Fraud Control Policy

SCOPE
This policy applies to all NHFIC Staff. This policy sets out:

  • the objectives of the fraud control policy;
  •  the fraud risks that the NHFIC faces;
  • the NHFIC’s approach to fraud prevention and detection; and
  • other elements that make up the NHFIC’s control strategy.


DEFINITIONS
In this policy:
Fraud means any intentionally dishonest or deceitful act that:

  • occasions actual or potential loss to the NHFIC, its clients or key stakeholders, of property, money, information or reputation; or
  • results in a benefit being received by the person or an associate of the person who has committed the act;

and includes theft; accounting fraud; misuse of NHFIC credit cards; unlawful use of, or unlawful obtaining of, property, equipment, material or services; providing false or misleading information to the NHFIC, or failing to provide information where there is an obligation to do so; making, or using, false, forged or falsified documents; causing a loss, or avoiding or creating a liability; cartel conduct and misuse of NHFIC assets, equipment, facilities, intellectual property or information.


Staff means persons employed by, or operating under an employment or similar contract with the NHFIC including full time or part time employees, consultants and contractors of the NHFIC and full or part time secondees to the NHFIC.


POLICY OBJECTIVE
The NHFIC has a zero tolerance policy in relation to fraudulent conduct or behaviour on the part of its Staff, recipients of loans, investments, grants or other assistance from the NHFIC or any other third parties that it deals with. To effectively manage the risk of fraud and to ensure that Staff understand their obligations and responsibilities, the NHFIC has established this formalised policy of controls and measures to:

  • minimise and prevent the incidence of fraud; and
  • establish a clear set of procedures for detecting and dealing with instances of fraud.

SPECIFIC OBJECTIVES
More specifically, the objectives of this policy are defined as:

  • communicating the need for an effective ‘fraud control environment’ within the NHFIC and to instill in Staff the desire for such an environment;
  • defining the responsibilities of Staff in ensuring fraud control measures are in place for each risk area;
  • establishing an on-going system of regular risk assessment and reporting to ensure that Heads of Department regularly review their unit’s exposure to fraud risk, particularly within the context of industry and organisational change;
  • establishing a mechanism for the effective communication to Staff of changes and developments in policies and procedures in relation to fraud;
  • clearly communicate to Staff how to report fraud and the NHFIC’s policy of protecting those who report fraud; and
  • disciplining those who commit fraud.


BACKGROUND
This policy aims to prevent and discourage illegal and otherwise improper conduct of the NHFIC’s Staff that may result in:

  • financial loss to the NHFIC;
  • damage to the NHFIC’s and the Australian Government’s reputation; and
  • a negative effect on Staff morale.

Efic has been engaged to assist the NHFIC with a number of back-office functions during the first year of the NHFIC’s operations. Efic’s Risk and Compliance Committee will be responsible for administering this policy on the NHFIC’s behalf and reporting to the NHFIC’s Audit and Risk Committee.


This policy will be reviewed and updated on a regular basis to ensure:

  • adequate measures are in place to counter and prevent fraud occurring; and
  • strategies are implemented to detect and investigate instances of fraud.

ROLES AND RESPONSIBILITIES

NHFIC BOARD RESPONSIBILITIES
The NHFIC Board is responsible for approving this policy.


NHFIC BOARD AUDIT AND RISK COMMITTEE’S RESPONSIBILITIES
The NHFIC Board Audit and Risk Committee is responsible for reviewing this policy and making recommendations to the Board regarding the approval of this policy.


NHFIC MANAGEMENT RESPONSIBILITIES
The NHFIC’s management is responsible for:

  • implementing the controls described in this policy to deter, prevent and detect fraud;
  • implementing appropriate remedial action for any failure to comply with this policy;
  • ensuring that appropriate consequences of any breach of this policy are communicated to NHFIC Staff; and
  • allocating appropriate resources to implement, develop and maintain this policy.

COMPLIANCE FUNCTION RESPONSIBILITIES
The NHFIC’s Compliance function is responsible for:

  • maintaining the currency of this policy;
  • maintaining the currency of the Fraud Control Plan once it has been developed;
  • arranging training for NHFIC Staff on this policy;
  • providing advice to NHFIC Staff on the implementation of this policy; and
  • monitoring the effectiveness of this policy and reporting on this policy to the NHFIC’s Board Audit and Risk Committee.

ALL STAFF
All Staff must:

  • undertake induction and ongoing fraud awareness training; and
  • report any allegations, suspicions or incidents of fraud in accordance with the NHFIC’s procedures. The responsibility of ensuring compliance with this policy rests with all Staff.


KEY ELEMENTS OF THE FRAUD CONTROL POLICY
The key elements of this policy include:

  • assignment of responsibility to Staff for implementing this policy;
  • implementation of the NHFIC’s fraud control strategy including measures to;
    – prevent fraud;
    – detect and report fraud;
    – investigate reports of fraud;
    – protect those who disclose fraud; and
    – discipline those who commit fraud;
  • training for new and existing Staff to heighten awareness of fraud prevention.


FRAUD RISKS
The nature of the NHFIC’s operations means that it faces broad internal and external fraud risks in the following areas.

INTERNAL FRAUD RISKS
Despite the NHFIC’s best efforts, there remains opportunity for unscrupulous or opportunistic Staff to attempt to obtain a financial advantage or benefit through fraud. Some of the more serious fraud risks are set out below.

Conflicts of interest
Where Staff are directly involved in dealings with an organisation in which they have an interest and they use that involvement to create a personal advantage or benefit for themselves or others.


Misrepresentation or concealment of material facts
Where Staff provide false statements and/or deliberately conceal material facts to induce the NHFIC to take a particular action in relation to:

  • bond issuances,
  • loan, investment, grant, capacity building applications or other assistance;
  • bond issuance, loan, investment, grant or capacity building policies;
  • terms and conditions associated with bond issuances, loans, investments, grants; capacity building activities or other assistance;
  • claims for drawdowns under loans or grant instalments;
  • insurance claims; and
  • providing misleading business advisory services and assistance in capacity building to registered community housing providers.

Theft
Where Staff could take money or property from the NHFIC without consent. This potentially includes by:

  • processing false loan, investment, grant or capacity building applications;
  • independently varying loan, investment, grant or capacity building applications;
  • diverting bond issuance funds, loan funds, investment or grant funds or payments into personally controlled bank accounts; and
  • accessing the files of recipients of loans, investments, grants or assistance from the NHFIC to obtain sensitive and / or confidential information;
  • submitting false petty cash vouchers; and
  • colluding with other Staff or third parties to steal money or property from the NHFIC.

Bribery
Where Staff are put in a position where they are offered a thing of value to influence their business decision or behaviour. A ‘thing’ of value is not necessarily cash or money. Things such as gifts and entertainment may be bribes if they are offered with the intent to influence a decision or the behaviour of Staff.


EXTERNAL FRAUD RISKS
False Information
There are opportunities available to all third parties relied upon to supply information to the NHFIC. For example, false and exaggerated information supplied by an applicant for a loan, investment, grant or other assistance from the NHFIC to induce the NHFIC to approve the loan, investment, grant or other other assistance application. Staff must be aware of this risk, conduct due diligence and take all other necessary steps to confirm the integrity of third parties’ information.

FRAUD CONTROL STRATEGY
OVERVIEW
The NHFIC will manage its fraud risk exposure by using a combination of preventive and detective strategies.

Preventive strategies are actions planned and implemented which are designed to counter the risk of fraud and prevent it occurring. Preventive measures are “signposts” which clearly signal to those who may contemplate fraud that it is not acceptable. They also ensure that there are mechanisms in place to detect fraud and take action because this in itself has a deterrent effect.

Detective strategies principally relate to a program which identifies, investigates and penalises those who choose to ignore the preventive measures and commit fraud. Detective strategies in themselves form an important component of an overall fraud prevention strategy. As preventive measures are concerned with informing Staff of their obligations and warning them against fraud, detective strategies focus on having processes and penalties in place to detect and discipline those who choose to ignore the signposts.

Investigations and sanctions against individuals who have committed fraud have a deterrent effect on the individual and create a fraud aware culture within the NHFIC as those who do not comply are seen to be punished. The diagram below depicts the major components of the NHFIC’s fraud control strategy.



PREVENTIVE STRATEGIES
The NHFIC has implemented the following fraud prevention strategies to help manage its fraud risk exposure.


Code of Conduct
The NHFIC has established a Code of Conduct which outlines the obligations and responsibilities of Staff in relation to their employment or engagement with the NHFIC. The Code of Conduct states that in performing their official duties, Staff are required to be impartial and not pursue personal interests which may conflict with the NHFIC’s interests.


The Code of Conduct specifies employee obligations in relation to:

  • financial and other private interests;
  • use of information;
  • use of the NHFIC’s computers; and
  • personal behaviour.


The NHFIC’s Code of Conduct requires all Staff to make a written declaration of their private interests which may, or may be perceived, to conflict with the NHFIC’s interests. If a Staff member is unsure as to whether a conflict exists, the situation should be declared regardless.

Staff have a responsibility to be aware of all aspects of the Code of Conduct to ensure they perform their duties in an appropriate manner.

Fraud Awareness Training
Training will be held at induction for new Staff and periodically approximately every 2 years for existing Staff to heighten fraud awareness and help create a ‘control consciousness’ within the NHFIC. Training will provide information to Staff that:

  • makes them aware that fraud does occur;
  • explains how fraud could occur;
  • explains what Staff should do about suspected fraud;
  • identifies what their roles are in relation to the prevention and detection of fraud; and
  • describes mechanisms the NHFIC has in place to deal with fraud.

The Compliance Function will be responsible for overseeing and co-ordinating appropriate fraud awareness training.

Conflict of Interest Policy
The NHFIC’s Conflicts of Interest Policy sets out the NHFIC’s approach to the effective identification and management of conflicts of interest that affect it and its Staff. The NHFIC’s Conflict of Interest Policy provides guidance to Staff on the mechanisms for managing conflicts of interest in five particular contexts (Staff, legal staff, service provider and transactional conflicts of interests).

Declaration of Compliance
Staff are required to submit a bi-annual declaration of compliance which confirms they have complied with the NHFIC’s policies and procedures, including this Fraud Control Policy, and undertaken training relevant to their role, including the requisite fraud awareness training.

Responsibility Structures
All Staff are subject to ongoing monitoring and oversight in their roles, according to the NHFIC’s responsibility structures and reporting lines.

DETECTIVE STRATEGIES
The following fraud control strategies are to be implemented to assist the NHFIC in the detection and investigation of fraud.

Fraud Detection and Reporting
All Staff are obliged to report cases of fraud to the NHFIC as soon as they are detected in accordance with this policy, the NHFIC’s Public Interest Disclosure Policy or the NHFIC’s Incident Reporting Policy.

The cases to be reported include, but are not limited to Staff:

  • submitting false statements or documents in connection with:
    – a bond issuance, an application for a loan, investment, grant, capacity building or other assistance; or
    – a claim for a drawdown under a loan;
    – an insurance claim;
  • theft of property belonging to the NHFIC or under the NHFIC’s control;
  • misuse of NHFIC credit cards;
  • misuse of assets, equipment or facilities belonging to the NHFIC or under the NHFIC’s control, including plant, vehicles and computing equipment;
  • providing false or misleading information to the NHFIC, or failing to provide information where there is an obligation to do so;
  • disclosing confidential information obtained during the course of their employment to any person not entitled to receive such information;
  • deliberately falsifying any entry in any book, record or computer data base maintained by the NHFIC; and
  • corruptly soliciting or receiving a secret commission, kickback or gratuity from any person in connection with their employment with the NHFIC.
    All Staff are to co-operate fully in the investigation process.

INVESTIGATION OF FRAUD AND OTHER IMPROPER CONDUCT
All Staff must report any suspicion or allegation of fraud in accordance with the NHFIC’s Public Interest Disclosure Policy or the NHFIC’s Incident Reporting Policy.

All cases involving credible evidence of suspected fraud are, subject to the Commonwealth Fraud Control Framework, to be reported to the Australian Federal Police.

The NHFIC’s management should periodically communicate to Staff any recent instances of fraud, the sanctions that have been applied and reiterate the NHFIC’s intolerance of fraud.

Protected Disclosures
The NHFIC is committed to supporting those who report fraud and corruption in good faith.

To the extent possible, informants will be kept anonymous during the investigation process, where this has been requested, and, where possible, informed of the outcome of the investigation, including any reasons for not furthering the investigations. If a disclosure leads to disciplinary proceedings, the informant’s identity will only be revealed as is required by legislation, the Australian Federal Police or the relevant court.

The NHFIC will not allow informants to be victimised. Where possible, any such behaviour will result in disciplinary action against those involved.

External Contractors and External Notification
The NHFIC’s External contractors and other third parties are able to notify the NHFIC of potential fraud through the NHFIC’s public website.

DISCIPLINARY STANDARDS
Any Staff against whom clear evidence of fraud has been obtained, should be expected to be

  • dismissed without compensation; and
  • reported to the Australian Federal Police.
    Where an Australian resident, citizen or corporation, or its agent, has been or is involved in bribery in relation to an application for a loan, investment, grant or other assistance made by the NHFIC, the NHFIC may:
  • if the loan, investment, grant or other assistance is yet to be approved, refuse to approve the loan, investment, grant or other assistance; and
  • if the loan, investment, grant or other assistance has been approved, refuse to provide or cancel the loan, investment, grant or other assistance or accelerate repayments, as the case may be.


SEEKING ASSISTANCE
If you have any queries or need any assistance in relation to this policy, please contact the Compliance Function.