Anti-Fraud and Corruption Policy

You are here: / / / Anti-Fraud and Corruption Policy

Purpose

  1. This policy sets out Sparrows' position on fraud and corruption, and what happens once either is suspected.
  2. Sparrows has zero tolerance for fraud and corruption. It never accepts either, whoever commits it, and it acts under this policy whenever either is suspected.
  3. Most of the controls that prevent fraud and corruption sit in other policies, which §3.1 names. This policy is what applies once fraud or corruption is suspected, whether a control has failed, been avoided or was not in the way.

What This Policy Covers

  1. This policy applies to every employee, volunteer and Board member.
  2. This policy also applies to how Sparrows responds to a suspicion of fraud or corruption against Sparrows by anyone else, such as a contractor, supplier or service provider. Sparrows holds such a person to the terms of its contract or order with them; the Procurement Policy §5.1.3 has a contract say when Sparrows may end it for bribery.

Prevention

  1. Most of the controls that prevent fraud and corruption are set out in other policies:
    1. a payment is released only by two of the three authorised bank signatories, and the Treasurer reconciles Sparrows' bank and accounting records every month, independently of whoever captured them (Financial Policy §6.8 and §6.10);
    2. spending is authorised within the thresholds in the Delegation of Authority Policy, and one purchase or contract is never divided to stay under a threshold (Financial Policy §8.1.2);
    3. a person with a conflict of interest in a purchase declares it and takes no part in it, and no one solicits or accepts a gratuity or anything of monetary value from a supplier, apart from general hospitality (Procurement Policy §2);
    4. gifts and hospitality are declared above the value the Conflict of Interest Policy sets, and cash is never accepted as a gift (Conflict of Interest Policy §4); and
    5. assets are counted against the Asset Register at least every two years and every difference is investigated, and a major asset is disposed of only with the Board's approval (Asset Management Policy §6.1 and §7.1).
  2. No person covered by this policy gives, offers or agrees to give a gratification to anyone in order to influence improperly a decision about funding, a contract, a licence, an approval or anything else. "Gratification" is as section 1 of the Prevention and Combating of Corrupt Activities Act, 2004 defines it, and includes money, a gift, a loan, a job, a favour and a discount. Doing so is an offence (section 3 of that Act).
  3. Section 34A of the Prevention and Combating of Corrupt Activities Act, 2004 makes Sparrows itself guilty of an offence if a person who performs services for it, in any capacity, gives or offers a gratification that Act prohibits, intending to obtain or keep business, or an advantage in business, for Sparrows. It is not an offence if Sparrows had adequate procedures in place designed to prevent this. Sparrows keeps the controls in §3.1, the rule in §3.2 and the awareness steps in §3.4 for that purpose.
  4. Every new employee, volunteer and Board member is told about this policy when they start, and a contractor, consultant, agent or agency worker is told when their work begins. The Executive Director reminds everyone about it each year, when the reminder about the Whistleblowing Policy is given (Whistleblowing Policy §6.2).

Reporting a Concern

  1. A concern that fraud or corruption may have occurred is raised under the Whistleblowing Policy, which sets out who may report, to whom, and with what protection.
  2. Nothing in this policy requires a person to be certain fraud or corruption has occurred before reporting a concern — only to hold a genuine, good-faith belief that it may have, as the Whistleblowing Policy already provides.
  3. A suspicion that reaches Sparrows any other way, for example from the auditors, the accounting officer, the bank or the Department of Social Development, is dealt with under this policy in the same way as a report. Whoever it reaches tells the Executive Director at once, or the Chairperson where it involves the Executive Director. The person told enters it in the Whistleblowing Register as the Whistleblowing Policy §6.1 provides.
  4. A report made with malicious intent, knowing it to be false, is itself a disciplinary matter under the Disciplinary Code and Procedure — this does not weaken the protection the Whistleblowing Policy gives a person who reports a genuine, good-faith concern that later turns out to be mistaken; the two situations are not the same.

Reporting to the Police

  1. Section 34 of the Prevention and Combating of Corrupt Activities Act, 2004 requires a person who holds a position of authority, and who knows, ought reasonably to have known or suspects that another person has committed either of the following, to report it, or cause it to be reported, to the police official in the Directorate for Priority Crime Investigation of the South African Police Service (commonly called the Hawks):
    1. an offence in Part 1, 2, 3 or 4 of Chapter 2 of that Act (corruption), whatever the amount involved; or
    2. theft, fraud, extortion, forgery or uttering a forged document, involving R100,000 or more.
  2. That Act treats the chief executive of an organisation, or an equivalent officer, and any other person responsible for the overall management and control of an employer's business, as holding a position of authority (section 34(4)(h) and (i)). For this policy the Executive Director and each Board member are treated as holding one. A person who fails to report as section 34(1) requires commits an offence (section 34(2)).
  3. The Executive Director makes the report. Where the matter involves the Executive Director, or the Executive Director cannot act, the Chairperson makes it. A Board member who suspects a matter in §5.1 and has not been told that it has been reported makes the report themselves. The person who makes the report asks for the acknowledgement of receipt that the police official must give (section 34(3)(a)), and puts it in the file kept under §8.1.
  4. A report must be made as soon as the person making it suspects a matter in §5.1, and at most five business days after. It does not wait for the review under §6 or for the Board's decision under §7, because the duty in section 34 arises on suspicion and not on a finding.

Immediate Steps and the Review

  1. The Executive Director takes the immediate steps in §6.3 and leads the review in §6.4. Where the concern involves the Executive Director, or the Executive Director cannot act, the Chairperson takes the immediate steps, with the Treasurer's help, and the Board carries out the review, led by the Chairperson.
  2. A person the concern involves takes no part in any step under this heading or §7, or in any decision of the Board on the matter. Where it involves the Chairperson, the Vice-Chairperson takes the Chairperson's place. Where it involves the Treasurer, the Chairperson acts without the Treasurer's help.
  3. As soon as a report or suspicion is received, whoever is leading under §6.1 takes any immediate step reasonably necessary to prevent further loss or interference with evidence — for example, restricting a person's access to funds or records pending the outcome of §6.4. Records that bear on the matter are not destroyed (Records and Retention Policy §3.2).
  4. Before any accusation is put to the person concerned, the facts available are looked at independently of that person, by the Executive Director where they are not implicated, or otherwise by the Board. This is so that a response is based on what the evidence actually shows, not on suspicion alone. The review is finished, and its findings put in writing for the Board, at most 21 calendar days after the concern is received. Where it cannot be finished in that time, the Board is told in writing why, and when it will be.
  5. Whoever conducts the review does not confront the person suspected, attempt to investigate beyond gathering the facts already available, or discuss the matter with anyone not involved in the review, so that the review itself doesn't tip off a genuinely guilty person or spread an unfounded allegation before it's been checked. A report to the police under §5 is not a breach of this clause.

What the Board Decides

  1. The Board decides what follows at a meeting held at most 10 business days after it receives the findings under §6.4. The Chairperson calls a special meeting for the purpose where no ordinary meeting falls in that time (Constitution clause 10.3.7).
  2. Where the review finds a genuine basis for the concern, the Board decides which of these steps Sparrows takes:
    1. suspending an employee, as §7.3 provides, pending a disciplinary process under the Disciplinary Code and Procedure;
    2. starting that disciplinary process;
    3. reporting the matter to the South African Police Service, where §5 does not already require a report to the Directorate for Priority Crime Investigation;
    4. recovering the loss, including from an insurer where a policy covers it; and
    5. where the matter involves a Board member, acting under Constitution clause 8.1.5, which requires a hearing and a unanimous Board decision, because a Board seat depends on remaining a member of Sparrows.
  3. A suspension under §7.2.1 is a precaution, not a finding and not a sanction. It is on full pay, is reviewed as the matter goes on, and is lifted as soon as it is no longer needed, as the Disciplinary Code and Procedure §5 provides for a child-safety concern.
  4. Where the review finds a genuine basis for the concern and Sparrows' funds or a Department of Social Development grant condition are implicated, the person who led the review tells the Department in writing at most five business days after the findings are put to the Board. This is so that the Department hears it from Sparrows and not from its own audit. The Transfer Payment Agreement requires Sparrows to tell the Department without delay of circumstances that affect the programme or the Department's financing (clause 12.1).
  5. Where the review does not find a genuine basis for the concern, no disciplinary or other adverse action is taken against the person who was the subject of it, and the person who raised the concern in good faith remains protected under the Whistleblowing Policy regardless of the outcome. In either case the person who raised the concern is told the outcome as the Whistleblowing Policy §5.4 requires.

Records

  1. The person who led the matter keeps a confidential file: the report or suspicion, each step taken with its date, the findings, the Board's decision, the police acknowledgement under §5.3 and any notice to the Department. Where the matter involves the Executive Director, the Secretary keeps it. Where it involves the Secretary, the Chairperson keeps it. The file is kept for the period the Records and Retention Policy §10 sets for the file on a report under the Whistleblowing Policy.

Review

  1. This policy is reviewed annually by the Board.