Fraud & Corruption Control for Elected Members Policy

1.0    Purpose

The purpose of the Fraud and Corruption Control policy is to establish an environment where fraud and corruption concerns associated with Elected Members can be identified and readily addressed. It will also potentially deter fraudulent and corrupt behaviour.

2.0    Background

The Council does not tolerate fraud or corruption at any level within the organisation. This policy outlines the controls and procedures that are in place to assist in the prevention and detection of any fraudulent or corrupt behaviour by Elected Members.

3.0    Key Definitions

Fraud is the misappropriation of what rightfully belongs to an organisation and usually involves some form of intentional misrepresentation of financial information, such as falsifying, altering or wilfully neglecting to update records to documents.

Corruption is a broad term used to cover a range of instances where a public official is inappropriately influenced in the exercise of their duties. Examples of corruption generally fall into one of the following three areas:

  • The offering, giving or acceptance of an inducement or reward which may influence the actions taken by authority employees or elected members.
  • The failure to declare a conflict of interest in making decisions that may have a financial or beneficial impact upon authority employees or elected members of their close associates; or
  • The improper use or disclosure of official information to gain a pecuniary advantage.

Whistleblower is the term given to the act of an individual or individuals identifying their concerns to the Mayor.  In the event that the allegation of fraudulent behaviour involves the Mayor, then the whistleblower should approach the Chief Executive or Human Resource Manager. In this respect wherever the “Mayor” is referred to in this document, this should also be construed as referring to the “Chief Executive” or Human Resource Manager, in the event that the allegation involves the Mayor.

4.0    Policy

4.1      Fraudulent or Corrupt Behaviour

4.1.1 Procedures

Controls and procedures are in place to assist in the prevention and detection of any fraudulent or corrupt behaviour.

Where an individual or individuals identify suspected fraudulent or corrupt behaviour, then this matter should be reported to the Mayor or Chief Executive or Human Resource Manager as appropriate. Every endeavour will be made to protect the “whistleblower” (individual who has identified their concern) from any reprisals.

All indications of fraud and corruption regardless of source of information and amount involved shall be investigated, and every endeavour will be taken to recover any losses sustained.

In serious instances of suspected fraudulent behaviour the matter will be referred by the Mayor or Chief Executive or Human Resource Manager, as appropriate, to the Police.

Any required media liaison will be through the Mayor or Chief Executive or Human Resource Manager, as appropriate (or his/her nominee).

4.1.2 Receipt and Offering of Gifts and Hospitality by Elected Members

Members should be alert to any situation in which they are offered gifts and/or hospitality that could be directly linked to any decisions that they are likely to be making in the near future, or have made at some time.

4.1.3  Gifts and Hospitality Policy for Elected Members

Elected members are required to record all gifts and hospitality valued at $50.00 or more, which are received or offered as a result of their position as elected members of the Timaru District Council.

Council’s Executive Assistant will maintain a register of such gifts and hospitality.

4.2 Fraud Response Plan

4.2.1 Procedures For Whistleblowing

  1. The elected member should advise the Mayor or Chief Executive or Human Resource Manager (as appropriate) of any suspected fraudulent activity.
  2. The Mayor will ensure confidentiality for all complaints. All indications of fraud, corruption or irregularities regardless of the source of information or the amount, will be investigated.
  3. All anonymous complaints will be investigated.

4.2.2 Roles

The Mayor

The role of the Mayor is to:

  1. Receive “complaints”.
  2. Liaise with the Chief Executive or Human Resource Manager regarding the organisation of any necessary investigation procedures.
  3. Report the result of any investigation to the individual who has made the allegation.

4.2.3  Investigation Procedures – Checklist

While it should be noted that the nature of individual investigations should be tailored to the type of allegation involved, the following serves as a useful checklist:

  • 1. Once the Mayor has made general enquiries and determined that the allegation should be further investigated, then the following issues should be considered:
    • objectives of the investigation
    • likely outcomes
    • scope
    • target dates
    • key issues
    • staffing resources, skill mix and responsibilities
    • costs
  • 2. Liaison with Police and/or Council insurers should be considered, as appropriate.
  • 3. Secrecy and confidentiality should be strictly maintained and legal advice should be obtained on the strength of   evidence available.
  • 4. All documentary evidence should be obtained and secured as early as possible in the investigation.
  • 5. Investigations and their costs should be monitored.
  • 6. Post investigation assessments should be performed. Systems’ weaknesses should be identified and rectified.
  • 7.If surveillance is going to be undertaken then there must be liaison with the Police and/or Council’s solicitors.

4.2.4  Procedures For Interviews

If an elected member is to be questioned then the following checklist should be referred to. This will ensure that the correct procedure is followed:

  1. Liaison with Police and/or Council solicitors should be considered prior to undertaking any interview.
  2. The elected member must be told prior to questioning what the purpose of the meeting is.
  3. The elected member must be cautioned and be advised of his or her right to be represented at the interview.
  4. The date and start/finish times of the interview must be recorded.
  5. Two people at the interview must take notes.
  6. The interview notes must be immediately written up after the interview.
  7. The interview notes (verified as to their correctness) should be signed by all parties.

Adopted Council Meeting 23 February 2016