Gareth Thomas (Harrow West, Labour)
To ask the Secretary of State for International Development what estimate he has made of the level of (a) procurement and (b) other fraud affecting his Department's spending in (i) 2010-11 and (ii) 2011-12; and if he will make a statement.
Andrew Mitchell (Secretary of State, International Development; Sutton Coldfield, Conservative)
Since October 2010, DFID has reported detected fraud and error on the quarterly data summaries. They are not split into an estimate of procurement and other fraud affecting departmental spend, nor do they take into account undetected fraud loss. The quarterly data summaries are published on DFID's website. DFID's actual losses to fraud are (i) gross £592,216.85, net £115,182.14 in 2010-11; and (ii) gross £3,099,044.27, net £1,178,071.02 in 2011-12. Net figures relate to losses after recovered funds have been deducted from gross totals. Types of fraud include procurement (all encompassing, including tendering process, procurement cards and goods/services not provided as stated), as well as, money/funds stolen and the theft of assets.
Given the environment in which DFID works and the diversity of its programmes, measuring losses due to fraud is difficult. DFID-commissioned work by the Centre for Counter Fraud Studies at Portsmouth university found that trying to produce an aggregate measure of fraud loss for the Department's budget would be costly, would take some years, and would ultimately only produce a partial picture. Any aggregate assessment that was produced would therefore be of dubious value, given the methodological problems and evidence gaps.
Given these findings, the Department will focus efforts on ensuring good fraud risk assessment for all of the Department's expenditure, and on mitigation and safeguards. Within the strengthened approach to safeguarding taxpayers' money introduced by the Secretary of State, increased use of forensic audits and spot checks will continue to build our knowledge. As this knowledge base develops, we will keep our approach to fraud loss measurement under review.
The Department has accelerated its work on the prevention and early identification of fraud. We take a robust approach once fraud has been identified (with effective incident investigation and strengthening of controls to prevent recurrence) and have a good record on recovery of lost funds (61% for 2011-12).