Updated: Updated to include response to the International Development Committee investigation into Adam Smith International.
International Development Committee investigation into Adam Smith InternationalThis morning’s media (12/02/17) reported on the International Development Committee’s (IDC) investigation into allegations that Adam Smith International (ASI) falsified submissions about its work to the committee. Following the allegations, the Secretary of State commissioned a fundamental review into supplier practices and wrote to DFID’s suppliers reiterating the standards we expect of them and setting out the new safeguards we have put in place.
The IDC’s inquiry concluded that ASI had ‘acted improperly’ by submitting testimonials about its work from aid beneficiaries without making clear the extent of its involvement in those submissions and without making sure the beneficiaries were aware they were submitting evidence to a parliamentary committee. The IDC found no evidence that DFID commissioned, or was involved in, the preparation of the testimonials ASI submitted to the IDC.
DFID responded to the report as follows:
Like the committee, we are very concerned about the culture and behaviour of Adam Smith International.
DFID has conducted its own forensic investigation into the allegations that ASI falsified submissions to the IDC and made use of improperly obtained DFID documents for commercial gain.
Since these allegations came to light, we have frozen awards of new contracts to ASI and we are taking detailed advice on next steps.
General media queriesEmail mediateam@dfid.gov.uk
Telephone 020 7023 0600
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National Audit Office report on DFID’s approach to tackling fraudThis morning’s media (09/02/17) reported on the National Audit Office’s (NAO) report on DFID’s approach to fraud.
The NAO rightly recognises that DFID has a zero tolerance approach to fraud, and acknowledges the comprehensive and strengthened measures DFID has in place to tackle and eliminate it.
International Development Secretary, Priti Patel, responded to the report as follows:
The UK operates in the most fragile countries because these are the places where the poorest are dying from starvation, drought and disease; these are the places where conflict and economic failure drive mass migration; and these are the countries where it is in the UK’s direct national interest to keep them stable and secure.
In the last three years DFID has overhauled its approach to fraud, meaning our robust systems are better at preventing and detecting fraud, and better at getting taxpayers’ money back. We expect all international agencies to have the same zero tolerance approach to fraud that we have if they are to receive taxpayers’ money.
It is time for the global aid community to be honest about the challenges it faces to increase the transparency and accountability of the international aid system.
Facts behind the headlinesYou may have seen the reporting in today’s media (09/02/17) of the National Audit Office’s report on DFID’s approach to fraud. Some of the headlines were misleading and inaccurate, and we would like to explain the truth behind them.
Britain loses £300m in foreign aid to fraud without noticing – The TimesIt is factually wrong to say that DFID has lost £300 million to fraud. The NAO report itself stated that DFID lost £3.2 million to fraud, not £300 million. We have recovered two thirds of the £3.2 million.
The NAO report found that 0.03% of DFID’s aid spend is identified as fraudulent, which is in line with the level of reported fraud in other international development organisations. The report did not attempt to quantify the level of unreported fraud and so the £300m figure in The Times’ headline is an extrapolation based on fraud in other organisations. The article does not reflect that the NAO recognises that DFID’s counter fraud team has an established process in place for investigating the allegations of fraud that it receives.
As Secretary of State for International Development Priti Patel stated in her response to the NAO report, DFID will not provide funding to any organisations who do not meet the same high standards concerning fraud. The NAO report highlights that DFID requires all of its partners to carry out investigations to the necessary standards when potential fraud is reported, and that DFID’s dedicated Counter Fraud team will also provide support.
Revealed: huge rise in foreign aid fraud but officials still only detect £3.2m of missing funds – The TelegraphThe NAO report recognises that DFID has a zero tolerance approach to fraud, and acknowledges the comprehensive and strengthened measures we have in place to increase the reporting of fraud, tackling and eliminate it. The rise in the number of fraud cases reported is due to DFID’s improved approach to identifying and stamping out the practice.
Number of fraud cases involving Britain’s foreign aid budget quadruples in five years since David Cameron set spending target – Daily MailThe Daily Mail article claims that £1.1 billion has been channelled into the 20 most corrupt counties in Transparency International’s Corruption Perception Index. In fact, DFID does not provide any direct funding to the top 20 most corrupt countries.
Giving aid to a country with high levels of corruption is not the same as giving aid to that country’s government. We ensure that our aid goes directly to poor people or to organizations that are working with poor people to reduce poverty.
The UK government is directing more funding to fragile and conflict affected states, including Syria and other countries in the Middle East and North Africa region, to address current crises, the root causes of migration, and the threats posed to the UK by the ongoing conflict, but that does not mean we’re prepared to lose taxpayers’ money to fraud.
Corruption and fraud in developing countries is a major factor perpetuating poverty and conflict. Rather than bypassing the challenge of systemic corruption, DFID is helping reform and address the underlying causes of poor governance in many different countries.
What is DFID doing to protect UK tax payers money against fraud?DFID only works with organisations that have a strong track record of delivering humanitarian aid in difficult and dangerous places. We have rigorous controls to ensure that aid reaches those for whom it is intended and delivers results.
As acknowledged in the NAO report, all of our programmes are designed with a range of safeguards to mitigate the risk of fraud. We use monitoring visits, financial spot checks and forensic and strict independent audits to ensure all funding is used for the purpose it was intended.
DFID’s dedicated specialist Counter Fraud Unit investigates all allegations of fraud and always seeks to recover funds. The whistleblowing hotline and e-mail account – referenced on the DFID website, Development Tracker and in all our partner agreements, allows all allegations of fraud to be reported and investigated.
All DFID staff undertake mandatory training on fraud and on risk and control and we have fraud specialists across our country offices to advise staff and partners.
We work in partnership with a number of UK and international law enforcement agencies, such as the National Crime Agency and the Serious Fraud Office in the UK, and the Office of the Inspector General (OIG) in our multilateral partners to develop and enhance our intelligence information.
General media queriesEmail mediateam@dfid.gov.uk
Telephone 020 7023 0600
Follow the DFID Media office on Twitter - @DFID_Press
The Prosperity FundYou may have read about the Prosperity Fund in this morning’s papers (08/02/17).
This is a cross-government fund designed to create economic growth in middle-income countries, where more than 60% of the world’s poorest live, so they can stand on their own two feet and become our trading partners of the future.
The Prosperity Fund will provide expertise and technical assistance to promote economic reform and remove barriers to trade, tackle corruption, strengthen policy capacity and build strong, effective and accountable institutions.
The Independent Commission for Aid Impact (ICAI) has just published a report on the Prosperity Fund. Here is the government’s response to it.
A UK government spokesman said:
Sustained economic growth is the only long term solution to poverty and the Prosperity Fund supports the vital economic development needed to help middle-income countries – where more than 60% of the world’s poorest live – to stand on their own two feet and become our trading partners of the future.
Overseas Development Assistance spend under the Fund is and will continue to be fully consistent with UK law under the International Development Act and OECD DAC criteria.
As ICAI acknowledge the Fund has made significant progress in a short time frame and we are already implementing the vast majority of ICAI’s early recommendations, including on transparency.
Why does the Prosperity Fund focus on countries like India and China? More than 60% of the world’s poor live in middle income countries such as China and India and it is vital that they have access to expertise and private sector investment to help the poorest people lift themselves out of poverty. The UK ended its traditional bilateral aid programmes with China (March 2011) and India (Dec 2015). Instead UK relationships now focus on trade and investment, providing expertise to support economic growth and development and working on global issues in a mutually beneficial way. India is a critical global economy. Supporting economic development will help global prosperity. This brings direct benefits from greater trade and investment opportunities – including for UK businesses. It is only right that UK companies should contribute to and share in that prosperity. How is it being delivered?The Foreign and Commonwealth Office (FCO) embassies and high commissions play a key role identifying opportunities, developing project proposals and overseeing local delivery, working both at country and regional levels. Cross-government teams work with a wide range of UK business and civil society partners to help identify how the Fund can deliver the greatest added value.
A cross government Ministerial Board, supported by a cross government Portfolio Board gives strategic direction and manages the overall portfolio. The governance of the Fund will help ensure full coherence with other cross government funds, including the Conflict, Stability and Security Fund (CSSF), Empowerment Fund and International Climate Fund.
Overseas Development Assistance spend under the Fund is and will continue to be fully consistent with UK law under the International Development Act and Organisation for Economic Cooperation and Development (OECD) Development Assistance Committee (DAC).
What is each government department’s role in the programme?The Department for International Development (DFID), Foreign and Commonwealth Office (FCO), HM Treasury (HMT), Department for Business, Energy and Industrial Strategy (BEIS) and Department for International Trade (DIT) are represented on the Portfolio Board and Ministerial Board. Each department can bid into the Fund to deliver programmes.
The Prosperity Fund has been designed through a consultative process which draws in particular on DFID experience and expertise. Many elements of the Fund including the concept note and business case process and multi-year programming are modelled on DFID processes.
The Prosperity Fund Management Office (PFMO) that administers the Fund is staffed from across government.
General media queriesEmail mediateam@dfid.gov.uk
Telephone 020 7023 0600
Follow the DFID Media office on Twitter - @DFID_Press
https://www.gov.uk/government/news/dfid-in-the-news
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