Report of Chief Internal Auditor

AGENDA ITEM DELEGATED REPORT TO AUDIT COMMITTEE

11th May 2009

REPORT OF CHIEF INTERNAL AUDITOR

INTERNAL AUDIT REPORT

PURPOSE OF THE REPORT

1. The purpose of this report is to seek Audit Committee Members’ re-approval of the Council’s current anti fraud protocol and procedure manuals. These have been made available to staff and the public on the intranet and internet where appropriate, in Libraries and all main reception areas. Periodic articles are also put out in Stockton News and Keeping You In Touch. The last time Members approved these documents was in October, 2003. Since then there have been a number of updates for such things as Money Laundering and the 2006 Fraud Act which covers such things as identity fraud.

2. Members have recently approved the updated Confidential Reporting and Investigation protocol.

3. The following documents are attached.  Appendix 1 – Employee guide on responding to fraud and corruption.  Appendix 2 – Public guide on responding to fraud and corruption.  Appendix 3 – Management guide on responding to fraud and corruption.  Appendix 4 – SBC Corporate anti-fraud and corruption strategy manual.

RECOMMENDATION

4. The attached documents on the Council’s anti fraud procedures are given Members’ approval. . Corporate Director of Resources: Mrs J Danks Contact Officer: Mr I Jones, Chief Internal Auditor Telephone No. 526362 E-mail [email protected]

Financial Implications None

Environmental Implications None

Equality Impact Assessment None

Policy Content These are the Council’s anti-fraud policy and procedure documents which put into practice the Confidential Reporting and Investigation protocol. . Background Papers None

Wards/Ward Councillors Not applicable.

Community Safety Implications. None

Risk Assessment These documents help reduce the risk of fraud and corruption. APPENDIX 1

Internal Audit

Employee Guide on Responding to Fraud and Corruption

Issued: February 2009 Resources Strategic Finance – Internal Audit

INDEX Page 1. Aims of this guide 3

2. Background 4 What is Fraud?

3. Detection and investigation 4 Preventative systems, indicators, working relationships, signs to look for.

4. Notification of possible irregularities 6 Initial action at source by any employee suspecting fraud has taken place.

5. Money laundering 8

6. Conclusion 8

Appendix A – List of nominated officers 10 STOCKTON-ON-TEES BOROUGH COUNCIL

(E) Aims Of This Guide

The aim of this document is to advise employees how to proceed if they have concerns in connection with any activities related to Council business, where they feel, for whatever reason, they cannot approach their own, or other appropriate line manager, directly.

Within this document you will find a list of points that may help to clarify your concerns and assist in the clear reporting of those concerns. Most importantly, it has a list of do’s and don’ts that you are urged to abide by as failure to do so could seriously prejudice any further action that may be necessary.

All employees must be aware that recent legislation such as the Human Rights Act, the Regulation of Investigatory Powers Act, Public Interest Disclosure (Whistle blowing), Money Laundering, Data Protection and Freedom of Information Acts have brought in new disciplines in tackling fraud.

This document is part of a framework of documents for preventing and detecting fraud. The other documents are;

 The Corporate Anti-Fraud and Corruption Strategy;  The Management Guide on Responding to Fraud and Corruption;  The Fraud Investigation Plan; and  The Confidential Reporting Policy.

These documents can be found on the Council’s Intranet or website.

In providing this framework it ensures that anyone unfortunate enough to be involved in investigating fraudulent activities seeks proper help and guidance from people with experience and knowledge of how these situations should be handled.

2. Background

The overwhelming majority of Council Members / employees are honest and diligent. However, in every large organisation there will be from time to time, people who will see the opportunity for personal gain and try to take advantage of any lapse of diligence or procedural compliance. Some areas of Council activity have a higher risk factor of this occurring than others but, throughout the Authority, there is no room for complacency. In addition, there is the ever present danger of service providers to the Council and service receivers from the Council acting in a fraudulent manner.

2.1 Fraud is defined as:

“The intentional distortion of financial statements or other records by persons internal or external to the authority which is carried out to conceal the misappropriation of assets or otherwise for gain.” (Fraud Audit Manual, the Audit Commission)

2.2 There is now a new Fraud Act, 2006, that recognises three basic types of fraud;  False representation,  Failing to disclose information, and  Abuse of position. There is obviously lots of detail to this Act but one of the reason for it is to recognise how technology has moved fraud to a different level. Examples of the offences in the new act are misrepresentation to machines and possessing articles that can be used in frauds. Identity theft is a case for both where merely having the items necessary to commit this offence is enough to be a crime.

2.3 Examples of the type of fraud most commonly encountered are: -

- Theft including assets, stores and money. - Teeming and Lading leading to theft (This is where receipts are misappropriated and subsequent or other receipts are used to conceal the fact). - Gain by falsification of books and records. - Fraud involving collusion. - Submission of false information. - Fraudulent encashment of a cheque or monetary instrument. - Manipulation of payroll and personnel records. - Suppression of debtor recovery processes. - Failure to disclose information for gain. - Seeking reward for the performance of one’s normal duties, or the provision of Council services. - Manipulation of computer data for gain.

2.4. Identity fraud is a new but widespread criminal activity. Managers and staff have to recognise, as credit card usage within the Council increases, the potential for dishonest colleagues to steal the identity of Council service users.

3. Detection and Investigation

The Council is also taking part annually in National Anti-Fraud Initiatives, Her Majesty’s Revenue and Customs and Benefit Agency data matching exercises.

‘Tip-offs’ or ‘whistle-blowing’ are an important source in detection. The awareness of employees and the public to our preventative measures and lines of communication enables detection and the appropriate action to take place where there is evidence that fraud or corruption may be occurring.

Depending on the nature and anticipated extent of the allegations, Internal Audit will normally work closely with management and, on occasions, other agencies such as the Police to ensure that all allegations and evidence are properly investigated and documented.

It is essential that Internal Audit or a nominated officer (see Appendix A) is notified as soon as possible when fraud or serious misconduct is suspected. Each case will then be reviewed to decide whether management, Internal Audit or someone else will pursue the matter. This prudent action may save much time and effort in later stages of an investigation. Posters are prominently displayed around the Council to ensure employees are aware of ‘whistle-blowing’ procedures. The Authority’s Disciplinary Procedures will be used where the outcome of the investigation indicates improper employee behaviour.

The Authority will normally wish the Police to independently prosecute offenders where financial impropriety is discovered.

3.1 Signs to look for

As a guide use the following simple test; ‘Do you think what you have seen would be regarded as dishonest by reasonable and honest people?’ Many frauds that occur are that simple, others can be a gut feeling based on a number of things.

The following is a list of possible signs of fraud/ serious misconduct taking place. One on its own may be due to a totally unrelated problem. However, where a number of factors are recognised it may be indicative of something more sinister occurring.

 Overspending against budget.  Unexplained items in suspense accounts.  Frequent late banking.  Altered petty cash vouchers and receipts.  Goods invoiced that are not normally purchased.  Employees who never take annual leave; also employees who work outside normal working hours.  Employees’ personal financial problems.  Employees whose lifestyle is more extravagant than their salary would warrant.  Unusual concerns about visits by auditors.  Someone who often breaks the rules and regulations. Cutting corners may be a way of concealing fraud.  Complaints about a member of employees from customers or employer.  People who rule their subordinates with a ‘rod of iron’, and unnecessary anger, sarcasm or criticism, so they become too frightened to question anything.  Lack of effective internal controls.  Failure of management information systems.  Undocumented procedures.  General laxity of attitude by management and employees towards security.

Corruption, (which normally occurs in connection with contracts or consultancy engagements), involves the offering and acceptance of a reward, thus requiring two or more persons, performing an act, or failing to perform an act, which leads to a gain for the person offering the inducement.

The above examples, however, do not cover corruption or lack of ethical standards in their wider interpretation. Malpractice and wrongdoing may be about something which; -

 is unlawful, or  against the Council’s Standing Orders or policies, or  is not in accordance with established standards of practice, or  amounts to improper conduct by an employee. Examples would be; -

 any unlawful act or omission, whether criminal or a breach of civil law;  maladministration, as defined by the Local Government Ombudsman;  breach of any statutory code of practice;  breach of, or failure to implement or comply with, any policy determined by the Council or any of its committees;  actions which are likely to cause physical danger to any person, or give rise to a significant damage to property;  failure to take reasonable steps to report and rectify any situation which is likely to give rise to a significant avoidable cost, or loss of income, to the Council or would otherwise seriously prejudice the Council;  abuse of power, or the use of the Council’s powers and authority for any unauthorised or ulterior purpose;  unfair discrimination in the Council’s employment or services;  dangerous procedures risking health and safety,  abuse of clients;  damage to the environment;  identity fraud;  other unethical conduct.

3.2 Errors and Fraud

Errors ‘per se’ are not indicative of fraud taking place, but they can be the precursor of fraud taking place, i.e. an individual notes that a genuine error has not been detected and sees an opportunity to exploit the situation. Alternatively, they can be used as a smoke screen making it more difficult to perceive fraudulent activities.

4. Notification of possible irregularities

The Council recognises that the decision of an employee to report an internal concern can be a difficult one to make, particularly where it involves a colleague. Not least because of the fear of reprisal from those responsible for the malpractice or, via a mistaken perception, from the Council as a whole. The Council will not, however, tolerate any harassment or victimisation and will take appropriate action in order to protect individuals when raising a concern in good faith. This policy complies with the requirements of the Public Interest Disclosure Act (Whistleblower’s charter).

This does not necessarily mean that if you are the subject of disciplinary procedures that those procedures will be halted as a result of a concern raised under this policy. In addition, the Council will view very seriously any false or malicious allegations it receives and will regard the making of such false or malicious allegations as a serious disciplinary offence.

However, any allegations made in good faith, which are not confirmed by the investigation, will be dealt with sensitively and every effort will be made to prevent the repercussions potentially involved. There may be perfectly good reasons for whatever may be concerning you. If this proves to be the case, then no further action will be needed and at least your concerns will have been aired.

4.1 Initial Action at Source If any employee has any suspicion whatsoever that fraud is taking or has taken place, then take the following course of action: -

Do treat others in the way you would expect to be treated yourself. This is the most difficult area of judgement in getting the balance right between having valid reasons for concern and jumping to conclusions. It may involve deciding to discuss it first with a colleague or senior manager. There is no advice that can be given to cover all scenarios. All that can be asked is that you act reasonably in the circumstances you believe you find yourself. Do retain any evidence you may have and/or make an immediate note of the issues and your concerns. Do not accuse, investigate or interview employees (or private contractors): this will be done as necessary by Internal Audit, Personnel employees or a senior management officer. This is particularly important in the area of Human Rights where a wide variety of legislation has to be followed. Do not delay unnecessarily in reporting your suspicions as this can lead to additional losses or evidence being destroyed or altered. Do not be frightened by these do’s and don’ts into doing nothing. Remember, the Council has responsibility for public assets and you are part of the general public.

As previously stated, under the Council’s Confidential Reporting Policy all service groupings have a nominated officer who has been trained to deal sensitively with employee suspicions. See Appendix A for details.

Employees are also reminded that they have the option of contacting The District Auditor, the Ombudsman or, possibly, the Police. However, these should only be considered as a ‘last resort’ as the Council believes it has internal systems of sufficient quality and strength to deal adequately and properly with almost all situations.

Nominated officers must make arrangements to listen to employees concerns in a confidential manner. To help in this process, nominated officers have been issued with a checklist of points as a guide to assessing the seriousness of the situation and obtaining the maximum possible information immediately.

The nominated officer must contact Internal Audit, Human Resources or the Council’s Monitoring Officer as soon as possible to pass on the concerns of employees. If not already notified, Internal Audit, or other appropriate officer, will then take responsibility for notifying the Council’s Monitoring Officer (Mr. D E Bond, Director of Law and Democracy) and any other appropriate persons. However, there are two notable exceptions to this process. If concerns involve either a Councillor or a member of Internal Audit then the Monitoring Officer should be contacted direct.

At this point the investigators will have to distinguish between error and fraud. Errors may be those of omission or commission (recorded incorrectly). It is an important part of an auditor’s duty to consider whether errors have been made accidentally or with a more serious intent.

Await further information or direction from the nominated officer. It is important to note that anonymity will be maintained as far as possible, but if the Police have to be involved they will need to interview all appropriate persons. However, you must not let this fact deter you from raising concerns. If you do not and it later transpires that you were aware of a situation you should have reported, then you can also be included in any disciplinary proceedings. Notice boards around the Council have posters displaying information on the Council’s confidential reporting procedures.

4.2 Types of Allegation – what happens next?

You may like to know how your query will be dealt with. The following, hopefully, will give you some reassurance.

a. If the allegation or request is of a serious nature, i.e. one that suggests a criminal offence may have been committed; the Corporate Director Resources must be informed. This is necessary in order to carry out the duties of the ‘Section 151 Officer’ and to authorise any further Internal Audit involvement.

b. If the allegation or referral relates to theft of council plant, machinery, equipment, or other assets, the Chief Internal Auditor must inform the Council’s Monitoring Officer, the Head of Finance and the appropriate Director of the Service Grouping. Depending on the significance of the allegation, the most appropriate course of action is usually to contact the Police who will obtain any necessary search warrants. As soon as it is established that a loss has occurred that may be covered by an insurance claim, details should be passed to the Risk Management and Insurance section. Once full details have been established and the intended action has been agreed, the Head of the Service Grouping will be responsible for submitting the appropriate insurance claims to the Risk Management and Insurance section.

c. Where an allegation does not refer to any financial loss having been incurred by the Council, e.g., personnel issues, such as bullying or harassment in the workplace, the matter will be assessed but any subsequent action will, most probably, be confined to service grouping departmental management investigations and the Council’s internal disciplinary procedures.

5. Money Laundering.

It is worth mentioning here the Money Laundering Regulations, 2003, which follow on from the Proceeds of Crime Act, 2002. The aim of these laws and regulations is to stop drug traffickers, etc, laundering ‘dirty’ money into ‘clean’ money. For example, how often do you hear of someone buying a house with bundles of notes? This example is used to illustrate the point that there are many parts of the economy where it is unusual for transactions to be paid for in cash. The law states, therefore, that any transaction for more than £10,000 cash (15,000 euros) must be reported to the police. (There are also additional laws for banks in the tracking of money between banks and countries but we need not concern ourselves with that.) In theory, it is possible within the Council for a ‘right to buy’ tenant to pay for the house in cash – not necessarily in one lump sum. The law also states that where cash is being paid into a system in regular sums less than £10,000 should be reported if there are reasonable grounds for suspicion as to its source, e.g. regular cash payments for Council house rent. Relax; it has been confirmed that the police DO NOT want this level of information.

6. Conclusion

The Authority has in place a clear network of systems and procedures to assist in the fight against fraud and corruption. It is determined that these arrangements will keep pace with any future developments in both preventative and detection techniques regarding fraudulent or corrupt activity that may affect its operation. However, the Authority is also aware of its obligations to protect civil liberties and human rights as laid down in such Acts as the Data Protection Act, the Regulation of Investigatory Powers Act, Freedom of Information Act and Human Rights Act. Sufficient training has been given to all appropriate employees in the way these Acts impact on the performing of their duties in the prevention, detection, reporting and dealing with the potential misuse of Council assets.

This guide has attempted to give you an insight into such things as the culture of the Council in combating fraud, the signs to look for and what to do. It is essential for employees at all levels to know the problems and risks in investigations and the extent of their roles and responsibilities in the proper stewardship of Council assets. We hope you never need to use this guide but if you do we hope you find it useful. Appendix A

STOCKTON – ON – TEES BOROUGH COUNCIL

CONFIDENTIAL REPORTING POLICY

LIST OF NOMINATED OFFICERS

SERVICE GROUPING NAME TEL. NO Sue Daniels (52) 7296 [email protected] Development & Neighbourhood Services Sharon Thomas (52) 6073 [email protected]

Tony Beckwith (52) 7052 [email protected]

Margaret Madden (52) 7519 Children, Education & Social [email protected] Care k (52) 6610 Betty Johns [email protected]

Law & Democracy and Nigel Hart (52) 6193 Performance & [email protected] Communications Judi Asquith (52) 6092 [email protected]

Colin Ward (52) 8189 Resources [email protected]

Susan Mulligan (52) 6824 [email protected]

Any of the above mentioned persons can be contacted for advice on, or the reporting of, concerns on possible malpractice which may involve fraud and/or corruption.

In addition, the following e-mail addresses or telephone numbers can be used.

Internal Audit: Tel. 01642 526362 E-mail: [email protected]

Housing Benefit: Tel. 0800 3286340 E-mail: [email protected] APPENDIX 2 Internal Audit

Public Guide on Responding to Fraud and Corruption

Issued: February 2009

Resources Strategic Finance - Internal Audit INDEX Page 1. Aims of this Guide 3

2. Background 3 What is Fraud?

3. Detection and Investigation 4 Preventative systems, indicators, signs to look for.

4. Notification of Possible Irregularities 5 Initial action at source when suspecting fraud has taken place.

5. Money laundering 7

6. Conclusion 7

Appendix A – Contact details 8 STOCKTON-ON-TEES BOROUGH COUNCIL

1. Aims of this Guide

The aim of this document is to advise members of the public on how to proceed if they have concerns in connection with any activities related to Council business that appear to be a misuse or inappropriate use of Council assets. Council assets are your assets. We also administer the spending of your taxes on benefits and grants. Fraud, inefficiency, misconduct, abuse and issues such as damage to the environment are misuse of your assets. Don’t let cheats abuse your assets!

Within this document you will find a list of points that may help to clarify your concerns and assist in the clear reporting of those concerns. Most importantly, it has a list of do’s and don’ts that you are urged to abide by, as failure to do so could seriously prejudice any further action that may be necessary.

All members of the public must be aware that recent legislation such as the Human Rights Act, the Regulation of Investigatory Powers Act, Public Interest Disclosure (Whistleblowing), Money Laundering, Data Protection and Freedom of Information Acts have introduced new disciplines in tackling fraud.

2. Background

Incidents of fraud or other unlawful activity in Local Government are thankfully infrequent. However, in every large organisation there will be from time to time, people who will see the opportunity for personal gain and try to take advantage of any lapse of diligence or procedural compliance. Some areas of Council activity have a higher risk factor of this occurring than others but, throughout the Authority, there is no room for complacency. Also, there is the ever present danger of service providers to the Council and service receivers from the Council acting in a fraudulent manner.

2.1 Fraud is defined as:

"The intentional distortion of financial statements or other records by persons internal or external to the Authority, which is carried out to conceal the misappropriation of assets or otherwise for gain." (Fraud Audit Manual, the Audit Commission)

2.2 There is now a new Fraud Act 2006, that recognises three basic types of fraud;

 False representation,  Failing to disclose information, and  Abuse of position.

Obviously, there is a lot of detail to this Act, but one of the reasons for it is to recognise how technology has moved fraud to a different level. Examples of the offences in the new Act are misrepresentation to machines and possessing articles that can be used in frauds. Identity theft is a good example of this, where merely having the items necessary to commit this offence is enough to be a crime.

2.3 Examples of the type of fraud most commonly encountered are:

- Theft including assets, stores and money. - Fraudulent claims and the submitting of false information or the failure to disclose information, e.g. housing benefits, council tax benefits and grants. - Gain by falsification of books and records. - Fraud involving collusion. - Fraudulent encashment of a cheque or monetary instrument. - Manipulation of payroll and personnel records. - Suppression of debtor recovery processes. - Seeking reward for the performance of one's normal duties, or the provision of Council services. - Manipulation of computer data for gain. - Teeming and Lading leading to theft (this is where receipts are misappropriated and subsequent or other receipts are used to conceal the fact).

2.4. Identity fraud is a new but widespread criminal activity. It is in the public’s interest that managers and staff recognise that as credit card usage within the Council increases, the potential to steal the identity of Council service users increases.

2.5. Corruption, (which normally occurs in connection with contracts or consultancy engagements), involves the offering and acceptance of a reward, thus requiring two or more persons, performing an act, or failing to perform an act, which leads to a gain for the person offering the inducement.

2.6 In 2003, the first Anti-Money Laundering regulations came into effect. From December 2007 these have been strengthened and effect local government as follows;  Must report to the Serious Organised Crime Agency (via Internal Audit registration) any cash transactions in excess of £10,000.  Must also report when there are good reasons for believing that any regular payments in cash are from the proceeds of criminal activity.  Council procurement officers are expected to ask themselves the question on any contractor they are entering into business with; ‘Do I know enough about this company, its owners and any sub-contractors, to be sure it is not a front for money laundering operations or involved in such activity as using illegal migrant workers?’ This question should be part of the risk assessment process.

3. Detection and Investigation

As a guide, use the following simple test; ‘Do you think what you have seen would be regarded as dishonest by reasonable and honest people?’ Many frauds that occur are that simple. Others can be a gut feeling based on a number of things.

Preventative measures, particularly internal control systems, have been designed to provide indications of any fraudulent activity. In addition, the Council has set up Housing Benefit and Council Tax investigation teams in recognition of the specialised needs of these services. The Council is also taking part annually in National Anti Fraud Initiatives, HM Revenue and Customs and Benefits Agency data matching exercises. 'Tip-offs' or ‘whistle-blowing’ are an important source of detection. The awareness of employees and the public to our preventative measures and lines of communication enables detection and the appropriate action to take place where there is evidence that fraud or corruption may be occurring.

Depending on the nature and anticipated extent of the allegations, Internal Audit will normally work closely with management and, on occasions, other agencies such as the Police, to ensure that all allegations and evidence are properly investigated and documented.

It is essential the Council is notified as soon as possible when fraud or serious misconduct is suspected. Each case will then be reviewed to decide whether management, Internal Audit, or someone else, will pursue the matter. This prudent action may save much time and effort in later stages of an investigation. See Appendix A for details.

The Authority's Disciplinary Procedures will be used where the outcome of the investigation indicates improper employee behaviour. Should the allegation involve Members then the case may be referred to the Standards Board for England. This is the appropriate national body to assess complaints about Member conduct.

The Authority will normally wish the Police to independently prosecute offenders where financial impropriety is discovered.

4. Notification of possible irregularities

The Council recognises that the decision to report a concern can be a difficult one to make, particularly where it involves a neighbour, colleague or friend. Not least because of the fear of reprisal from those responsible for the malpractice or, via a mistaken perception, from the Council as a whole. Therefore, the Council will take appropriate action in order to protect the identity of individuals when raising a concern in good faith. This policy complies with the requirements of the Public Interest Disclosure Act (Whistleblower’s charter).

However, the Council will view very seriously any false or malicious allegations it receives and will regard the making of such false or malicious allegations as a serious matter.

Any allegations made in good faith, which are not confirmed by the investigation, will be dealt with sensitively and every effort will be made to prevent the repercussions potentially involved. There may be perfectly good reasons for whatever may be concerning you. If this proves to be the case, then no further action will be needed and at least your concerns will have been aired.

4.1 Initial action at source

If you have any suspicion whatsoever that fraud is taking, or has taken place, then take the following course of action: Do treat others in the way you would expect to be treated yourself. This is the most difficult area of judgement in getting the balance right between having valid reasons for concern and jumping to conclusions. It may involve deciding to discuss it first with a Council representative. There is no advice that can be given to cover all scenarios. All that can be asked is that you act reasonably in the circumstances you believe you find yourself. Do retain any evidence you may have and/or make an immediate note of the issues and your concerns. Do not accuse, investigate or interview anyone you suspect of being involved in fraudulent activity: this will be done as necessary by Internal Audit or the relevant Fraud Investigation Team. This is particularly important in the area of Human Rights where a wide variety of legislation has to be followed. Do not delay unnecessarily in reporting your suspicions, as this can lead to additional losses or evidence being destroyed or altered. Do not be frightened by these do’s and don’ts into doing nothing. Remember, the Council has a responsibility for protecting public assets.

In addition to the contact details at Appendix A, you also have the option of contacting The Audit Commission, the Ombudsman, the Standards Board for England or, possibly, the Police. However, these should only be considered as a ‘last resort’, as the Council believes it has internal systems of sufficient quality and strength to deal adequately and properly with almost all situations.

Await further information from your point of contact. It is important to note that anonymity will be maintained as far as possible, but if the Police have to be involved they will need to interview all appropriate persons. However, you must not let this fact deter you from raising concerns.

You may notice posters containing guidance and information on the Council’s confidential reporting procedures are displayed in all main reception areas and libraries. These are for staff but hopefully give you, the public, assurance that the Council will not tolerate any fraudulent or inappropriate action no matter what the source.

4.2 Types of allegation – what happens next?

You may like to know how your query will be dealt with. The following, hopefully, will give you some reassurance.

d. If the allegation or request is of a serious nature, i.e. one that suggests a criminal offence may have been committed; the Corporate Director of Resources must be informed. This is necessary in order to make senior management aware of the seriousness of the situation and to authorise/ be aware of any further action.

e. If the allegation or referral relates to theft of Council plant, machinery, equipment, or other assets, the Chief Internal Auditor must inform the Council’s Monitoring Officer, i.e. the Director of Law and Democracy , the Head of Finance and the appropriate Director. Depending on the significance of the allegation, the most appropriate course of action is usually to contact the Police, who will obtain any necessary search warrants. As soon as it is established that a loss has occurred that may be covered by an insurance claim, details will be passed to the Risk Management and Insurance section.

f. Where an allegation does not refer to any financial loss having been incurred by the Council, e.g. issues such as bullying or harassment, the matter will be assessed but any subsequent action will, most probably, be confined to departmental management investigations and the Council’s internal disciplinary procedures. g. As previously stated, should the allegation involve the conduct of Members the complainant will be advised how to contact the Standards Board for England and will be kept informed of how the complaint will be dealt with.

5. Money Laundering.

It is worth mentioning here the Money Laundering Regulations 2007, which follow on from the previous 2003 regulations and the Proceeds of Crime Act 2002. The aim of these laws and regulations is to stop drug traffickers etc, laundering ‘dirty’ money into ‘clean’ money. For example, how often do you hear of someone buying a house with bundles of notes? This example is used to illustrate the point that there are many parts of the economy where it is unusual for transactions to be paid for in cash. The law states, therefore, that any transaction for more than £10,000 in cash (€15,000) must be reported to the police.

6. Conclusion

This guide has attempted to give you an insight into such things as the culture of the Council in combating fraud and what to do if you have concerns. We hope you never need to use this guide, but if you do, we hope you will find it useful. Appendix A

STOCKTON - ON - TEES BOROUGH COUNCIL

CONFIDENTIAL REPORTING

The following email addresses or telephone numbers can be used for advice on, or the reporting of, concerns on possible malpractice which may involve fraud and/or corruption.

Internal Audit: Tel. 01642 526362 Email: [email protected]

Housing Benefit: Tel. 0800 328 6340 Email: [email protected] APPENDIX 3

Internal Audit

Management Guide on Responding to Fraud and Corruption

Issued: February 2009

Resources Strategic Finance - Internal Audit INDEX Page 1. Aims of this Guide 3

2. Initial Contact 3

3. Information recording. 4

4. Do’s and Don’ts. 5

5. Communication. 5

6. Conclusion 5

Appendix A - List of Nominated Officers 6

Appendix B – Manager’s/ Nominated Officer’s checklist 7

Appendix C – Confidential Reporting and Investigation 9 Protocol. STOCKTON-ON-TEES BOROUGH COUNCIL

1. Aims Of This Guide

The aim of this document is to give guidance to managers on how to conduct a confidential reporting meeting and what to do with the information obtained. This will usually mean the nominated officers in each service grouping (see Appendix A), Internal Audit or the Human Resources employees. However, it is likely that issues may be reported direct to line managers who must know how to react.

This document is part of a framework of documents for preventing and detecting fraud. The other documents, contained on the Council’s intranet or website, are;  The Corporate Anti-Fraud and Corruption Strategy;  The Employees Guide on Responding to Fraud and Corruption;  The Fraud Investigation Plan; and  The Confidential Reporting policy.

In providing this framework it ensures that anyone unfortunate enough to be involved in investigating fraudulent activities knows how to react or where to seek help and guidance from people with experience of how these situations should be handled.

2. Initial contact

The overwhelming majority of Council Members / employees are honest and diligent. However, in every large organisation there will be from time to time, people who will see the opportunity for personal gain and try to take advantage of any lapse of diligence or procedural compliance. Some areas of Council activity have a higher risk factor of this occurring than others but, throughout the Authority, there is no room for complacency. There is also the ever present danger of service providers to the Council and service receivers from the Council acting in a fraudulent manner.

Having stated all the above, ‘tip-offs' or ‘whistle-blowing’ are still an important source in detection. It is therefore essential that managers/ nominated officers (see Appendix A) contacted under the Confidential Reporting Policy keep an open mind on the information received and act in a professional manner.

The Council recognises that the decision of an employee to report an internal concern can be difficult, particularly where it involves a colleague. Not least because of the fear of reprisal from those responsible for the malpractice or, via a mistaken perception, from the Council as a whole. It is essential that contact officers reassure information providers that it is Council policy not to tolerate any harassment or victimisation and to take appropriate action to protect individuals when raising concerns in good faith. This policy complies with the requirements of the Public Interest Disclosure Act (Whistle-blower’s charter). You must assure the information provider that you will keep them informed of how any subsequent investigation progresses and that all contact from the Council to the information provider will be via yourself. You must also inform the information provider that if an investigation does take place they may be interviewed in the normal course of the investigation because of their job/ position, but that the investigators, so far as possible, will maintain the anonymity of those who provided the initial information.

3. Information recording

Nominated officers must make arrangements to listen to employees concerns in a confidential manner. A file should be opened to contain all the information passed to or generated by you, appertaining to the disclosure, from the moment of contact until the matter is officially closed. At Appendix B is a checklist of how to conduct an interview and the information to record. Although this is an extensive list it will not fit all circumstances and therefore can only be issued as a guide.

At the end of this checklist there is a ‘caution’ you should give to the information provider. Unfortunately, there will be the rare occasions when ‘whistle-blowing’ is being done for ulterior motives, e.g. maliciously or to deflect from actions of the whistle-blower. You must point this out to the whistle-blower and remind them if this is the case the whistle-blower could be the subject of disciplinary action. At that point you should offer the person the chance to withdraw their allegations.

Urgency in passing on information is the key consideration. There is a problem in ensuring sufficient information is passed for any recipient to quickly take appropriate action. It is suggested you type up your notes from the meeting immediately and, if possible, have them checked by the information provider as being an accurate reflection of their concerns. Times must be noted for these actions.

You should then try contacting one of the following people by telephone.  David Bond; Director of Law and Democracy;  Julie Grant; Head of Legal Services;  Denise McGuire; Assistant Head of Resources;  Ian Jones; Chief Internal Auditor; or,  One of the two Audit Team Managers (Christine Burney/ Helen Fowler).

However, where the allegation involves either a Councillor or a member of Internal Audit then the Director of Law and Democracy must be contacted. In his absence, contact the Head of Legal Services.

The telephone call is needed to;

 Ascertain that the person concerned is available to receive an urgent and confidential e-mail or is available to meet you. To ensure confidentiality is maintained, a number, rather than a name or title should refer to all persons or posts.  If your initial contact is not available you must then work down your list unless the issues raised relate to either a Councillor or a member of Internal Audit when the contact officer has to be David Bond (Director of Law & Democracy) or Julie Grant (Head of Legal Services).  Warn them of an urgent and confidential e-mail being sent to them under the Confidential Reporting Policy.  If not already notified, Internal Audit, or other appropriate officer, will then take responsibility for notifying the Council’s Monitoring Officer (Mr. D Bond, Director of Law and Democracy) and any other appropriate persons.

Each case will then be reviewed to decide whether management, Internal Audit or someone else will pursue the matter. Depending on the nature and anticipated extent of the allegations, Internal Audit (for example) will normally work closely with management and, on occasions, other agencies such as the Police to ensure that all allegations/ evidence are properly investigated and documented. The Authority will normally wish the Police to prosecute offenders where criminal activity is discovered.

As soon as possible you will be notified of the action to be taken on the information supplied. This should be conveyed to the information provider to ensure that person knows their concerns are to be addressed.

The Authority's Disciplinary Procedures will be used where the outcome of the investigation indicates improper employee behaviour.

4. Do’s and Don’ts

The following do’s and don’ts have been brought to the attention of information providers under the Confidential Reporting Policy. It is considered prudent that you are aware of these points and understand your part in dealing with the sensitive issues and personalities involved.

Do treat others in the way you would expect to be treated yourself. Do retain any evidence provided – make a list of what has been handed over, ensure you both agree the list and sign accordingly. Do remember there are rigid procedures to be followed in investigations. Do not accuse, investigate or interview employees (or private contractors). Do not delay unnecessarily in reporting your suspicions as this can lead to additional losses or evidence being destroyed or altered. Do not be frightened by these do’s and don’ts.

5. Communication

It is essential contact and regular communication is kept with the information provider. To assist in this the Confidential Reporting and Investigation Protocol is enclosed as Appendix C and gives clear instructions on how this is to be done.

6. Conclusion

The Authority has in place a clear network of systems and procedures to assist in the fight against fraud and corruption. It is determined that these arrangements will keep pace with any future developments in both preventative and detection techniques regarding fraudulent or corrupt activity that may affect its operation. However, the Authority is also aware of its obligations to protect civil liberties and human rights as laid down in such Acts as the Data Protection Act, the Regulation of Investigatory Powers Act, Freedom of Information Act and Human Rights Act. As managers you have an important part to play in ensuring the Council fulfils these obligations. Appendix A

STOCKTON - ON - TEES BOROUGH COUNCIL

CONFIDENTIAL REPORTING POLICY

LIST OF NOMINATED OFFICERS

SERVICE GROUPING NAME TEL No Sue Daniels (52) 7296 [email protected] Development & Neighbourhood Services Sharon Thomas (52) 6073 [email protected]

Tony Beckwith (52) 7052 [email protected]

Margaret Madden (52) 7519 Children, Education & Social [email protected] Care k (52) 6610 Betty Johns [email protected]

Law & Democracy and Nigel Hart (52) 6193 Performance & [email protected] Communications Judi Asquith (52) 6092 [email protected]

Colin Ward (52) 8189 [email protected] Resources Susan Mulligan (52) 6824 [email protected]

Any of the above mentioned persons can be contacted for advice on, or the reporting of, concerns on possible malpractice which may involve fraud and/or corruption.

In addition, the following e-mail addresses or telephone numbers can be used.

Internal Audit: Tel. 01642 526362 E-mail: [email protected]

Housing Benefit: Tel. 0800 3286340 E-mail: [email protected] Appendix B

STOCKTON - ON - TEES BOROUGH COUNCIL

CONFIDENTIAL REPORTING POLICY

MANAGER’S / NOMINATED OFFICER’S CHECKLIST

This checklist is intended as an aid to managers or nominated officers receiving information under the Council’s Confidential Reporting Policy. It will not be applicable in all respects or necessarily sufficient for every possible set of circumstances. However, if the spirit of this checklist is followed at all times, then the potential for errors to be made that could cause problems at a later date will be minimised.

1. INFORMATION PROVIDER’S DETAILS.

Name. ______Tel. No. ______

Service Grouping/ Section ______

Method of contact ______Time/date ______

Meeting place ______Time/date ______- _____

Notification to information provider of Council’s intention to protect the individual: _____

2. INFORMATION DETAILS.

Who/ What is the information about? ______

Person(s)/ Section ______

Relationship of information provider to person(s) causing concern ______

Details of information and any evidence provided ______

Details of anyone else contacted or spoken to: ______

3. Notification to information provider.

Details given to information provider of what will happen now: ______

Caution given as follows.

Your identity will remain anonymous for as long as you want. This may mean you will be interviewed in the normal course of any investigation that follows. It means the investigating officers will not know you have stepped forward with your concerns. It is possible that an investigation may find valid reasons for actions that you consider suspicious but you will be kept informed of how any subsequent action progresses. You are reminded that should your allegations be considered malicious then disciplinary action could be taken against you, or, if there is an on-going disciplinary matter against you relating to the information you have provided it will not be stopped unless evidence comes to light that warrants it.

(At this point the information provider should be given the option to withdraw their allegation/s).

4. The passing on of information.

Which of the following people were notified?

 David Bond; Director of Law and Democracy;  Julie Grant; Head of Legal Services;  Denise McGuire; Assistant Head of Resources;  Ian Jones; Chief Internal Auditor; or,  One of the two Audit Team Managers (Andrew Barber/ Paul Sunley).

Time/ date: ______Method of contact ______

How were the notes of the meeting with the information provider passed on ______

Time/ date ______

Were any instructions received on what to do next ______

Action taken ______Note; where the allegation involves either a Councillor or a member of Internal Audit then the Director of Law and Democracy must be contacted. In his absence, contact the Head of Legal Services. Appendix C

CONFIDENTIAL REPORTING AND INVESTIGATION PROTOCOL

Confidential Reporting

1. Within 14 calendar days of a concern being raised with a Nominated Officer, the Nominated Officer should write to the person who raised the concern:-

a. acknowledging receipt of concern;

b. indicating how it is proposed to deal with the matter;

c. giving an estimate of likely time for a final response on the concern;

d. indicating if initial enquiries made;

e. advising if further investigations will take place (and if not, why not).

2. Information on b) to e) should be provided following discussions with Human Resources, Internal Audit (IJ) and Legal (DEB) and after initial discussions between them and any proposed Investigating person or body (e.g. Standards Board, IA, Audit Commission (AC), Police or Departmental Management).

3. As part of 2 the contact for the Investigating Person or Body should be identified; that contact should be informed of the Nominated Officer details and vice versa.

4. The Investigating Contact should be asked (as part of 2) to liase with the Nominated Officer to agree the frequency of future consultation between them; the level of information to be provided as to the progress of the investigation and the procedure for controlling or regulating the information to be provided to the person who raised the original concern.

5. The aim, subject to 4, must be to ensure that the person who raised the concern is kept appropriately informed at timely intervals, and ultimately is provided with as much information as possible about the outcome of the investigation.

6. For the purposes of 4 and 5 above, where an external body is involved e.g. Standards Board, Audit Commission or Police, it may be necessary for the external contact person to liase with either IA, Personnel or Legal at Stockton, who in turn would then need to liase with the Nominated Officer. 7. In all cases the Nominated Officer should aim to be proactive in seeking information on progress, should this not be readily forthcoming, by contacting the relevant SBC contacts (rather than external contacts, should the investigation not be conducted internally).

8. Regular contact/discussion should, in any event, take place between the Nominated Officer, Human Resources, Internal Audit (IJ) and Legal (DEB).

9. In addition, regular contact/discussion should take place between Human Resources, Internal Audit, Legal and the Investigating Officer/Investigation Team to ensure that progress on the investigation is being maintained and that the Nominated Officer (and through him/her, the person who raised the concern) are being kept regularly appraised of developments.

10. Following the completion of an investigation, the Investigating Officer/Team should prepare a report and confirm the outcome of the investigation to the Human Resources, Internal Audit and Legal Officer (Steering Group). Based on the report and confirmed outcome, the Investigating Officer/Team and Steering Group should agree with the Nominated Officer and also with the Head of Service/Management Team, as appropriate, whose employees were the subject of the investigation, the nature and extent of the information to be released to the person who raised the concern and to the employees the subject of the investigation (the release of such information may need to take place as part of any disciplinary action proposed as a result of the outcome of the investigation). The Nominated Officer should release the agreed information to the person who raised the concern and the appropriate Head of Service/Management Team should release the agreed information to the employees who were the subject of the investigation.

11. The Head of Service/Management should report back to the Steering Group as soon as possible, to confirm the action taken as a result of the report of the Investigating Officer/Team.

12. Throughout the process (from 2 to 10 inclusively) careful consideration should be given to the welfare and well being of the person who raised the concern, and appropriate action taken (e.g. transfer, whether temporarily or permanently, from original workplace environment) whenever necessary. APPENDIX 4

Internal Audit

Stockton Borough Council Corporate Anti Fraud and Corruption Strategy Manual

Issued: February 2009 Resources Strategic Finance - Internal Audit INDEX Page

1. Aims of this manual 3

2. Background 3 What is Fraud?

3. Strategy 4

4. Culture, Prevention and Training 5

Culture – Codes of ethics and professional standards Prevention – recruitment, codes of conduct, training, job specifications, segregation of duties, example of procedures. Training – Induction and continuation

5. Detection and Investigation 7

6. Conclusion 8 7. Appendix A 9 List of nominated officers STOCKTON-ON-TEES BOROUGH COUNCIL

1. Aims of this Manual

The aim of this manual is to define, for the benefit of all Members and employees, the Council’s Anti Fraud and Corruption Strategy. This strategy has the backing and approval of Members and senior managers.

Employees must appreciate that fraud can occur at any level within Local Government. For example, it is not unknown for employees within a Council to be part of a well-organised criminal activity. Consequently, Members, managers and employees must be aware of how misconduct or fraudulent acts can occur.

All employees must be aware that recent legislation such as the Fraud Act 2006, Regulation of Investigatory Powers and Public Interest Disclosure (Whistle – blowing) Acts has brought in new disciplines in tackling fraud.

This document is part of a framework of documents for preventing and detecting fraud. The other documents are;

 The Employee Guide on Responding to Fraud & Corruption,  The Management Guide on Responding to Fraud & Corruption;  The Fraud Investigation Plan; and,  The Confidential Reporting Policy.

All of these documents can be found on the Council’s Intranet and website.

The aim of this framework is to ensure that anyone unfortunate enough to become aware of fraudulent activities seeks proper help and guidance from people with experience and knowledge of how these situations should be handled.

2. Background

The overwhelming majority of Council Members / employees are honest and diligent. However, in every large organisation there will be from time to time, people who will see the opportunity for personal gain and try to take advantage of any lapse of diligence or procedural compliance. Some areas of Council activity have a higher risk factor of this occurring than others but, throughout the Authority, there is no room for complacency. For example, identity fraud is a new but widespread crime and is a possible activity managers are going to have to address more and more as time goes on. In addition, there is the ever present danger of service providers to the Council and service receivers from the Council acting in a fraudulent manner.

2.1 Fraud is defined as:

"The intentional distortion of financial statements or other records by persons internal or external to the authority which is carried out to conceal the misappropriation of assets or otherwise for gain." (Fraud Audit Manual, the Audit Commission) 2.2 There is now a new Fraud Act, 2006, that recognises three basic types of fraud;  False representation,  Failing to disclose information, and  Abuse of position.

There is obviously lots of detail to this Act but one of the reason for it is to recognise how technology has moved fraud to a different level. Examples of the offences in the new act are misrepresentation to machines and possessing articles that can be used in frauds. Identity theft is a case for both where merely having the items necessary to commit this offence is enough to be a crime.

2.3 In 2003, the first Anti-Money Laundering regulations came into effect. From December 2007 these have been strengthened and effect local government as follows;  Must report to the Serious Organised Crime Agency (via Internal Audit registration) any cash transactions in excess of £10,000.  Must also report when there are good reasons for believing that any regular payments in cash are from the proceeds of criminal activity.  Council procurement officers are expected to ask themselves the question on any contractor they are entering into business with; ‘Do I know enough about this company, its owners and any sub-contractors, to be sure it is not a front for money laundering operations or involved in such activity as using illegal migrant workers?’ This question should be part of the risk assessment process.

3. The Strategy

In administering its responsibilities in relation to fraud and corruption, whether it is attempted by a third party against the Authority or by persons from within it, the Authority is committed to an effective anti-fraud and corruption strategy designed to:-

 identify risks;  encourage prevention;  promote detection; and  identify a clear pathway for investigation.

This will be achieved by: -

The Council’s Corporate Risk assessment and management policy; - establishing what constitutes a potential irregularity and the risk of it occurring; - establishing clear roles and responsibilities for notifying, investigating and reporting on irregularities; - clarifying the relationship with, and distinction from, the Council's disciplinary procedures; - ensuring the clear communication to all employees of policies and procedures contained in the Council's Constitution, such as Standing Orders; Financial Regulations and Security Protocols; - promoting the right culture and environment for the prevention and detection of fraud; - take part in national data matching exercises designed to detect and deter fraudulent activity.

The Authority's expectations on propriety and accountability are that Members of the Council and employees at all levels will lead by example in ensuring adherence to rules, and that all procedures and practices are above reproach. The Authority also requires external individuals and organisations to act towards the Authority with integrity and without thought or actions involving fraud or corruption.

The Authority recognises the wider implications and benefits of an Anti-Fraud and Corruption Strategy, based on a series of comprehensive and inter-related procedures, designed to frustrate any attempted fraudulent or corrupt act. These cover: - Culture Prevention Detection and Investigation Training

Anti-fraud strategy starts at the planning stage. Adequate procedures, training, controls, feedback, monitoring and wherever possible, segregation of duties, should be a part of every system when introduced. Experience of fraud cases shows that in the vast majority of cases, one or other of these areas were either absent or ineffectively applied. Once installed the disciplines involved should form part of any induction or training programme for employees. Finally, the saddest casualties of any investigation are usually the managers/ supervisors who, to make life easier, have placed too much trust in an individual who then lets them down in a big way.

Accountability is the most effective measure of any system in the combating of fraud. Openness and transparency are the keys to accountability. Not only should managers be able to see for themselves how they are performing in relation to their objectives, but can also present this performance in a clear and meaningful way to others.

As a consequence of defining the above measures, which all employees at whatever level are expected to promote and abide by, the Council will not tolerate fraudulent or corrupt practices or other wrongdoings from either its Members, employees or from outside sources and appropriate action will be taken whenever necessary.

The above statement also refers to wrongdoing. This shows the need to cover the lack of ethical standards in their wider interpretation. This can be referred to as malpractice and wrongdoing may be about something which; -

 is unlawful, or  against the Council’s Standing Orders or policies, or  is not in accordance with established standards of practice, or  amounts to improper conduct by an employee.

Examples would be; -

4. Culture, Prevention and Training

4.1 Culture

The culture of an organisation is defined by a commonly held set of values and beliefs held by all members of that organisation. This can be interpreted as the 'way we do things around here'.

Within this Authority there are numerous employees with qualifications from a wide variety of professions and trades. All are, to some degree, based on a code of ethics and professional standards which when linked to the new Constitution, Standing Orders, Scheme of Delegation, written procedures, accounting instructions, etc. and quality standards such as IIP, ISO and Chartermark, help to form the basis of the Council's culture. The culture is, therefore, one of integrity and the expectation of the highest possible personal standards in the execution of duties and customer care by employees. It is also worthy of note that these standards, particularly in so far as elected Members are concerned, are also applicable to activities not necessarily associated with Council duties.

4.2 Prevention

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 their propriety and integrity. Employee recruitment procedures have been produced to give managers guidance on how to conduct this activity and include such things as ensuring qualifications are seen and references are obtained.

Significant emphasis has been placed on the thorough documentation of financial systems, and every effort is made to continually review and develop systems in general, in line with best practice and changes in legislation, to ensure efficient and effective internal controls. However, fraud is not confined to financial issues, it may for example involve the deliberate misrepresentation of performance indicator data.

The independent monitoring of systems is carried out by Internal and External Audit, but, managers and employees should ensure the following examples of standard procedures in preventing fraud should be installed and complied with wherever practical: -

- Risk assessments. - Information security measures, - Information Technology (IT) security systems, - Monitoring/reporting procedures. - Rotation of duties. - Segregation of duties. - Increased monitoring of high-risk areas. - Use of commitment accounting system. - Verification checks. - Minimise cash/stock holdings. - Regular banking of cash/cheques. - Expenses to be supported by receipts. - Surprise cash/stock checks. - Regular budget monitoring at all levels with analysis of unexpected variances. - Use of ‘Gifts & Hospitality’ registers. - Use of Interests Registers.

All employees are also reminded of the need to be mindful of the disposal of rubbish. All documents such as mail referring to customer codes, or old invoices, should be treated as confidential waste and disposed of accordingly. Not only is this good practice but also there is a growing tendency for frauds to be based on information gained via rubbish bags and dustbins. Consequently, managers are going to have to give clear guidance on the shredding of documents prior to disposal.

4.3 Training

The Authority recognises that the continuing success of its Anti-Fraud and Corruption Strategy, and its general credibility, will depend largely on the effectiveness of programmed training and responsiveness of all employees. To facilitate this, the Authority supports the concept of induction and training, particularly for employees involved in internal control systems, to ensure that their responsibilities and duties in this respect are regularly highlighted and reinforced.

The induction checklists and training programmes should have clear reference to Council and service grouping codes of ethics, anti fraud awareness measures and the role of nominated officers.

All Councillors and employees are required to declare, in registers, any offers of gifts or hospitality and any outside interests which are in any way connected to their duties. This includes declaring any form of benefits or grants received.

Authority employees are expected to follow Codes of Conduct related to their personal professional qualifications, the Council's Official Code of Conduct, Council policy, Council Standing Orders, the Scheme of Delegation, Accounting Instructions and service grouping procedures as appropriate. All new employees should receive induction training into these procedures, e.g. Housing Benefit employees being aware of the department’s Code of Conduct in countering housing benefit fraud.

Job specifications should clearly define duties, responsibilities, lines of communication and delegated powers. In addition, appropriate and specialist training is also essential for employees in many other areas of Council activity, e.g. Internal Audit, Trading Standards, Housing Benefit, Council Tax and Non-domestic Rates. It is also essential the specialists know and understand each other’s area of specialisation and work together whenever necessary.

5. Detection and Investigation

'Tip-offs' or ‘whistle-blowing’ are an important source in detection. The awareness of employees and the public to our preventative measures and lines of communication enables detection and the appropriate action to take place where there is evidence that fraud or corruption may be occurring. Adverts have been placed in appropriate publications and notices strategically placed around the Council to ensure all employees and the public know who to contact should they feel the need to ‘whistle- blow’. Appendix A to this manual also contains the names of contact officers and their telephone numbers.

It is essential that Internal Audit or nominated officers (see Appendix A) are notified as soon as possible when fraud or serious misconduct is suspected. Each case will then be reviewed to decide whether management, Internal Audit or someone else will pursue the matter. This prudent action may save much time and effort in the later stages of an investigation.

The Authority's Disciplinary Procedures will be used where the outcome of the investigation indicates improper employee behaviour.

The Authority will normally wish the Police to independently prosecute offenders where financial impropriety is discovered.

Investigation procedures are detailed in the full version of the Anti – Fraud & Corruption Strategy manual

6. Conclusion

To this end, the Authority maintains a continuous overview of such arrangements through; in particular, its Monitoring Officer (the Director of Law & Democracy), the Corporate Director Resources, the Performance Review and Audit Committee, Corporate and Service Grouping risk assessments and its Internal and External Auditors.

However, the Authority is also aware of its obligations to protect civil liberties and human rights as laid down in such Acts as the Data Protection Act, the Regulation of Investigatory Powers Act, Freedom of Information Act and Human Rights Act. Sufficient training must be given to all appropriate employees in the way these Acts impact on the performing of their duties in the prevention, detection, reporting and dealing with the potential misuse of Council resources.

Although this guide has attempted to give you a good insight into the culture of the Council in combating fraud, it has deliberately not set out to tell you what to do other than who to contact. Front line managers must realise and accept that recent laws have made investigation more of a specialist subject than before. It is essential for employees at all levels to know the problems and risks in investigations and the extent of their roles and responsibilities in the proper stewardship of Council assets.

Appendix A

STOCKTON - ON - TEES BOROUGH COUNCIL

CONFIDENTIAL REPORTING POLICY

LIST OF NOMINATED OFFICERS

SERVICE GROUPING NAME TEL. NO Sue Daniels (52) 7296 [email protected] Development & Neighbourhood Services Sharon Thomas (52) 6073 [email protected]

Tony Beckwith (52) 7052 [email protected] Children, Education & Social Margaret Madden (52) 6478 Care [email protected] k

Law & Democracy and Nigel Hart (52) 6193 Performance & [email protected] Communications Judi Asquith (52) 6092 [email protected]

Colin Ward (52) 8189 Resources [email protected]

Susan Mulligan (52) 6824 [email protected]

Any of the above mentioned persons can be contacted for advice on, or the reporting of, concerns on possible malpractice which may involve fraud and/or corruption.

In addition, the following e-mail addresses or telephone numbers can be used.

Internal Audit: Tel. 01642 526362 E-mail: [email protected]

Housing Benefit: Tel. 0800 3286340 E-mail: [email protected]