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Overseas Aid: Corruption

Volume 461: debated on Thursday 21 June 2007

To ask the Secretary of State for International Development on what occasions and from whom the UK has sought the return of monies misappropriated from UK aid programmes. (140735)

DFID is committed to ensuring that its resources are used only for the purposes intended. The Department’s Anti-Fraud and Corruption Policy aims to ensure that resources lost through misappropriation are minimised, and that appropriate action is taken to recover such funds. A specialist Fraud Response Unit within DFID’s internal audit function coordinates DFID’s response to allegations of fraud and corruption, and provides support to management to strengthen systems and processes to prevent or detect future losses.

Where a loss relates to activities which are being managed on DFID’s behalf by an NGO, an international organisation or a similar partner with whom DFID has an ongoing relationship, the partner concerned will usually be required to absorb the loss and to complete delivery of the agreed development goals without additional DFID funding. Before agreeing to this course of action, DFID will first require adequate assurance that the weaknesses in the partner’s systems which allowed the losses to occur have been addressed. In other cases, the Department’s practice is normally to seek the repayment of the monies which have been misappropriated.

Where DFID cannot obtain the necessary assurance that a partner’s arrangements for preventing fraud and corruption have been strengthened, and hence that UK taxpayers’ monies will be properly safeguarded, future funding may be withheld or the relationship with the partner may be terminated.

The following table lists the cases, for the financial years 2004-05 to 2006-07 inclusive, where the UK has sought the return of monies misappropriated from UK aid programmes. This includes instances where there has been full or partial repayment to DFID of misappropriated funds, those where the partner organisation managing the activities on DFID’s behalf has absorbed the losses itself, and those where no recovery could be achieved.

Location

Party from whom return was sought/circumstances of loss

2004-05

Uganda

Bank: Unidentified culprit cashed cheque claiming to be working for consultants. Funds recovered in full from bank.

2004-05

The Gambia

NGO: NGO suffered an internal fraud in the Gambia. Individuals were prosecuted and some funds returned.

2004-05

Caribbean

NGO: Misappropriation, including diversion of project salaries funded by DFID. Full amount recovered.

2004-05

DR Congo

International organisation: Financial irregularities within DFID-funded project. Audit undertaken by external auditor. Full funds recovered.

2004-05

UK

Private individual’s estate: Pension still being claimed after staff member’s death. Money refunded in full.

2004-05

UK

Credit card provider: Unauthorised use of credit card. Full refund made by card company

2005-06

UK

Staff member: Made false claim for payment of travel time. Recovered in full.

2005-06

Rwanda

Staff member: Theft of generators by DFID employee. Generators recovered, and employee dismissed.

2005-06

Malawi

Staff member: Cash received on project had not been banked. Staff member resigned and funds recovered in full.

2005-06

Liberia

Supplier: DFID contractor forging/stealing cheques. Company repaid the monies in full.

2005-06

Southern Africa

Staff members: Money stolen from office safe at project. Two staff dismissed and police notified. Funds recovered in full.

2005-06

Kenya

Contractor: Equipment misappropriated. Culprit absconded before police could act. No recovery possible.

2005-06

Malawi

NGO: NGO discovered that their PAYE contributions had been diverted to pay tax on the importation of cars. Court proceedings have been initiated but not concluded. Monies recovered in full.

2006-07

Kenya

NGO: Double billing of donors. Amounts recovered in full.

2006-07

Kenya

NGO: Procurement irregularities, with work being awarded to relatives at inflated costs. Full recovery.

2006-07

Kenya

NGO: Insecticide-treated nets were sold by staff in medical centres to be used as fishing nets. Some supplies were recovered, others written off. Police involved.

2006-07

UK

Private individual’s estate: Pension still being claimed after staff member’s death by a relative, who has since herself died. Some monies recovered from the estate and HMRC.

2006-07

Cambodia

International organisation: Cash/cheque fraud by an international organisation's employees. Some monies returned.

2006-07

Somalia

Local community: Misuse of funds on an Accountable Grant funded project. Community members found responsible and funds repaid in full.

2006-07

Malawi

NGO: Over-claiming of school fees by NGO staff member. Funds repaid in full.

2006-07

Ghana

Supplier: Private company had been using a phone number for which DFID paid the bills. Full recovery.

2006-07

Sudan

NGO: NGO identified a fraud on a DFID-funded project and has since repaid the loss in full.

During the same period, 2004-05 to 2006-07, DFID also had a smaller number of instances where misappropriation of UK funds could be proven but where effective recovery action was not practicable due to the particular circumstances of each case—for example, where the culprits could not be identified or subsequently absconded, or where the value of the loss was lower than the cost of any recovery action. For completeness, these cases are set out in the following table.

Location

Circumstances of loss

2004-05

UK

Payments intercepted in the mail.

2004-05

UK

Staff member tried to re-sell DFID-funded travel tickets.

2004-05

Guyana

NGO worker took unauthorised allowances.

2005-06

Iraq

Over-claiming of project-related salaries.

2005-06

Nigeria

Cash theft.

2005-06

Nepal

Burglary.

2005-06

Iraq

Loss of satellite telephone.

2005-06

Kenya

Equipment purchased without proper authority.

2006-07

Rwanda

Unauthorised use of vehicle.