NAO has conducted its investigation following two major changes which have altered the risk of fraud faced by DFID. The first is the government's commitment to spend 0.7% of gross national income on international aid, which amounted to £12.133 billion in 2015. This commitment has increased DFID's budget by 26.5% since 2011. In addition, the 2015 Strategic Defence and Security Review committed DFID to spend at least 50% of its budget in "fragile states and regions" at least until 2020. These factors could have increased the risk of fraud in DFID's budget. National Audit Office report The NAO found a clear relationship between fragile states and countries also perceived as the most corrupt. Based on DFID's fraud cases, the NAO found there were few allegations of fraud reported to DFID in some of the countries ranking among the most corrupt. In response to previous criticism by external scrutiny bodies, DFID has changed its counter-fraud strategy. It has built the consideration of fraud risk into the process that teams must follow when setting up programmes. The number of allegations of fraud reported to DFID has increased, as a result of its work to increase awareness of fraud and reporting requirements among its staff and suppliers. This is more difficult to achieve in 55% of its expenditure, which is routed through multilateral bodies, where DFID does not have direct control over all the funds it provides and relies on multilateral bodies' systems. The NAO team also found thay DFID's central fraud team investigated 93% of the 429 fraud allegations made in 2015–16 and provided advice on the rest. DFID's fraud caseload quadrupled between 2010–11 and 2015–16 and it received 475 new allegations during the nine months to 31 December 2016. Annual gross losses owing to fraud in 2015–16 were around 0.03% (£3.2 million) of DFID's budget. Between 2003 and 2016, non-governmental organisations accounted for nearly 40% of reported fraud cases. Since 2003, DFID has recovered around two-thirds, by value, of the reported fraud loss. Externally, DFID provides less information than it used to in its Annual Report, although this is made available on its website. Neither the FCO nor the British Council provide more fraud information in their Annual Reports than DFID.”
The committee's words, from the inquiry page on parliament.uk ↗.
What it found
The risk of fraud in the UK Government’s overseas expenditure has changed considerably in recent years, primarily as a result of the Department for International Development’s (DFID’s) budget rising by more than a quarter since 2011 to nearly £10 billion, and a requirement to spend half of this in ‘fragile’ countries which are among the world’s most corrupt states. The Foreign & Commonwealth Office (FCO) and the British Council also work in challenging environments overseas, yet all three bodies report remarkably low levels of fraud. DFID’s recorded losses to fraud in 2015–16 were only 0.03% of its budget and the FCO and the British Council reported losses of only £16,000 and £35,000 respectively. DFID has improved its approach to countering fraud, but has more to do, particularly where it spends money through other bodies such as multilateral organisations and local delivery partners. DFID, the FCO and the British Council all meet HM Treasury’s minimum requirements for reporting fraud in their Annual Report and Accounts by publishing details on all fraud cases over £300,000.
However, public confidence in the Government’s ability to protect its overseas expenditure would be increased if the three bodies were more open about the instances of fraud they identify and what actions they take in response.
What the government said
No government response is linked to this report.
How the inquiry ran
Each dot is a dated item listed on this page, from the inquiry's opening on 21 February 2017 to its close on 4 January 2018.
- Oral evidence 15 Mar 2017
- Report 25 Apr 2017
What it recommended
The committee's recommendations are not listed here yet. Read them in 55th Report - Tackling overseas expenditure ↗ on parliament.uk.
Evidence
Oral evidence sessions 1
- 15 Mar 2017No witnesses recordedparliament.uk ↗