The National Audit Office has today published the findings from its
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 increase the risk of fraud in
DFID’s budget.
This investigation sets out how DFID tackles fraud across
its budget, and also looks at measures put in place by the
Foreign and Commonwealth Office (FCO) and the British Council. In
line with the principle of conducting investigations to establish
the underlying facts, the NAO do not conclude on whether DFID's
counter-fraud work is value for money. Nor do we cover DFID’s
wider anti-corruption programmes or overseas expenditure incurred
by other government departments, such as the Ministry of
Defence.
The key findings of this investigation are as
follows:
· 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
· 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.
