APPENDIX 1
Supplementary memorandum submitted by
the Ministry of Defence (PAC 00-01/169)
Question 52: Cost of Fraud deterrence
1. The estimated cost of the measures put
in place in the Ministry of Defence for tackling fraud amounts
to approximately £4.2 million per annum made up as shown
below.
| Fraud deterrence agency
| Estimated Costs |
| |
| Ministry of Defence Police (MDP) investigation of fraud and fraud-related offences
| £3 million per annum of which £2.32 million relates to staff costs and £0.68 million relates to running costs.
|
| |
| Defence Fraud Analysis Unit (DFAU) | £0.4 million per annum. (This is expected to rise to £0.5 million in 2001-02 as more resources are deployed to the unit.)
|
| |
| Defence Estates | £0.3 million. (This relates to staff costs and includes provision for fraud awareness training as well as investigations.)
|
| |
| Costs of forensic investigation by consultants in financial year 2000-01
| £0.5 million. |
Notes
1. The Fraud hotline incurs no separate costs.
2. There will also be elements of expenditure within individual
Top Level Budgets which has not been possible to identify in the
time available.
3. The figure of £4.2 million includes not only the
cost of investigations, but also activities related to the creation
of an effective anti-fraud culture (training awareness etc.) and
ensuring that appropriate systems are in place and functioning.
4. In the financial year ending 31 March 2001, the MDP
investigations into allegations of fraud resulted in recoveries
of £2.4 million.
Questions 143, 148, 153 and 162: Benchmarking of the MoD fraud
hotline with other external organisations
2. It is difficult to compare the performance of different
hotlines because each is unique. The Defence Fraud Analysis Unit
understands that the Department of Social Security (DSS) hotline
receives many thousands of calls but these essentially comprise
allegations of fraud committed by the public against the Department.
Only recently have some units of the DSS set up hotlines specifically
for the reporting of internal fraud, and in doing so they have
consulted MoD.
3. So far as the National Health Service is concerned,
their Fraud and Corruption Reporting Line became operational in
February 2001 and is being published in stages: first to the professions;
second to staff in health authorities; and finally to the 1.2
million staff who work within the Health Service. No figures are
yet available for the number of calls received.
4. The NHS has expressed the view that a key part of
the work in this area is the development of an anti-fraud culture
in which everyone in the organisations understands their role
and their duty to report potential or actual cases of fraud. It
is believed that offering rewards or financial inducement to callers
can be counter-effective to the creation of such a culture. This
also remains the Department's view.
5. Defence Estates also contacted the Loss Prevention
and Security Department of Boots The Chemists, with regard
to their "confidential hot line". The line is directed
at all their staff in stores (around 50,000 in total).
6. Defence Estates understands that the company is pleased
with the response they have received. This compares favourably
with information of other retailers experiences with similar systems.
Boots receive about 12 calls a month. Excluding calls that
are about other issues other than theft and fraud (eg complaints
about management), the number of calls reduces to about seven
to 10 real calls a month.
7. Boots offer no financial inducement to staff
reporting concerns on their system.
Questions 195-197: Whether sub-contractor at RAF Wittering
has been dismissed?
8. The individual referred to in paragraph 2.22 of the
C&AG's report is still employed at RAF Wittering. At the time
of the NAO's visit, the electrician who was employed on site by
the sub-contractor was carrying out inspections that he was not
technically qualified to undertake (ie up to 16th edition IEE
Regulations). Since the NAO visit, the electrician has attained
the appropriate qualification. The sub-contractor has subsequently
employed the electrician to carry out a re-inspection of all the
work that he had previously undertaken at no cost to MoD.
9. More generally, where contractors have been found
to be at fault, and where there is no suggestion that MoD staff
are involved, it is not for the Department to take disciplinary
action. In such circumstances, MoD has taken up the broader issue
with the contractors concerned and has sought appropriate redress
(such as rebate of fees).
Ministry of Defence
7 June 2001
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