NEWS . ETHICAL CONDUCT & INVESTIGATIONS . AUGUST 2019

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COMMONWEALTH FRAUD INVESTIGATIONS REPORT 

APPLICABLE TO US ALL!

Things happen fast in the Commonwealth government space it seems. The Commonwealth fraud investigations 2016-17 report was published this month by the Australian Institute of Criminology. The report says there has been an 86% increase in internal Commonwealth fraud investigations, with the most common forms of internal fraud related to misuse of government credit cards, misuse of procurement payments and misuse of entity cash.

Here is a snapshot summary of some of the key stats from the 2016-17 report:

• 50 entities commenced a total of 350,291 fraud investigations in 2016-17 with estimated financial losses of $109,105,749
• 33 entities commenced 2,345 investigations into employee/contractor fraud, up from 1,236 in 2015-16, with a value of $2.1 million
• 27 entities finalised 2,371 internal investigations
• 36 entities started 347,902 investigations into external fraud, up from 3,270
• 39 entities finalised 349,166 external investigations, up from 3,125
• Fraud was substantiated in 75 per cent of internal investigations and 99 per cent of external

WHAT OUR CLIENTS NEED TO DO

State and Local Government agencies are responsible for preventing fraud and corruption in the work place. Every agency needs to have a robust fraud prevention plan in place that supports strong governance. Clients need to check the following areas are in place and fit for purpose, such as having:

• Robust Fraud Prevention Plan
• Strong Internal Complaints Reporting Process (Whistleblower guidelines)
• Recent Fraud and Corruption Risk Assessment and Controls
• Up to date Code of Conduct and Procedures
• Robust Fraud Prevention Training Program
• Fraud Prevention Staffing Surveys
• Investigation capability i.e. external independent panel/ investigator

HOW WE CAN HELP

We can help you with an initial Fraud Prevention Health Check to identify any gaps that you may have within your agency. We can then provide you with meaningful feedback and support your development fraud prevention needs. This may include assessing your fraud prevention plan and associated policies and procedures, initiating a fraud and corruption risk assessment process or simply carrying out some training with your staff.

We have an expert team with recent experience working within State and Local government areas. Centium also has expertise investigating any suspected wrongdoing in the work place and can investigate on your behalf.

If you would like to discuss to your fraud prevention needs, please call Roy Cottam Director, Ethical Conduct & Investigations: roy.cottam@centium.com.au or 0417 697600

The Commonwealth fraud investigations 2016-17 report can be found here.

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NSW AUDIT OFFICE REPORT ON ENGAGEMENT OF PROBITY ADVISORS AND PROBITY AUDITORS

The Audit Office’s report found that three key agencies (Transport for NSW, the Department of Health and the Ministry of Health) are not fully complying with the NSW Procurement Board’s Direction for engaging probity practitioners. They also don’t have effective processes to achieve compliance or assure that probity engagements achieved value for money.

In the sample of engagements the Audit Office selected, they found instances where the agencies did not always:

• document detailed terms of reference
• ensure the practitioner was sufficiently independent
• manage probity practitioners' independence and conflict of interest issues transparently
• provide practitioners with full access to records, people and meetings
• establish independent reporting lines were limited to project managers
• evaluate whether value for money was achieved.

The Audit Office also found that agencies tend to rely on only a limited number of probity service providers that may threaten the actual or perceived independence of probity practitioners. 

WHAT OUR CLIENTS NEED TO DO

The Audit Office lists recommendations that participating agencies should review.  Clients need to review and revise probity policies, processes and systems to ensure they:

• comply with the NSW Procurement Board’s Direction for engaging probity practitioners.
• evaluate probity practitioner performance against an agreed scope to assess whether value for money has been achieved after an engagement
• capture lessons learned from external practitioner engagements to build internal probity management capability and capacity
• ensure internal audit functions, under the oversight of audit and risk committees, regularly review agency probity governance and processes as part of their cyclical audit programs.

Further, clients should review the existing use of probity advisors to ensure that different probity practitioners are used to maintain independence.

HOW WE CAN HELP

We can assist you with reviewing your probity policies, processes and system to ensure that they are fully compliant with the NSW Procurement Board’s Direction for engaging probity practitioners.

We can also help by providing independent, professional probity advice to your organisation and the engagement with us will ensure value of money to your organisation is achieved.[DB1] 

If you would like to discuss to your probity advice needs, please call Roy Cottam Director, Ethical Conduct & Investigations: roy.cottam@centium.com.au or 0417 697600.

The report is available at this link: NSW Audit Office’s Report.

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NEW COMMONWEALTH WHISTLEBLOWER LAW FROM 1 JULY 2019

1 July 2019 marked the start of a new Commonwealth Whistleblower law that applies to ‘trading or financial corporations’. This new legislation makes employers much more accountable to protect whistleblowers, at the same time imposing criminal penalties in a number of areas including disclosing a whistleblower's identity or causing or threatening detriment to a whistleblower.

 This new legislation is likely to cover:

• State Owned Corporations
• Health organisation
• Transport agencies
• Local Councils
• Universities
• Schools which are public companies or large proprietary companies

NSW Public Interest Disclosures Act 1994

Coverage under the NSW Public Interest Disclosures Act 1994 continues but a very wide number of organisations including NSW State Government entities are likely to be subject to the new Commonwealth law if they are trading or financial corporations.

 WHAT THE NEW LAW INCLUDES

• matters subject to disclosures include ‘misconduct or an improper state of affairs or circumstances’
• disclosures made by current and former staff, their relatives and dependents, contractors/ suppliers
• more people as 'eligible recipients' of disclosures eg senior managers, directors and auditors
• requiring a whistleblower to have ‘reasonable grounds to suspect’ misconduct or improper state of affairs or circumstances
• entitling whistleblower anonymity and prohibiting identity disclosure (with major penalties, including criminal penalties for individuals) for disclosing the identity or for victimising a whistleblower.
• excluding from protection most disclosures of personal work-related grievances
• allowing for certain disclosures to the media or Members of Parliament in exceptional cases
• allowing whistleblowers to seek compensation for harm arising from victimisation (reversing the onus of proof when seeking compensation, once they have shown detriment)

 HOW WE CAN ASSIST YOU

Through our in-depth experience and knowledge of Whistleblower Protected Disclosures we can provide comprehensive support to you around your Whistleblower Policies and Practices through:

1) Training staff (and potential recipients of complaints)

2) Reviewing and ensuring Whistleblower Policy compliance (you must have this in place before 1 January 2020), and this must include addressing:

• protections available to whistleblowers
• how and to whom an individual can make a disclosure
• how your organisation will support and protect whistleblowers (including identity protection)
• how investigations into disclosures will proceed;
• how you will ensure fair treatment of persons mentioned in whistleblower disclosures
• how the policy will be made available and may be periodically reviewed

If you would like to discuss how you will meet your obligations under the new legislation, including reviewing your compliance readiness, please call Roy Cottam Director, Ethical Conduct & Investigations: roy.cottam@centium.com.au or 0417 697600.

The NSW Ombudsman has issued the following news bulletin on this new legislation here.