APPENDIX 1
Irregular payments at the British Embassy
in Amman, Jordan (PAC 1997-98/208)
Supplementary Memorandum from the Foreign
and Commonwealth Office
Question 51
During his oral evidence to the Committee, Sir
John Kerr said that the FCO's Internal Audit Department (IAD)
had recommended that our conduct and discipline procedures should
be revised to make greater provision for the recovery of funds,
including in cases where the loss is attributable to negligence.
This recommendation was one of a number of action points agreed
in December 1997 (for implementation by September 1998) following
an audit of the FCO's conduct and discipline procedures. We envisage
a tougher approach to proven cases of negligence where public
monies are involved. Question 51 implies that the FCO is proposing
a Whitehall-wide approach to this issue. That is not the intention:
Departments are responsible for defining the standards of conduct
they require of their staff and for ensuring these fully reflect
the Civil Service Code of Management on Conduct and Discipline.
But we are keen to examine best practice in other Departments,
and have initiated discussions with them. We also need to ensure
that our revised rules have safeguards and are seen as fair and
reasonable. So discussions with staff and the Trade Union Side
are important.
We shall inform the Committee when our proposal
is firm.
Question 86
1. At Annex 1 is the FCO's current list
of Posts where the risk of fraud is deemed highest. This list
is produced by the Financial Compliance Unit from a computer database
of financial and management information on overseas posts known
as the Early Warning System (EWS). The EWS risk model uses both
objective data (the post profile) and subjective data (indicators).
The categories are shown in Annex 2. In 1997/98 FCU teams will
visit Moscow, Peking, Tehran, Nairobi, Istanbul and Accra.
2. In addition, the FCO's Internal Audit
Department conduct a cycle of audits of 25 to 30 overseas posts
each year. Their audit visits in the 1997/8 financial year are
listed at Annex 3, and their 1998/99 programme at Annex 4. Posts
are selected for visits on the basis of IAD's own risk assessment
system, coupled with the Early Warning System scores produced
by the FCU.
Annex 1
Financial Compliance Unit: Early Warning
System: Top 50 posts (in risk order)
| POST | |
| ISLAMABAD | (PAKISTAN) |
| LAGOS | (NIGERIA) |
| NEW DELHI | (INDIA) |
| DHAKA | (BANGLADESH) |
| MOSCOW | (RUSSIAN FEDERATION)
|
| BOMBAY | (INDIA) |
| PEKING | (CHINA) |
| BANGKOK | (THAILAND) |
| CAIRO | (EGYPT) |
| AMMAN | (JORDAN) |
| KARACHI | (PAKISTAN) |
| PARIS | (FRANCE) |
| WASHINGTON | (USA) |
| BRUSSELS | (BELGIUM) |
| TEHRAN | (IRAN) |
| NAIROBI | (KENYA) |
| ISTANBUL | (TURKEY) |
| ACCRA | (GHANA) |
| NEW YORK | (USA) |
| JAKARTA | (INDONESIA) |
| RIYADH | (SAUDI ARABIA) |
| BONN | (WEST GERMANY) |
| CANBERRA | (AUSTRALIA) |
| TOKYO | (JAPAN) |
| MANILA | (PHILIPPINES) |
| ABUJA | (NIGERIA) |
| KIEV | (UKRAINE) |
| COLOMBO | (SRI LANKA) |
| SOFIA | (BULGARIA) |
| WARSAW | (POLAND) |
| BEIRUT | (LEBANON) |
| BOGOTA | (COLOMBIA) |
| FREETOWN | (SIERRA LEONE) |
| ADDIS ABABA | (ETHIOPIA) |
| BUCHAREST | (ROMANIA) |
| KAMPALA | (UGANDA) |
| SANA'A | (YEMEN) |
| ALGIERS | (ALGERIA) |
| SEOUL | (KOREA) |
| CARACAS | (VENEZUELA) |
| RIGA | (LATVIA) |
| DUSSELDORF | (WEST GERMANY)
|
| MADRID | (SPAIN) |
| BERLIN | (WEST GERMANY) |
| BELGRADE | (YUGOSLAVIA) |
| KUALA LUMPUR | (MALASIA) |
| KATHMANDU | (NEPAL) |
| ANKARA | (TURKEY) |
| VIENNA | (AUSTRIA) |
| LUSAKA | (ZAMBIA) |
Annex 2
FCU Early Warning System risk model
Post profiles (objective data)
- the number of UK based staff and
Locally engaged staff, ie the degree of UK based supervision;
- the number of properties owned
and rented (number of contracts negotiated);
- the number of staff involved in
financially sensitive areas, ie immigration work and management
work;
- the difficulty of the post, ie
the Difficult Post Allowance/Special Difficult Post Allowance
rating and tour length;
- whether the post is involved in
paying out pensions; and
- the operation of multiple exchange
rates and more than one currency in use.
Indicators (subjective data)
- Reports from "In Depth"
account checks, Internal Audit reports, Inspectors' reports and
Resource Management Officers' visit reports.
- Each indicator is given a weighted
score and a review data.
Annex 3
Internal Audit Department's 1997/98 Programme
Almaty
Amman
Bahrain
Baku
Bogota
Bratislava
Budapest
Cairo
Casablanca
Damascus
Doha
Frankfurt
Hambourg
Kathmandu
Kuwait
Lilongwe
Lima
Lusaka
Minsk
Munich
Palma
Port of Spain
Quito
Rabat
Reykjavik
Riyadh
Tashkent
Tiblisi
Annex 4
Internal Audit Department's 1998/99 Programme
Bangkok
Belgrade
Boston
Buenos Aires or Havana
Caracas
Hague
Harare
Hong Kong
Kuala Lumpur
Lagos
Ljubliana
Los Angeles
Luxembourg
Maseru
Montevideo
Montreal
New York
Ottowa
Prague
San Francisco
Seoul
Singapore
Tegucigalpa
Tokyo
Toronto
Vancover
Vilnius
Washington
Windhoek
Question 129
Water
For the period 1 October 1996 to 30 September
1997, water consumption on the Embassy compound was 7,125 cu metres.
During the same period a further 8,262 cu metres was used at the
19 units of staff accommodation.
Charges:
A flat rate of JD 2.900 (£2.42) is charged
for the first 20 m3 per quarter.
The charge from 21m3 to 145 m3 per
quarter is on a rising scale from JD3.080 (£2.57 for 21 m3)
to JD174.300 (£145.25 for 145 m3).
Consumption of more than 145 m is charged at
JD1.200 for every additional m3. The cost of 146 m3
of water would be JD175.500 (£146,25).
Petrol
In 1996/7 23,544 litres of petrol was purchased
for official use only. The annual budget for petrol, vehicle maintenance
and car hire was £24,306. The mileage for the vehicles for
the same period was 86,675.
Following Question 153 Mr Davies asked that the Committee be
given a note on the Comparative Costs between Compulsory Early
Retirement and Voluntary (Normal) Retirement Terms.
As Sir John Kerr explained (Q 43), the
former Senior Management Officer left the Diplomatic Service on
standard Compulsory Early Retirement terms, which in his case
produced the following payments:
| -a Superannuation Lump Sum (a lump sum of three times pension (less certain deductions) made to all retirees, including normal retirement at age 60):
| £39,408.65 |
In addition, the terms of the structural CER
under which he applied gave to all successful applicants:
| -a Compensation Grant (a one-off payment based on six months' salary):
| £14,201.57 |
| -a Scheduled Service Grant (a one-off payment in lieu of eight years' service in designated hardship posts overseas before 1973 when scheduled service ceased):
| £6,868.13 |
| -a Resettlement Leave payment (made to those who served two years overseas in the five year period before their departure) equivalent to six months' salary (basic plus London Weighting)
| £14,436.50 |
| |
| TOTAL ONE-OFF PAYMENT | £74,914.85
|
Had he remained in the Diplomatic Service, at
the same grade, until normal retirement at 60 in 2001, he would
have received a Superannuation Lump Sum (a lump sum of three times
pension) of more than £43,309.50 (the precise sum would of
course take account of increases in salary between 1997 and 2001).
Consequently, the difference in value between the Compulsory Early
Retirement terms he received and the lump sum he would have received
at normal retirement at 60 is less than £31,605.35.
He receives an annual pension of £14,436,50.
His annual pension in retirement would have been higher had he
served to 60: the size of the increment cannot be precisely calculated
now, since it too would take account of increases in salary between
1997 and 2001.
At the End of the Hearing (Page 61 of the Transcript) the Chairman
also asked for an Explanation of the Decision Sequence that took
place, on the Retirement of the Former Senior Management Officer
at Amman.
Because of a surplus of Grade 6 officers, the
Department on 29 June 1995 issued a circular notice to all Grade
6 staff inviting applications for early retirement. Applications
were required before 31 March 1996. The Civil Service rules governing
early departure provide for specific Compulsory Early Retirement
(CER)/Severance terms to be used in such circumstances.
On 14 August 1995 the former Senior Management
Officer was told by his Personnel Officer that his chances of
promotion to a higher grade after Amman were poor. It was suggested
that he consider early retirement under the terms of the circular
notice.
On 26 August 1995, he applied for early retirement
under these terms.
On 10 October 1995, his application was approved,
on the basis on a retirement date of September 1997 (ie at the
end of his tour in Amman). He confirmed in writing his acceptance
of the terms as set out in the circular notice.
In July 1997, the process was suspended, while
the fraud at Amman was investigated. When it had been established
that he was not an accomplice to the fraud, he was reprimanded
for inadequate supervision, and his early retirement took effect.
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