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TITLE: PREVENTION OF FRAUD/CORRUPTION AND OTHERIRREGULARITIES
Policy Number / 0015
Effective Date / April 2011
NextRevision Date / 2013
APPROVED / 30/03/2011
- PREAMBLE:
A Policy on Prevention of Fraud/Corruption and other Irregularities is supportive of good corporate governance practices.
1.1The purpose of this Policy is to set out the responsibilities of the employees and members of the public, with regard to Anti-Fraud and Corruption as well as Fraud and Corruption Prevention Plan and the action that will be taken by the Waterberg FET College in the event of any contravention.
1.2This policy is about changing organisational features that allow the events to occur and possibly go unnoticed or unreported. The strategies incorporated in the Fraud and Corruption Prevention Plan address issues such as accountability, transparency, efficiency, effective and clean administration. Further, these strategies focus on improving systems and procedures, changing the attitudes of the staff and members of the public and improving the overall integrity and performance of or as we are attempting here, to incorporate in several such as Anti-Fraud and Anti- Corruption policy, Fraud and Prevention Plan and Code of Ethics etc.
1.3The Anti-Fraud and Corruption Policy covers the prevention, detection and management of fraud and corruption and for fair dealing in matters pertaining to fraud and corruption. It aims to raise the awareness of fraud and corruption and its prevention in the Waterberg FET College environment and to give guidance to both the reporting of suspected fraud and corruption and how the investigation of that report will proceed.
1.4The Waterberg FET College has a duty to protect the public funds under its control against fraud and corruption both from within the Municipality and from external sources. This Anti-Fraud and Corruption Policy is part of the Municipality’s commitment to sound corporate governance.
1.5The Waterberg FET College expects all employees at all levels to lead by example in the achievement of probity and accountability by ensuring adherence to legal requirements, regulations, rules, procedures, policies and practices.
1.6The Waterberg FET College also expects that individuals and organizations (e.g. suppliers, contractors and partners, etc) with whom it comes into contact, will act with integrity and without intent or actions to commit fraud or corruption or any other dishonest activities of a similar nature against the Municipality.
1.7This policy is intended to set down the stance of Waterberg FET College to fraud and corruption as well as to reinforce existing systems, policies, procedures, rules and regulations of Waterberg FET College aimed at deterring, preventing, detecting, reacting to and reducing the impact of fraud and corruption.
1.8The Waterberg FET College recognizes the fact that acts of fraud and corruption by its employees and external stakeholders affect the quality and quantity of service delivery because of limited resources, thus resulting in the Waterberg FET College not meeting its objectives.
1.9Fraud and corruption is an ever-present threat to these resources and hence must be a concern to all employees and persons employed in a similar capacity. Fraud and corruption may occur internally or externally and may be perpetrated by anybody including employees, members of the public, councillors, consultants, suppliers, contractors or development partners, individually or in collusion with others.
- SCOPE OF THE POLICY:
2.1Scope:
2.1.1To contribute to cost effective service delivery
2.1.2To comply with legislation
2.1.3To contribute to a fair and just administration;
2.1.4To contribute to the welfare of the communities it serves
2.1.5To promote the effective attainment
2.1.6To promote effective and efficient fraud and corruption
2.1.7Management
2.2The key principles underlying the policy are the following:
2.2.1Fairness
2.2.2Value for money
2.2.3Efficiency and effectiveness
2.2.4Consistency
2.2.5accountability
2.3Adherence to the Policy will enable Council to :
2.3.1Recognise and reward good service
2.3.2Promote a secure working environment
2.3.3Channel funds saved, into training and development opportunities for the betterment of all employed at the Institution.
2.4Non-compliance will:
2.4.1Cause job losses
2.4.2Cause the Institution to incure serious financial losses
2.4.3Negative service delivery
2.4.4Adversely affect the College image in the community and in the market place.
- LEGAL FRAMEWORK:
3.1The following legislation, amongst others, deal with corruption in South Africa:
Corruption Act 94 of 1992
Public Finance Management Act,1 of 1999
Treasury Regulations
Protected Disclosure Act
King Report
Code of Conduct Waterberg FET College
3.2It is the responsibility of the Council, Management,
3.2.1Employees and Students at the Waterberg FET College toadhere to the Code of Ethics and Conduct and other policies to assist the institution in the prevention and perpetration of fraud/corruption and other irregularities.
3.3All forms of fraud/corruption and other irregularities, prejudicial or beneficial to Waterberg FET College, are prohibited and would be dealt with in accordance with the Disciplinary Code for Employees and students respectively.
3.3.1When dealing with allegations of fraud/corruption and any other irregularities at Waterberg FET College, the Institution will strive to protect the rights of all parties involved in terms of the Constitution and the Laws of the Republic of South Africa.
- DEFINITIONS:
4.1Conflict of Interest: refers to situations in which:
4.1.1Financial or other personal
4.1.2Considerations may compromise,
4.1.3Or have the appearance of com-
4.1.4Promising, an employee’s professional
4.1.5judgement in administration,
4.1.6management, instruction, research
4.1.7and other professional activities.
4.2Corruption in terms of section 3 of the Prevention and Combating of Corrupt Activities Act 12 of 2004 is committed by any person who, directly or indirectly
4.2.1Accepts or agrees or offers to accept any
4.2.2Gratification from any other person, whether for the benefit of himself or herself or for the benefit of another person
4.2.3Gives or agrees or offers to give any other person any gratification, whether for the benefit of that other person or for the benefit of another person, in order to act, personally or by influencing another person to act in a manner:
4.2.3.1That amounts to the:
4.2.3.1.1illegal, dishonest, unauthorised, incomplete or biased: or
4.2.3.1.2misuse or selling of information or material acquired in the course of the, exercise, carrying out or performance of any powers. Duties or functions arising out of a constitutional, statutory, contractual or any legal obligation;
4.2.3.2That amounts to;
4.2.3.2.1the abuse of a position of authority
4.2.3.2.2breach of trust; or
4.2.3.2.3the violation of a legal duty or a set of rules designed to achieve an unjustified result; or that amounts to any other unauthorised or improper inducement to do or not to do anything that is guilty of the offence of corruption.
4.3The legal definition of fraud, theft and corruption in defined according to the common law of South Africa, and is summarised as:
4.3.1Fraud: is defined as the unlawful act or omission by which misrepresentation is made with the intention to defraud or making a misrepresentation which causes actual prejudice or which is potentially prejudicial to another.
4.3.2Theft is defined according to the common law of South Africa, and is summarized as: The unlawful misappropriation of movable property or money with the intention to steal.
4.3.3Corruption: Corruption is defined according to the Corruption Act, 94 of 1992 of South Africa, and as amended, and in summary prohibits the abuse of a position of employment by; the offering or acceptance of a benefit that is not legally due, for the commission of an act in connection with that position of employment
4.3.4Immediate family: In this context it includes a spouse, if any, parents and any natural or adopted siblings or children, stepchildren, parents-in-law, brothers, sisters and all in-laws. “Spouse’ includes any male or female person with whom the employee is cohabiting as habitual partners.
4.3.5Irregularity: Means any conduct that is in contravention of any approved policy of Waterberg FET College, including, amongst others, fraud.
4.3.6Corruption takes various forms in the public sector and elsewhere in society.
The following are examples of different types of corruption:
4.3.6.1Bribery: the promise, offering or giving benefits that improperly affects the actions or decisions of staff. Example: traffic officer receiving cash for not issuing a fine
4.3.6.2Embezzlement: theft of resources by persons entrusted with the authority and control of such resources; Example: staff selling medicine from hospitals and selling to private pharmacists
4.3.6.3Fraud: actions that fools others into providing a benefit
4.3.6.4Extortion: coercing a person or entity to provide a benefit to a staff member, another person or an entity in exchange for acting in a particular manner.
4.3.6.5Abuse of power:using vested authority to improperly benefit another employee- (Manager request that a certain person receive the tender)
4.3.6.6Conflict of interest: failing to act or disclose his/her interest
4.3.6.7Abuse of privileged information: the use of information and knowledge that a staff member possesses and uses for hi/her advantage to obtain a benefit
4.3.6.8Favouritism: the provision of services or resources according to personal affiliation (example political, religious, ethnic group receiving preference over other groups
4.3.6.9Nepotism: An employee ensures that family members are appointed in positions or those family members receives tenders, etc.
- INDICATORS OF FRAUD AND CORRUPTION:
5.1The following indicators (RED FLAGS) that could be an indication of the potential existence of fraud and corruption:
5.1.1Unusually high personal debts
5.1.2Living beyond one’s means
5.1.3Excessive gambling habits
5.1.4Alcohol /drug problems
5.1.5Undue family or peer pressure to succeed
5.1.6Feeling of being underpaid
5.1.7Feeling of insufficient recognition for job performance
5.1.8Close association with suppliers
5.1.9Wheeler-and –dealer attitude
5.1.10Desire to “beat the system”
5.1.11Criminal record
5.1.12Not taking vacations
5.1.13Not allowing someone access to area of responsibility
5.1.14Undisclosed conflict of interest and;
5.1.15Rationalization for conflicting behavioural problems
5.2Indicators of opportunities to commit fraud:
5.2.1Rapid turnover of key employees through resignation or dismissal
5.2.2Dishonest and dominant management
5.2.3Inadequate training programmes
5.2.4Complex business structures
5.2.5No effective internal audit function
5.2.6Continious problems with regulatory agencies and
The above illustration of the manifestation of corruption is by no means complete or exhaustive. Corruption appears in various permutations and degrees
- MISCONDUCT THAT CONSTITUTES CORRUPTION AND OTHERIRREGULARITIES AT WATERBERG FET COLLEGE:
6.1.1Misappropriationor misuse of funds and property thatbelongs to the Waterberg FET College.
6.1.2Destruction, removal or concealment of Waterberg FETCollege property
6.1.3Alteration or falsification of documents prejudicial toWaterberg FET College, or any party conducting businesswith the College.
6.1.4Presenting any false claim for reimbursement by any partyassociated with Waterberg FET College.
6.1.5Theft of property in any form, corporeal, from WaterbergFET College.
6.1.6Knowingly creating, condoning or presenting inaccurate Financial statements contrary to proper financial controls and generally accepted accounting principles (GAAP)
6.1.7Reporting standards adhered to at Waterberg FET College.
6.1.8Colluding, for a benefit, with any party (internal or External) in any manner that creates actual or potential Prejudice to Waterberg FET College.
6.1.9Improper handling or reporting of financial transactions.
6.1.10Knowingly giving authority for the payment of orsigning for fictitious goods and services.
6.1.11Knowingly submitting or authorizing false overtime andmaking any misrepresentative travel claims
6.1.12The use of or authorizing the use of any Waterberg FETCollege logo or trademarks in any manner that causesprejudice to the institution.
6.1.13Exercising or failing to exercise any power of authority
6.1.14Delegated to the individual as a Waterberg FET Collegeemployee resulting in the employee or his/her immediatefamily obtaining a personal benefit.
6.1.15Failing to disclose any vested interest where there is likely to be any conflict of interest while conductingWaterberg FET College business.
6.1.16Making any misrepresentation of facts that result inactual or potential prejudice against a party at theCollege.
6.1.17Failure to comply with the provisions of any policy and/or procedure duly approved by Council in a manner that causes prejudice to the institution.
6.1.18Failure to act or refrain from acting in reasonablemanner, where such conduct or omission is not regulatedby policy, causing prejudice to the College.
6.2In view of the legal framework and government policies:
6.2.1It is the Policy of the Waterberg FET College that fraud, corruption, theft, maladministration and or any other dishonest activities of a similar nature will not be tolerated. In addition these will be investigated and followed up by the application of all remedies available within the full extent of the law.
6.2.2Appropriate prevention and detection controls will be applied. These include the controls and checking mechanisms as prescribed in existing policies, procedures and other relevant prescripts.
6.2.3It is the responsibility of all employees to report all instances of fraud, corruption, theft, maladministration or any other dishonest activities of a similar nature to his/her immediate supervisor.
- FRAUD/CORRUPTION AND OTHER IRREGULARITIES PREVENTION PLAN:
7.1A major step in the avoidance of losses is when the Council acknowledges that fraud control is one of the building blocks of good governance.
7.2Treasury Regulation 3.2.1 states:
7.2.1“The Accounting Officer must ensure that a risk assessment is conducted regularly to identify emerging risks to the Institution. A risk management strategy, which must include a Fraud Prevention Plan, must be used to detect direct internal audit effort and priority, and to determine the skills required of managers and staff to improve controls and to manage these risks. The strategy must be clearly communicated to a;; officials to ensure that the risk management strategy is incorporated into the language and the culture of the Institution”
7.3Waterberg FET College will implement the following strategy for the prevention of fraud/corruption and other irregularities:
7.3.1Prevention: activities intended to prevent the fraud from occurring
7.3.2Detection: activities intended to uncover the existence of fraud that could not be prevented
7.3.3Investigation: a systematic examination of facts surrounding the detected incident.
7.3.4Correction: is the action of addressing the root causes of what allowed the fraud/corruption or irregularities to occur and would include control improvements, sanctions and redress.
7.3.5Deterrence: is the stopping of fraud before it is attempted. This would be attributed to fear of being caught and punished as well as the difficulty aspect of perpetrating the fraud.
7.3.6Fraud risk assessment: Management to assess the vulnerability of the College every 18-24 months. This is done by traditionally evaluating the type of risk/fraud, the likelihood of its occurrence, the potential impact of the fraud
7.3.7Accountability: Management, line managers and staff should have a matrix which lists the anti-fraud functions and which staff have primary, secondary or a shared responsibility. The Code of Conduct must be signed by all staff members where it is stated that they understood the document and will adhere hereto. This will prevent them from claiming ignorance.
7.3.8Controls:After the fraud assessment Management must determine whether there are controls in place to mitigate the identified fraud risks or if additional emphasis should be placed on existing controls.
7.4Fraud Deterrence Lifecycle:
- ENVIRONMENT AND CULTURE:
8.1The management must create an environment and culture in which employees believe that dishonest acts will be detected and investigated. To this end, they must:
8.1.1participate in in-house training program covering fraud and corruption detection, fraud and corruption prevention and training on the code of ethics;
8.1.2ensure that staff understand that the internal controls are designed and intended to prevent and detect fraud and corruption or any other dishonest activities of a similar nature;
8.1.3encourage staff to report suspected fraud and corruption directly to those responsible for investigation without fear of disclosure or retribution; and
8.1.4require vendors and contractors to agree in writing as a part of the contract process, to abide by the Waterberg FET College policies and procedures, and thereby avoid any conflict of interest.
8.2Measures to prevent fraud and corruption should be continually monitored, reviewed and developed particularly as new systems, programs, contracting or arrangements are introduced or modified.
- PROCEDURES FOR REPORTING FRAUDULENT AND OR CORRUPTIVE ACTIVITIES:
9.1Consistent with the Auditor General’s guidelines, line managers are responsible for daily operations and for the internal control systems within their organisational responsibility. Where managers do not have the expertise to evaluate internal controls they should call upon the support from Internal Audit.
9.2It is the responsibility of members of the employees (including line managers) to report all incidents of fraud, corruption or any other dishonest activities of a similar nature.
- INVESTIGATION OF COMPLAINTS:
10.1The Office of the Head: Investigations will investigate all complaints of fraud and corruption with the assistance of different Units/Departments and individuals.
10.2The Human Resources Unit must provide adequately qualified prosecutor (initiator) and presiding officers to deal with disciplinary enquiries relating to serious misconduct.
10.3For the purpose of this policy “serious misconduct” means
10.3.1Theft, unauthorized possession of or malicious damage to the employer’s property.
10.3.2Any act of gross dishonesty.
10.3.3Gross negligence
10.3.4Wrongful disclosure of privileged information.
10.3.5Any act of fraud, corruption or bribery.
10.3.6Any other act of misconduct that would constitute just cause for dismissal for a first offence.
- PROTECTION OF WHISTLE-BLOWERS:
11.1The Protected Disclosures Act, Act 26 of 2000 makes provisions for procedures in terms of which employees may disclose information regarding unlawful or irregular conduct by their employers or other employees in the employ of their employers without fear of victimization.
11.2A person shall therefore not:
11.2.1prejudice, or threaten to prejudice, the safety or career of; or
11.2.2intimidate or harass, or threaten to intimidate or harass; or
11.2.3do any act that is, or is likely to be, to the detriment of, another person because the other person:-
11.2.3.1has assisted, is assisting or will or may in the future assist The Office of the Head: Investigations or any Law Enforcement Agency in the performance of its functions; or
11.2.3.2has furnished, is furnishing or will or may in the future furnish information to The Office of the Head: Investigations or any Law Enforcement Agency; or
11.2.3.3has been or is, or has been or is employed by or acting on behalfof, an independent agency or appropriate authority to whom or which an allegation has been referred; or
11.2.3.4has exercised a power, or performed a duty, conferred or imposed on the other person or is exercising or performing, or will or may inthe future exercise or perform, any such power or duty."
11.2.4All whistle-blowers’ identities will remain confidential or anonymous to prevent victimization.
11.2.5Action to cover up the wrongdoing and or to retaliate against, or victimise witnesses is strictly forbidden, and such action constitute a conduct within the jurisdiction of the Waterberg FET College, which is punishable.
11.2.6The Whistle-blowing Policy supplementing this policy will be prepared by the Ombudsperson and Head: Investigations and be cascaded to all employees after having been approved by the Executive Council of Waterberg FET College.