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PRESS RELEASE

24 January 2008

PN 09/08

Northern Ireland Public Accounts Committee Launches Report on Tackling Public Sector Fraud

The NI Assembly Public Accounts Committee published its report on Tackling Public Sector Fraud today, dealing with both a specific fraud in the Ordnance Survey Northern Ireland (OSNI) and wider counter -fraud initiatives in the public sector.

Committee Chairperson John O’Dowd said:

“The fraud in OSNI was not particularly sophisticated and was largely due to serious shortcomings in the control environment. This highlights the need for the public sector to assure itself, on an ongoing basis that controls are appropriate and are being applied rigorously in high risk areas, such as cash handling.

“Despite a number of clear and consistent warning signals, the fraud was only discovered while the fraudster was on extended sick leave. Otherwise, it could have continued for a further considerable period. It is therefore clear to the Committee that a counter-fraud culture was lacking in the Agency and that many of the warning signals fell on deaf ears.

“Following an independent investigation, one member of staff received a written warning while another escaped censure. The Committee does not believe that this limited disciplinary action sends the right signal about the seriousness of ineffective supervision.

“It considers that if a similar degree of negligence had occurred in the private sector, it would have been sanctioned more severely.

“This was not the first fraud in the Agency and there were elements of it which resonated with the evidence given to the previous Public Accounts Committee in relation to a fraud in the former Local Enterprise Development Unit (LEDU). The Committee is therefore disturbed that the lessons from both the previous fraud in LEDU and in the Agency itself were not learnt and that the same types of control and supervisory failures recurred”.

Mr O’Dowd said, “I am concerned that fraud on this scale could lead to a serious loss of confidence in the public service and should qualify for forfeiture of pension rights.

The Committee has recommended that Department of Finance and Personnel (DFP) reviews the legislation to ensure that forfeiture of pension in cases of proven internal fraud can be applied if full restitution has not been made.

Turning to wider fraud initiatives, the Committee also reported on the proposed introduction of data matching legislation, the role of DFP in providing counter-fraud advice and guidance; and the extent to which counter-fraud measures are in place across the whole of the public sector.

Mr O’Dowd said: “Within the first 12 to 18 months following the introduction of the Serious Crime Bill, savings of £4 million may be attainable in Northern Ireland.

“It is therefore essential that efforts to detect, investigate and prosecute fraud are not undermined by a lack of capacity and expertise in the wider public sector.

“To address this concern, the Committee has recommended that DFP undertakes a stocktaking exercise across the wider public sector to assess the availability of trained investigation staff on front line investigation work, and, if necessary, devise a strategy to fill any skills gaps identified from this exercise through mechanisms such as training programmes or short-term redeployment of existing resources.

“The Committee noted with interest a survey recently commissioned by DFP which identified the absence of whistle-blowing policies in 25 per cent of the bodies and would like to see much more emphasis given to this as an important means of identifying potential fraudulent activity.

“There is no excuse for 25 per cent of departments and Agencies not having whistle-blowing policies in place and we expect DFP to ensure this deficit is addressed and that full compliance is achieved.”

Notes to editors:

  1. 1. Ordnance Survey of Northern Ireland (the Agency) is an Executive Agency within the Department of Culture, Arts and Leisure (the Department).
  2. In August 2003, an internal fraud was uncovered within the Agency’s Accounts Branch which had been perpetrated over a five year period between 1998 and 2003 during which the fraudster stole £70,690.
  3. The Department of Finance and Personnel (DFP) has a key role to play in co-coordinating the drive across the public sector to combat fraud. This includes the dissemination of Public Accounts Committee recommendations; guidance on counter fraud best practice; sharing of data and information through a Fraud Forum; an annual report on the types, causes and means of discovery of fraud; and the regular monitoring and review of legislation.
  4. The Serious Crime Bill will provide new data matching and data sharing powers. This will enable the public sector to share data both internally and with the private sector for the prevention and detection of fraud. It will also allow the Comptroller and Auditor General (C&AG) to replicate data matching exercises similar to those conducted by the Audit Commission in England and Wales to identify cases which could signify fraud or error.
  5. The PAC Committee members are:-
    Mr John O’Dowd, (SF) Chairperson
    Mr Roy Beggs, (UUP) Deputy Chairperson
    Mr Trevor Lunn (Alliance)
    Mr Jonathan Craig (DUP)
    Mr Simon Hamilton (DUP)
    Mr David Hilditch (DUP)
    Ms Dawn Purvis (PUP)
    Mr Mickey Brady (SF)
    Mr Mitchel McLaughlin (SF)
    Mr John Dallat (SDLP)
    Mr Patsy McGlone (SDLP)
  6. Standing Orders under Section 60(3) of the Northern Ireland Act 1998 have provided for the establishment of the Public Accounts Committee (the Committee). The main statutory function of the Committee is to consider accounts and the reports by the Comptroller and Auditor General for Northern Ireland (C&AG) laid before the Northern Ireland Assembly.
  7. The C&AG is head of the Northern Ireland Audit Office (NIAO) and is empowered to investigate any area of expenditure and has a statutory right of access to all files and papers in Departments and public bodies.

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