1 disclaimer: all images have been taken from google clipart
TRANSCRIPT
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Anti-Fraud Hotline
Case Scenarios
Disclaimer: All images have been taken from Google Clipart.
List of possible corrupt activities during the lifetime of a project
PROCUREMENT
• Manipulated tender specifications/bidding
documents
• Bid-rigging and insider information
• Biased supplier prequalification
• Manipulated bid evaluation, contract award and
execution
• Surplus procurement
• Supply of sub-standard goods or services
TRANSPORT
• Payment for access to aid resources or
beneficiaries
• Diversion during transport
• Falsification of inventory documents
• Diversion during storage
ASSET MANAGEMENT
• Unauthorized private use of vehicles
• Corruption in vehicle repairs and
maintenance
• Diversion of fuel
HUMAN RESOURCES
• Bias in recruitment, deployment, promotion or
supervision
• Short-circuiting of HR controls in an emergency
• Conflict of interest
• Extortion, intimidation and coercion of staff
• Behavior conducive to corruption
List of possible corrupt activities during the lifetime of a project
FINANCE
• Operating in a cash environment
• Issues in cash-based programming
• Financial fraud and embezzlement
• Improper accounting
• False or inflated invoices or receipts
• Manipulated audits
• Payroll and claims fraud
• Payment for local permits or access to public
services
NEEDS ASSESSMENT/RESOURCE ALLOCATION
• Biased project location or resource allocation
• Inflated or distorted needs, costs or beneficiary
numbers
PARTNERS AND LOCAL INTERMEDIARIES
• Manipulated selection of local partner agencies
• Ineffectual partner monitoring
• Biased local relief committees
• Blocking or diversion of aid by ‘gatekeepers
List of possible corrupt activities during the lifetime of a project
TARGETING AND REGISTERING BENEFICIARIES
• Bias in targeting criteria
• Corrupt exclusion or inclusion of
beneficiaries
• Multiple or ‘ghost’ registrations
DISTRIBUTION AND POST-DISTRIBUTION
• Modification of entitlement size or
composition
• Diversion of resources during distribution
• Post-distribution taxing or expropriation
List of possible corrupt activities during the lifetime of a project
PROGRAMME MONITORING AND EVALUATION
• False, exaggerated or incomplete reports
• Non-reporting of corruption
COMMODITIES
• Diverting Food aid
• Gifts in Kind
1. SUPPLY OF SUBSTANDARD GOODS OR SERVICES
Under a health project, medical equipment had to be provided to a hospital. The head
of the project awarded the contract to a company that provided surgical instruments.
After certain medical equipment was received by the hospital, the project head asked
the company to provide used equipment to the hospital at the cost of new ones. After
the company refused, their contract was cancelled and handed over to another party
that agreed to supply used equipment like x-ray machines, delivery tables etc. The
project head cancelled the contract only because the surgical company refused to
collude with him; however, unfortunately, he found another supplier that agreed to the
corrupt terms.
• Set up an independent monitoring system
Make frequent, unannounced control checks (including site visits) to
monitor contract implementation. Consult aid recipients regularly to help
establish benchmark quality standards for items, as well as to check whether
these are adhered to. Carry out regular, independent internal audits to deter collusion or cover-up,
and ensure external auditors compare final costs and results with estimates and expectations.
Investigate discrepancies and hold those responsible to account. Inform beneficiaries of quality
standards, so they can tell you if these are not met.
Prevention measures
1. SUPPLY OF SUBSTANDARD GOODS OR SERVICES
• Prices inflated substantially above market levels
• The amount of goods or services delivered being less than requested
• Goods that don’t match the sample provided with the bid
• Goods with imminent or past expiry dates
• Excessive or frequent change orders, requests for contract variations or efforts to
renegotiate contract terms during implementation
Watch out for
1. SUPPLY OF SUBSTANDARD GOODS OR SERVICES
2. MODIFICATION OF ENTITLEMENT SIZE OR COMPOSITION
Relief goods consisting of biscuits, chocolates and cooking oil were being provided to the
poor victims and patients of a rural and basic health center. The DCO handed over the
responsibility of distribution of the goods to one of the doctors. The doctor appointed a
distributor at his discretion. Allegedly, very few people received the allocated aid while
some goods were being sold in the local markets.
Allegedly the doctor appointed a distributor he could collude with; relief goods were
reported to have been misused and/or hidden so that they could be sold.
• Inform the community of distribution details and their entitlements
Tell beneficiaries transparently and directly (not via leaders) what each is entitled to receive, how
much, when and how. Communicate distribution timing, process, ration size and composition in the
local language through community meetings, signboards, leaflets, speaker vans, posters,
drama and radio announcements, to ensure that people are aware of their
entitlements. Encourage beneficiaries to use your confidential complaints mechanism
if entitlements aren’t received as announced.
• Have written agreements with distribution site teams
Specify contractual obligations and penalties, including repayment of the value of losses for corrupt
diversion of goods. If distribution site personnel are caught diverting goods, impose sanctions, which
will also act as a deterrent and show that your agency is serious about its responsibilities to
beneficiaries.
Prevention measures
2. MODIFICATION OF ENTITLEMENT SIZE OR COMPOSITION
• Make regular visits to distribution sites
Monitor and evaluate distributions regularly. Make random, surprise
site visits to verify that rations handed out match original entitlements.
Visit local markets and stores to see whether relief goods are being sold
privately. Carry out ‘food basket verification’, i.e. random checking of rations received by one in
every five or 10 beneficiaries, and examine food sacks and oil cartons thoroughly to ensure they’re
completely empty post-distribution. Rotate M&E teams to reduce the potential for collusion with
field staff.
Prevention measures
2. MODIFICATION OF ENTITLEMENT SIZE OR COMPOSITION
• Large quantities of relief goods on sale in local markets or stores
• The rounding-up of ration allocation numbers
• Puncture holes in bags or cans; packages that look tampered with
• Cartons missing from standard pallets
• Distribution records that have been altered or could have been rewritten
• Substantial discrepancies between cash transfer entitlements as calculated in the needs
assessment, and disbursements
Watch out for
2. MODIFICATION OF ENTITLEMENT SIZE OR COMPOSITION
3. MULTIPLE OR GHOST REGISTRATION
The government had approved the immediate payment of a fixed cash benefit per
disaster-affected family. However, a lot of villagers who were allocated cash under this
scheme, did not receive any relief from the local staff. Instead, villagers from
neighboring areas were registered by replacing the names of legitimate beneficiaries. It
was also seen that the staff, some of whom did not even own a motorcycle, now had
their own cars worth millions.
The local staff was allegedly extorting bribes from the legitimate beneficiaries before
providing the funds. Since the beneficiaries were unable to pay, funds were given to
different villagers that were ready to pay the bribes.
• Verify registration documents at distribution
During registration, ensure staff can speak the language and check registration
documents. Verification should be regular and frequent, including
house-to-house visits, random cross-checks of other records (e.g.
medical records), interviews with people suspected of multiple registration, and roll-calls or card
validation before distributions. Update your information as the population changes with births,
deaths and movement. Try to include some visual record such as photographs, biometric indicators,
etc., to supplement written registration cards.
Prevention measures
3. MULTIPLE OR GHOST REGISTRATION
• Corrected or apparently falsified registration lists
• Altered or fake registration or ration cards
• Fake identity documents
• Beneficiaries with identical characteristics (age, family size,
origin, etc.)
• Too many absent beneficiaries who can’t physically register themselves
• The multiple appearance of similar names (check with local leaders if these are different
people: many names can be repeated in a community), or similar signatures
• Registration lists that are all thumbprints and no signatures
Watch out for
3. MULTIPLE OR GHOST REGISTRATION
4. BID RIGGING AND INSIDER INFORMATION
A contractor was working with an educational foundation and was involved with
constructing classrooms along with providing furniture to the government school. Then,
he was told that his contract had been rejected based on the bid he submitted. The
contractor had not submitted any bids at that time.
Allegedly, one of the employees of the educational foundation along with an employee
of a printing company had prepared and submitted sham quotations with inflated rates
under the contractor’s company letterhead. Then the two made another quotation – this
time under the printing company’s letterhead – and stated comparatively lower prices
than the contractor’s (sham) quote. Thus, because of this collusion, the tender was
awarded to the printing company and both the culprits shared the commission received.
• Have clear sanctions and disciplinary measures
Use debarment or legal action to sanction corrupt suppliers. Be sure to
take disciplinary measures should findings indicate corrupt practices.• Winning bids consistently being the last submitted or
being altered at the last minute (indicating they were waiting for information about other bids)
• Winning bids being consistently just less than the next lowest bid, indicating that the bidder could have received details of other bids
• An employee consistently pushing for contracts to be awarded to one or a few suppliers, even though they may not have made the best bid
• Staff living above their means• Staff having social relations or accepting private appointments with bidders• Staff who are vague or evasive about their purchasing or contract awarding role and authority,
or who resist publicizing information on the procurement process
Prevention measures
4. BID RIGGING AND INSIDER INFORMATION
• Repeated awards to the same bidder or group of bidders• Contracts awarded to known friends or family of agency staff, or to companies
where staff have a financial interest• Contracts awarded under financing terms not the most favorable on offer• Common patterns in bids, particularly where the same calculations,
components or mistakes appear in multiple bids• Conditions conducive to the formation of a price-rigging cartel
(e.g. a small number of vendors who have close relationships with one another)• Bids received in advance of the due date not stored in a secure location• Bids opened in advance of the bid opening date
Watch out for
4. BID RIGGING AND INSIDER INFORMATION
5. CONFLICT OF INTEREST
A local organization was supporting an education department to improve children’s
reading skills. The organization hired a director of operations (DO), who was a friend of
the organization’s chairperson and had been fired from his previous employment due to
alleged corruption. Allegedly, the DO displayed strong biases towards employees; he
would favor the HR manager and whenever she would request to visit a city, that trip
was turned into an official one. The director also showed personal grudges to employees.
He wouldn’t extend employee contracts for personal reasons and would not provide any
justification. Also, the alleged director awarded contracts only to his favorite vendors.
• Have a clear conflict of interest policy as part of your code of conduct
A written policy enables staff to identify and avoid conflicts of interest,
and tells staff what to do if they occur. Its existence makes a clear
statement, that decision taken on any basis other than what’s best for
your organization constitute corruption and undermine program quality.
Such a policy helps staff resist improper approaches, protecting them
(and your organization) from any appearance of harboring corruption.
• Oblige staff to avoid conflict of interest situations
Be clear that employees may not engage in conduct where potential for personal or professional gain
might affect their activities on behalf of your organization. Staff should avoid actual/apparent conflict
between work and private interests by disposing of the private interest or withdrawing from all related
decisions at work. Implement a policy on staff acceptance of gifts and hospitality. Establish an ethics office
to give staff guidance.
Prevention measures
5. CONFLICT OF INTEREST
• Employees or their families with a lifestyle or assets well above their salary
and official income level
• Reports of staff indulging in gambling, excessive entertaining or
international travel, or boasting about their status
• Decisions that are not objectively justifiable and may reflect cronyism
or nepotism• An employee consistently pushing for contracts to be awarded to one or a few suppliers, even
though they may not have made the best bid• Staff living above their means• Staff having social relations or accepting private appointments with bidders
Watch out for
5. CONFLICT OF INTEREST
6. BIASED LOCAL RELIEF COMMITTEE
For the implementation of a project supporting rural areas, toilets had to be
constructed. An NGO formed a committee from one group of people and nominated a
president who was tasked with preparing a list of deserving beneficiaries. Calls were
received from alleged beneficiaries complaining about favoritism. Allegedly, the
president of the committee prepared a list of preferred beneficiaries, even if they already
had a toilet facility. The committee also registered 5-10 persons from the same family.
• Understand local power structuresAs part of your risk analysis prior to or in the initial phase of a crisis, learn about the political, economic, social, religious, ethnic and clan structures in target communities, so that committees and volunteers can be as free from conflict of interest as possible. Require that all committee decisions are publicised transparently and that people know their entitlements, so they can speak out or complain privately if they feel a committee isn’t representing them fairly.• Don’t give committees or volunteers total discretionary powerEnsure that committee or volunteer work is adequately monitored and evaluated. Make random, surprise visits to observe committees or volunteers in action. Explain their roles and responsibilities to the community and set up an independent complaints mechanism (i.e. not through the committee or volunteer structure).• Be explicit about payments or rewards for committee membersDepending on context, either establish and publicise a nominal payment for committee members or publicly state that committee members should not be paid – including by beneficiaries. Make sure everyone understands and agrees to this, so that committee members don’t feel entitled to skim off unofficial ‘payment’ in relief goods which they feel they’ve earned. Publicly acknowledge members’ contribution, to inspire loyalty to your agency and make them feel valued.
Prevention measures
6. BIASED LOCAL RELIEF COMMITTEE
• Committees composed only of established local leaders or public authorities
• Committees with members of only one particular group
• Members who attend committee meetings intermittently
• Unexplained substantial improvements in volunteer or
committee member lifestyles
• Committees resistant to monitoring and evaluation
• Reports of SEA or extortion of staff or beneficiaries
Watch out for
6. BIASED LOCAL RELIEF COMMITTEE