Date policy first adopted: 01/04/2011

Review period: Ad hoc when a change to legislation or ESC process requires it and at least every four years

Date of last review: 17/07/2023

Date of next review: 31/07/2027

Purpose

This Fraud Response Plan sets out arrangements to ensure that when suspected frauds against the ESC are reported, prompt and effective action is taken to:

• investigate the circumstances
• minimise the risk of subsequent loss
• ensure that appropriate recovery action is taken or, failing recovery, to initiate action to write off any losses
• remedy any weaknesses in internal control procedures
• initiate disciplinary and legal procedures, where appropriate
• demonstrate that ESC is not a soft target for attempted fraud, and
• maintain a record of reported frauds and provide reports to the Commissioner on the progress of cases and outcomes.

Initial Actions

Individual employees should report any suspicion of fraud to their line manager.

Where a suspected fraud involving an employee is reported, the line manager will consult the Head of Corporate Services (HCS) and decide on the action to be taken. Where it is not immediately clear from the evidence presented that a fraud may have been committed, the line manager and HCS may decide to initiate action to determine whether there is substance to the allegations. For example, colleagues may be asked to confirm the accuracy of particular allegations. The aim at this stage should be to gather sufficient evidence to enable the HCS to reach a view on whether the allegations of fraud are likely to be substantiated.

If the HCS considers this is likely to be the case, the HCS will consult the Commissioner and initiate the following action, insofar as it is appropriate to the particular case:

• appoint an Investigating Officer (who may be an external party, such as internal audit)
• agree the scope, nature and timescales for any investigative work required to establish the facts, which may include the examination of the conduct of employees who are the subject of allegations such as in relation to travelling and subsistence claims, flexible working hours, overtime claims, etc
• decide the level at which other employees should be involved and bring the allegations to their notice if appropriate, at the same time confirming the investigative arrangements and reporting line.
• take whatever action is needed to secure records and assets, including restrictions on access to offices, computer terminals and ESC’s information such as by way of remote access
• decide whether to seek legal advice
• decide whether the Police/Procurator Fiscal Service should be informed
• consider the prima facie case for suspension of employees who are the subject of allegations, and
• agree a timetable for completion of the agreed action.

Where a line manager is suspected of fraud, the employee should report their concerns direct to the HCS.

Where the HCS is suspected of fraud, the employee should report their concerns direct to another member of the Senior Management Team.

How to report concerns about the Commissioner are outlined in the Whistleblowing Policy.

Scope of Investigations

The HCS should consider carefully the terms of reference for any investigative work necessary to establish the facts. Investigations should not be restricted solely to allegations against an individual that may lead to a charge of gross misconduct. If there is a possibility that instances of serious misconduct (e.g. misconduct other than fraud) may also have occurred, these should be investigated at the same time as the fraud allegations. The terms of reference should not preclude reporting any evidence of fraud or serious misconduct which was not identified in the initial report to the HCS. Investigations will be based on ESC’s Disciplinary Policy.

Actions During the Investigation

As appropriate, the HCS, after consultation with the Commissioner, will:

• arrange to suspend the individual(s) pending the outcome of investigations (and review the notice of suspension at regular intervals throughout the period of investigation)
• liaise with legal advisors
• consider the sensitivity of the allegations in terms of public interest and whether any external bodies, e.g. the Scottish Parliamentary Corporate Body, should be informed and whether media briefing should be prepared
• take whatever action is required to safeguard funds or assets at risk
• initiate action to recover misappropriated funds, if there is a clear case for doing so in advance of a full investigation
• consider the case for recovery action, and
• notify the Police/Procurator Fiscal Service of the case.

As appropriate the Investigating Officer will:

• instruct action to protect accounting and other records
• ensure that data backed-up offsite is secure
• restrict access to offices, systems and records of individuals allegedly or possibly
• involved by suspending accounts and access
• plug any immediately obvious gaps in financial controls, and
• establish possible financial implications for the business plan and running costs.

Report and Review of Findings

As soon as investigations have been completed, reports and any other relevant documentation (subject to any confidentiality requirements) should be passed to the Commissioner. The Commissioner will decide whether the evidence tends to substantiate allegations of fraud. The Commissioner may instruct further investigation, for example, where evidence gathered is inconclusive, contradictory or incomplete. Once the Commissioner is satisfied that no further investigations are required, consideration must be given to:

• what, if any, disciplinary action should be initiated against those involved the form and content of the final report, and
• whether the Police/Procurator Fiscal should be notified (if this has not already been done).

Where any person being investigated is not directly employed by ESC, the results of any investigation will be reported to the relevant office/employer. This may also result in ESC terminating any contract subject to the outcome of the investigation.

Action on Findings

If the Commissioner decides that disciplinary action should be taken against a person, they will provide the employee with a written statement setting out details of the allegation and the conclusion on the facts established. Thereafter, the disciplinary procedures as set out in the Disciplinary Policy will be followed. If evidence of gross misconduct or lesser instances of misconduct have been identified during the investigation, the lesser instances will not be disregarded solely because a charge of gross misconduct is proposed in respect of certain aspects of the individual's actions.

Further action will include:

• pursuing recovery of funds
• informing other public and government bodies, as appropriate
• considering the adequacy of internal control procedures
• considering the impact on the budget and take any action to deal with the consequences
• arranging, where necessary, for notation of the relevant accounts and
• liaising with the Police/Procurator Fiscal as necessary.

The Police/Procurator Fiscal are understood to be willing to provide advice on an informal basis. However, the Police are obliged to report formal approaches to the Procurator Fiscal. In the latter case, the Police/Procurator Fiscal would expect ESC to have conducted inquiries or initial investigations and to have established at least a prima facie case before referral to them.
 

Media enquiries

Any media enquiries received regarding the alleged fraud should be directed to the HCS. Standard ESC practice is to ask for all enquiries to be made in writing.
 

Follow Up and Review of Cases

Where evidence of fraud or serious misconduct has been identified, the HCS will consider whether any action needs to be taken to prevent a recurrence. In such cases, an action plan should be drawn up setting out recommendations and the Commissioner should ensure that the agreed recommendations are implemented.
 

Confidentiality

The HCS and Investigating Officer will receive all information relating to individual cases. They must treat all information relating to individual employees in strictest confidence and should ensure that it is only passed on to colleagues on a strictly need to know basis. Only those allegations which have resulted both in disciplinary charges and a finding against the employee will be noted in their Personnel record. Where an employee identifies and reports fraud, a note recognising this will be kept in their Personnel record.

External Fraud

External frauds are frauds perpetrated by third parties against ESC (e.g. contract fraud or fraudulent invoices). In the case of Public Appointments Advisers, contractors and suppliers, a finding of fraud will normally lead to termination of their contract. If there is any suspicion of collusion on the part of employees in an external fraud, the procedures relating to internal fraud will be adapted to apply as appropriate, given any requirements arising from ongoing Police/Procurator Fiscal investigations. Subject to that condition, cases of suspected external fraud should be reported to and handled by the HCS as for internal fraud.