Tackling fraud effectively in central government departments. A review of the legal powers, skills and regulatory environment of UK central government counter fraud teams
| Pages | 384-399 |
| Published date | 08 May 2018 |
| DOI | https://doi.org/10.1108/JFC-01-2017-0006 |
| Date | 08 May 2018 |
| Author | Michael Gilbert,Alison Wakefield |
| Subject Matter | Accounting & Finance,Financial risk/company failure,Financial crime |
Tackling fraud effectively in
central government departments
A review of the legal powers, skills and
regulatory environment of UK central
government counter fraud teams
Michael Gilbert
Private Citizen, New Malden, UK, and
Alison Wakefield
Institute of Criminal Justice Studies, University of Portsmouth, Portsmouth, UK
Abstract
Purpose –Fraud has a significanteffect on society. It has been estimated to cost the UK economy more than
£50bn annually.The Government have signalled their determinationto tackle these losses through a range of
preventative, enforcementand collaborative activities. Diminishingpolice resources allocated to fraud means
that this activity will need to be delivered by both law enforcement and civilian counter fraud teams. This
paper aims to establish whether UK central government organisations have the legal powers, skills and
regulationneeded to tackle fraud effectively.
Design/methodology/approach –This research was based upon a literature review, which included
academic and other material, a semi-structured interview programme and a survey of counter fraud
champions.
Findings –Empirical data suggested that the effectiveness of central government civilian counter
fraud teams is hampered by a fragmented legal landscape and a lack of skills, and that further
professionalisation and regulation is needed to protect professional standards and individual legal
rights.
Research limitations/implications –Postal survey had 50 per cent response rate –below gold
standardof 70 per cent.
Practical implications –There are no practical implications, as this is a topicalresearch area which is
intendedto inform counterfraud practice and development.
Social implications –This research highlights limitations on the UK central government’s ability to
tackle fraud. There is therefore a low risk that, when published, this research could inform those
considering fraudulent actions.
Originality/value –This research was undertakenfor a professional doctorate and has been sent to the
Cabinet Office to inform their professionalisation programme. It filled a potential gap in the academic
literature by looking atthe perceived powers, skills and regulatory pressures inplace within the UK central
government and the extent of the current gap between current practice and the delivery of a fully
professionalisedservice.
Keywords Fraud, Professionalism, Regulation, Training, Counter fraud, Legal powers
Paper type Research paper
Introduction
Fraud is estimated to cost the UK economy £52bn annually,of which £20bn is seen to relate
to the public sector (National Fraud Authority, 2013, p. 2). In 2011, the UK Government
published its strategy to tackle fraud in two principal documents –“Eliminating Public
JFC
25,2
384
Received26 January 2017
Accepted2 March 2017
Journalof Financial Crime
Vol.25 No. 2, 2018
pp. 384-399
© Emerald Publishing Limited
1359-0790
DOI 10.1108/JFC-01-2017-0006
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1359-0790.htm
Sector Fraud”and “FightingFraud Together”[Cabinet Office and National Fraud Authority
(NFA),2011a, 2011b].Both documents signalled an intention to decrease the losses to the UK
economy because of fraud –and in particular,the £20bn lost to the UK public sector in both
2011 and 2012 (National Fraud Authority, 2012,p.7;National Fraud Authority 2013,p.2).
Both documents place a significant emphasis on fraud awareness and prevention, as
recommended by the Fraud ReviewFinal Report published in July 2006 (Attorney General’s
Office, 2006, pp. 8, 116). Both also emphasise the need for improved information on fraud
whether this be improved intelligence on fraudster behaviour and activity (Fighting Fraud
Together) or in the risks and threats faced by individual organisations (Eliminating Public
Sector Fraud).
“Eliminating Public SectorFraud”also emphasised the need for a collaborative response
to implementing a zero-tolerance approach to fraud, while “Fighting Fraud Together”
stressed the need for more effective enforcement activity to detect those committing fraud
and ensure that they receive appropriate sanctions. Limitations on police resources mean
that this approach will need to be delivered by both law enforcement and civilian counter
fraud teams and particularly as fraud is not a policing priority (Home Office, 2004;Gannon
and Doig, 2010, p. 39). Each major central government body is required to have a counter
fraud champion to improve knowledge of fraud against Government departments [Cabinet
Office and NationalFraud Authority (NFA), 2011b, p. 16].
The collaborative working envisaged by the Cabinet Office presents a number of
practical challenges.The activities of many public sector bodies are principally governed by
their enabling legislation, the common law or the Royal Prerogative (Department for
Constitutional Affairs, 2003). Differing legal frameworks can lead to both ineffectiveness
and inefficiency when tackling fraud.Fisher (2010, p. 1), for example, posits that the present
arrangements for fighting fraud in the UK’sfinancial markets “are lamentably deficient”.
One of the reasons for this is that, the bodies concerned operate under different statutory
frameworks which leads to “overlappingresponsibilities and an unnecessary duplication of
both workforce and specialistresources”.
Convergence in legal frameworks and powers is insufficient in itself to ensure effective
counter fraud management. Fraud management needs skilled staff with knowledge of the
law, investigative techniques, the abilityto manage evidence and exhibits and take witness
statements and the capability to provide interviewtranscripts and surveillance evidence. It
also requires a high degree of inter-personal and interviewing skills (Button et al., 2008,
p. 245). In addition, fraud investigations need access to specialist skills such as accounting
and computer forensics, and especially the latter, as more and more information is held in
electronic rather than paperformat. Similarly, fraud prevention needs staff skilled in system
design and control, so that appropriateaction can be taken to identify and counter potential
threats and control weaknesses which could lead to theft, data loss or corrupt activity
(Krambia-Kapardis,2002, p. 245).
It appears that staff qualified in these areas are thinly spread. The reasons for this are
complex. Research by Frimpong and Baker(2007, p. 132) suggests that this may be because
of the low status afforded to counter fraud staff, a lack of resources, inadequate training,
poor pay, poor career prospects,management apathy and out of date legislation.
However, the Cabinet Office proposals for tackling fraud in the UK public sector and
economy only partially deal withthese issues. While their proposals for eliminating public-
sector fraud refer to the needto train all staff and change organisational cultures, there is no
mention of the skills, training and retention issues for the front-line staff who are to deliver
these proposals. The same is true for their proposals for tackling fraud in the UK economy
[Cabinet Office and NationalFraud Authority (NFA),2011a, 2011b].
Central
government
departments
385
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