Taking stock: Four tips to prevent fraud and theft in our bushfire response
6 February 2020 at 8:28 am
Drawing on his experience of crises worldwide, Oliver May reflects on what we can learn about fraud prevention in our bushfire response.
Maybe it was the time I walked into a hot warehouse, three years after a humanitarian emergency, to find hundreds of thousands of dollars of surplus equipment just lying there (allegedly) being picked away by thieves. Or maybe it was the time I spent three months piecing together what had happened to millions of dollars of aid following a natural disaster in Asia. But wherever I learned it, the lesson was clear: responding to natural disasters has its own unique vulnerabilities to fraud and theft.
In crises like these, very large sums of money are spent very quickly in very difficult circumstances. This is not business as usual. Sadly, criminals take advantage of this. I’ve dealt with fraud and theft cases after typhoons in the Philippines, earthquakes in Haiti and Nepal, and Ebola in West Africa. The threat from organised and opportunistic criminals is the same wherever and whatever the circumstance.
The way that Australia and the world has rallied to help our bushfire-affected communities recover is amazing. So it is imperative that this response should go to where it is needed as swiftly as possible, and that government and charitable organisations avoid theft or fraud. If your organisation – especially if it is a small or medium-sized charity – is participating in the bushfire emergency response, here are some tips to help you ensure your efforts are protected and correctly directed.
1. Know the risks and what to do about them
Take a moment to think about the risks, and how to tackle them. The ACNC’s Governance Toolkit contains a fraud risk assessment tool and is a helpful starting point. Consider exactly how your organisation is assisting the bushfire response, and how fraud or theft could occur. Are you working with local suppliers and contractors, for example? How could some of them take advantage of you? And don’t forget to think the unthinkable – could your own people potentially fall victim to temptation?
Similarly, because emergencies move quickly, existing procedures are often tested to breaking point. People might need to make decisions rapidly and remotely in ambiguous circumstances. To provide support, and increase the chances of them doing so wisely, run an anti-fraud and corruption training session so that they can understand what might go wrong, be alert to the red flags, and stop any wrongdoing before it occurs.
2. Know who you are dealing with
Good faith and trust are as crucial in emergency response as any charitable work. But this needs to be balanced with vigilance and care. In addition to knowing who is working with you, including volunteers as well as paid employees, it is also important to know who your potential partners, suppliers and contractors really are.
Carry out due diligence. There is lots of information available from public sources, online and from ASIC. Check whether your partners, suppliers or contractors have, or their directors have, been linked to any previous issues. Are they linked to your own organisation? Do they have references from trustworthy sources?
In an emergency, time pressure can limit due diligence like this, so try to build a pool of pre-checked suppliers from which to draw.
3. Know how you will handle surplus
It is hard to predict how beneficiary needs will pan out, so responders often end up with a surplus of resources. Similarly, because the flow of donations, whether in cash or in kind, is often high, it can quickly overwhelm smaller organisations.
Make sure there’s a plan in advance for how surplus will be stored, managed, and disposed of in a way that is transparent, accountable, and in line with donor expectations. These resources carry fraud and theft risk while they’re unused and in your care, as well as in the way in which they’re disposed.
4. Know how you will transition from emergency to recovery
Driven by urgent beneficiary need, organisations frequently have a higher appetite for risk during the emergency phase, using more basic controls to speed up operations. This is sometimes known as “minimum standards”. But as your charitable response evolves into longer-term recovery work, so too will your fraud and theft risks evolve. Make sure you have defined when you will transition to your business-as-usual controls, and do so immediately on reaching that threshold.
These tips are starting points of course rather than an exhaustive list, as emergency management is a technical discipline. But by applying care and caution to the way that we help those in need, we can make sure that we can help as many as possible by losing as little as possible.
About the author: Oliver May was previously the head of counter-fraud for Oxfam GB. He is now a director in Deloitte’s forensic practice, where he helps not-for-profit, corporate and government clients to manage integrity risks. He blogs at Second Marshmallow and his book, Fighting Fraud and Corruption in the Humanitarian and Global Development Sector (Routledge, 2016), is out now. A follow-up book, on managing terrorist financing risks in international aid, is out in 2020.