ANTI-FRAUD & CORRUPTION POLICY

1. INTRODUCTION

The Councils Finance and Support Services Committee on 1 February 1999 approved
the introduction of an Anti Fraud Policy. The Policy was last updated in September
2003 and this new policy represents amendments approved in April 2006.

2. POLICY AIMS AND OBJECTIVES

The aims and objectives of the policy are to prevent, deter and detect fraud, corruption
and other irregularity and its intentions where it is suspected and/or committed. In
addition, the aim of this policy is to clearly communicate the City Councils stance on
fraud both internally and externally and to generally strengthen the Councils anti
fraud culture.

The Council is committed to the highest ethical standards and requires Members, Chief
Officers and all other staff, including those of contractors to make themselves aware of
and comply with the seven principles of public life as defined in the Nolan Report 1.
These principles are:

SELFLESSNESS
INTEGRITY
OBJECTIVITY
ACCOUNTABILITY
OPENNESS
HONESTY
LEADERSHIP

3. POLICY JURISDICTION

The Anti Fraud and Corruption Policy relates to Members, Chief Officers, Council
staff, contractors (and their staff), consultants and all individuals and groups who
receive Council services. The Policy lays down the standards of behaviour it expects
and the Councils intentions in respect of the prevention, deterrence and detection of
fraud, corruption and other irregularity.

The City Council expects Members, Chief Officers and all other staff, including
contractors and their staff providing Council services, to act with integrity at all times, to
be totally honest and trustworthy and to comply with all laws and regulations applicable
to the Councils business.

Fraud, corruption and other irregularity will not be tolerated whether it is perpetrated
against the City Council or elsewhere, i.e. by its staff against another organisation.
This policy will be given wide circulation to ensure it is recognised and adhered to.
1
For further details see the Councils Code of Governance.
4. ANTI FRAUD AND CORRUPTION STRATEGY

To accompany this policy, there is an Anti-Fraud and Corruption Strategy. The strategy
must be read in conjunction with this policy as it sets down the detailed manner in
which the City Council is to deter, detect and prevent fraud and corruption. In addition,
the Strategy provides detailed information and guidance on the manner in which
suspected fraudulent or corrupt activity can be reported and how the City Council will
act in these circumstances.
 ANTI-FRAUD & CORRUPTION STRATEGY

1. INTRODUCTION

1.1 The City Council has a clear AntiFraud Policy and is committed to preventing, detecting
and deterring fraud, corruption or other irregularity from happening and to take action
where this is suspected or detected.

1.2 An effective Anti-Fraud and Corruption Strategy is key to the City Council in directing and
controlling its business with openness, integrity and accountability. The Strategy also
demonstrates the Councils attitudes toward fraud and corruption and how it intends to
act.

The City Council is therefore committed to a Strategy designed to:

enhance and maintain an anti-fraud culture

actively encourage prevention
act as a deterrent to fraudulent and corrupt acts
promote detection
provide clear guidance on roles and responsibilities
identify a clear pathway for investigation and remedial action

2. WHAT is FRAUD and CORRUPTION?

2.1 Fraud and Corruption are generic terms, definitions include:

A deception deliberately practiced in order to secure unfair or unlawful gain.

The offering, giving, soliciting or acceptance of an inducement or a reward,

which may influence the action of any person.

The use of ones position of trust for personal gain

A lack of integrity or honesty (especially susceptibility to bribery)

The Audit Commission defines fraud 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

These definitions therefore encompass acts involving:

Theft
Deception
Bribery
 Forgery
Extortion
Corruption
Conspiracy
Embezzlement
Misappropriation
False representation
Concealment of material facts
Collusion.

3. FRAUD AND CORRUPTION - PREVENTION AND DETECTION

3.1 Roles and Responsibilities of Chief Officers

Chief Officers and their managers have the responsibility to ensure that there are
sound systems of internal control within their departments and, in respect of contracted
out services, to determine the risk of fraud, corruption and irregularity and incorporate
appropriate controls and safeguards within tender documentation and in the process of
tender evaluation.

Controls should be designed and implemented to reduce the risks posed by fraud and
ensure, as far as possible, its detection should it occur. Chief Officers and their
managers must implement agreed Audit recommendations in accordance with agreed
time scales to ensure that systems are maintained appropriately to prevent and detect
fraud.

3.2 Roles and Responsibilities of Contractors

The role of contractors is no different from that of Chief Officers in relation to controls
operated on behalf of the Council. As such, contractors should ensure they have
adequate systems and controls to ensure the prevention and detection of fraud and
corruption. In addition, contractors also have responsibility for ensuring that agreed
Audit recommendations for improvements in systems and control are implemented
within agreed time scales to maintain adequate anti fraud measures.

3.3 Roles and Responsibilities of Internal Audit

The City Council has a statutory responsibility to maintain an adequate and effective
Internal Audit function. This responsibility currently rests with the Director of Finance
(DoF) who discharges these duties through the Internal Audit Service. The DoF
arranges the Internal Audit of the Councils Internal Control systems and has
responsibility for Internal Audit planning, direction, standards and coverage.

Internal Audit coverage is risk based and the annual planning cycle provides an
opportunity for Chief Officers to draw attention to their concerns. In accordance with
the Audit Plan, Internal Audit are responsible for reviewing and appraising the
 adequacy, reliability and effectiveness of the Councils systems of internal control and
reporting to Chief Officers and managers. Internal Audit are also responsible for
following up agreed recommendations to confirm that these have been implemented by
Chief Officers in accordance with agreed timescales.

3.4 Roles and Responsibilities of Members

The conduct of Members is governed by the National Code of Conduct for Members
which is set out in full in the City Councils Code of Governance, together with some
associated guidance. Members agree to abide by the Code when accepting office.
The most important principle enshrined in the Code is that:

It is not enough to avoid actual impropriety. You should at all times avoid any
occasion for suspicion and any appearance of improper conduct.

3.5 Roles and Responsibilities of the Audit and Performance Overview and Scrutiny
Sub-Committee

The remit of the sub-committee is to:

Ensure effective control over the City Councils activities by monitoring, appraising
and reporting upon the City Councils internal control procedures;
Ensure there is an effective anti-fraud culture and to advise on the promotion of
probity and good practice within the City Council;
To review and scrutinise as appropriate matters arising from the investigation and
reporting of fraud or irregularity;
To review and scrutinise as appropriate matters arising from the Internal Auditors
reports;
To liaise with the external auditors over the annual audit programme and to
recommend for approval both the internal and external audit programmes; and
To review and scrutinise as appropriate matters arising from the external auditors
reports.

Internal Audit report periodically to the Audit and Performance Sub-Committee in

accordance with the agreed timetable.

3.6 Recruitment of Staff and Staff Vetting

It is important to ensure that the integrity of Council systems is maintained. A key

element in this process is to ensure that the Council employs staff of the appropriate
quality and integrity. As such, whilst the procedures concerning the appointment of
staff are a small part of the Councils systems and controls it is considered to be a vital
element.

The Recruitment Code of Practice as part of the Councils HR Framework provides

guidance on the appointment of the successful individual.
 The Council will ensure staff provide adequate proof of identity and permission to work
in the UK. Staff are appointed subject to satisfactory references and care is to be
taken to ensure that employment references and qualifications are genuine. Copies of
appropriate qualifications will be requested and held on the relevant personal file. For
certain posts checks to the Police Criminal Records Bureau and List 99 are necessary
and will be carried out. Records of these checks and their outcome will be maintained.

In addition, the Councils employment application form includes an Applicants

Declaration. This declaration enables confirmation by each applicant of their
understanding that if false information is provided which leads to their appointment, or
it is subsequently discovered that false information has been supplied, it will render
them liable to dismissal without notice. Due regard will also be made in respect of the
Rehabilitation of Offenders in relation to spent and unspent convictions. The
Councils HR Framework Recruitment Code contains specific information on the way in
which this sensitive area is to be handled.

The Council requires contractors to also properly vet applicants who will be working on
Council contracts. The precise requirements on contractors to comply with this are
included in the standard terms and conditions of every contract issued by the City
Council.

3.7 Redress and Recovery

Within the Internal Audit function there is a specialist team that investigates fraud,
corruption and other potential irregularities. Disciplinary action and /or other legal
action, including prosecution, will be taken against those found and proven to be
defrauding the City Council. In addition, the City Council may in certain circumstances
offer an alternative to prosecution in the case of Housing Benefit fraud and in
accordance with its sanctions and prosecution policy.

In addition, all appropriate financial and other redress will be pursued to recover assets
that have been lost as a result of fraudulent acts.

3.8 Publicity

All publicity will seek to promote the message that the City Council will not tolerate
fraud, corruption of any other form of irregularity and is committed to countering any
that is perpetrated.

Methods of publicity for the Councils anti-fraud action are included in a rolling
programme of planned and unplanned publicity. This may include the use of warnings
on Council application forms, City Council newsletters and intranet, local newspaper
advertisements, articles and features through local radio, television and other relevant
media. It is City Council policy that all successful prosecutions are reported to the
 media via the Councils Communications Team where it is considered appropriate to do
so.

3.9 Fraud Hotline

The City Council has established a freephone fraud hotline. The number is answered
by trained fraud investigators within Internal Audit. The hotline is manned during
normal office hours, and an answering services operates at all other times.

Staff and the public alike are encouraged to ring the hotline with any information about
known or suspected fraudulent activity. All information is treated in the strictest
confidence and if callers wish to remain anonymous, then that will be respected.

In accordance with the rolling publicity programme, publicity will be given to the hot-line
on a regular basis. The hot-line appears on the City Councils web site and there is
also an opportunity for those wishing to report suspected fraud to do so via email to a
designated Council email address. The hotline number is 0800 028 9888.

3.10 Gifts and Hospitality

The Code of Governance gives clear advice to both Members and officers on the
acceptance of gifts and hospitality. The guidance must be followed at all times to
ensure that the integrity of Members and officers is not compromised.

3.11 Whistleblowing

The guidance for officers/Members set out in the City Councils Code of Governance
contains a section on Whistleblowing and an officers/Members duty to speak up.
This is important in the context of fraud prevention and detection and the following
paragraphs set out officers and Members responsibilities the processes when a
Whistleblower comes forward.

The City Council encourages both members and officers to report their concerns when
the interests of others or the organisation itself are at risk. The Whistle-blowing Policy
and guidelines have been developed so that Members and Officers know how to raise
a concern in the right way at an early stage and are assured that concerns raised will
be dealt with properly and appropriately.

The City Council will not tolerate the victimisation or harassment of anyone raising a
genuine concern. Employees are protected from victimisation and harassment when
raising genuine concerns by the Public Interest Disclosures Act 1998. This legislation
aims to ensure employees who may be worried about coming forward can do so in the
knowledge that it is safe to do so.

Members and staff are advised that where their concern falls into one or more of the
following areas they should come forward:
 A criminal act;
A failure to comply with any legal obligation;
Danger to health and safety;
Breaking the Law;
Danger to Health and safety;
Any damage to the Environment;
Breach of the Code of Governance;
An attempt to cover up any of these.

3.12 Anti-Money Laundering

Money Laundering is an act falling within section 340(11) of the Proceeds of Crime Act
2002 (POCA). Money laundering is also an offence under section 18 of the Terrorism
Act 2000. The term money laundering is used for a number of offences involving the
proceeds of crime or terrorist funds. The following actions constitute money laundering:

Concealing, disguising, converting, transferring or removing criminal property from

England and Wales, or from Scotland, or from Northern Ireland;

Becoming concerned in an arrangement in which someone knowingly or suspects

or facilitates the acquisition, retention, use or control of criminal property by or on
behalf of another person;

Acquiring, using or possessing criminal property.

In accordance with section 332 of POCA the City Council has appointed a Money
Laundering Reporting Officer (MLRO). The MLRO is responsible for:

Making those staff most likely to be exposed to or suspicious of money laundering

situations aware of the requirements and obligations placed on the Council, and on
them as individuals, by the Proceeds of Crime Act 2002 and the Terrorism Act 2000;

Give targeted training to those considered to be most likely to encounter money

laundering;

Make arrangements to receive and manage the concerns of staff (and contractors)
about money laundering and their suspicion of it, to make internal enquiries, and to
make reports, where necessary to the National Crime Intelligence Service (NCIS);

Establish internal procedures to help forestall and prevent money laundering.

3.13 Proactive Anti-Fraud Initiatives

 There is an annual risk based proactive anti-fraud programme, which targets resources
to specific areas where there is a higher risk of fraud.

The City Council is determined to take action on fraud and corruption and promote
initiatives that can lead to a reduction in the occurrence of fraud. The Internal Audit
service is required not only to investigate fraud cases but also to submit proposals
throughout the contract term for proactive fraud initiatives. Data matching is in use
both within Westminster City Council and outside and is an extremely successful
means of identifying fraud. Internal Audit will continue to make increasing use of the
opportunities that Information Technology provides.

The Council will continue to participate in Anti-Fraud initiatives established by the

Department for Work and Pensions Housing Benefit Matching Service and the Audit
Commissions National Fraud Initiative. In addition, the Council will continue to foster
links to undertake specific fraud drives and exchange information with other external
agencies including the Police, Benefit Agencies, Inland Revenue, Customs and Excise,
and other Councils.

From time to time the Council may run its own data matching exercises against its own
databases. This may include systems holding information about Council employees
(payroll and personnel), claimants of Housing/Council Tax Benefit and recipients of
Student Awards. Other systems will also be considered such as Residents Parking.
The use of contractors data for the purposes of identifying fraud is currently under
review.

In conducting data matching exercises the Council will have due regard for its
responsibilities in complying with relevant legislation such as the Data Protection Act
1998.

3.14 Fraud Business Plan

In 2005 a Corporate Counter Fraud Business Plan has been introduced. This plan
details the provision of the Counter Fraud Service for 2005/06 and beyond. The
Corporate Counter Fraud Service encompasses the provision of Housing Benefit fraud
investigation and other Corporate fraud investigation.

This Business Plan sets out the manner in which the Corporate Counter Fraud Service
will operate to ensure that it maximises fraud prevention, detection and deterrence in
Westminster.

The overriding aim of the team is to deliver a quality investigative service with the
objective of preventing, detecting and deterring fraud throughout the Council, thereby
securing the public purse. The specific scope, aims and objectives of the team are to:

Carry out investigation of reactive Housing Benefit and Corporate fraud referrals
to determine whether fraud has occurred;
 Carry out investigation of pro-active Housing Benefit and Corporate fraud
referrals, including those arising from the Housing Benefit Matching Service and the
National Fraud Initiative, to detect where fraud or overpayment has occurred;
Apply appropriate sanctions and redress where it is proven that fraud has taken
place in accordance with the City Councils prosecution (sanction) policy and
disciplinary code where appropriate;
Identify appropriate means to further tackle Housing Benefit and Corporate fraud
including the development of new and innovative proactive exercises;
Encourage referrals of suspected fraud from both internal and external sources;
Evaluate all referrals to determine whether resources could be effectively deployed
to investigate;
Carry out all investigations in accordance with prevailing legislation;
Adhere to the newly published DWP Performance Standards in relation to Housing
Benefits and any other recognised best practice;
Liaise with the City Councils City Solicitors, the Police and Crown Prosecution
Service and the Department for Work and Pensions Solicitors branch as
appropriate in all cases of prosecution;
Provide feedback to the Benefits Service on cases of successful sanctions;
Obtain publicity in the press for successful prosecution cases;
Report Counter Fraud activity to the Internal Audit Client and City Council members
as directed;
Liaise with the Counter Fraud Investigation Service of the Department for Work and
Pensions in accordance with prevailing Partnership Agreements;
Liaise with partners in the Housing Benefits Service, including the Fraud Liaison
Officers and other Council departments where appropriate;
Ensure Housing Benefit Investigation officers are appropriately trained and
qualified;
Participate in local and/or national forums regarding Housing Benefit and Corporate
Fraud.
Respond to and comply with directives issued by the DWP in the form of Circulars;
Comply with the investigators Code of Conduct;
Maintain an up to date working knowledge of changes in legislation and best
practice and to act accordingly;
Review Anti-Fraud Policies and Strategies on an annual basis taking on board
changes in legislation and any emerging best practice.

3.15 Anti-Fraud and Corruption Training and Awareness

The City Council places a high emphasis on ensuring that the AntiFraud and
Corruption Policy and Strategy are well publicised and that all those who have
obligations under the policy and strategy understand this.

Fraud awareness sessions are now regularly run for managers and staff. The agenda
has been revised to meet changing needs and further interactive workshops have been
run. On a continual basis and in accordance with the rolling plan previously mentioned
 the City Council will continue to review the best methods for communicating these to
members, staff, contractors and all other service providers and users.

3.16 Training for Investigators

The City Councils Internal Audit provider ensures that its investigators are fully trained
in carrying out their responsibilities and that this training is maintained to ensure
continuous improvement. This includes, where appropriate, relevant qualifications such
as the Professionalism in Security (PINS) accreditation. All investigators are also
required to sign up to and comply with a code of conduct for investigations.