Anti-corruption work in NRC 2015

Published 12. Jun 2016
NRC encourages open discussions and acknowledges that corruption may occur even under the best of control systems. Our policy is to be transparent, and one element of that is that we by June 30 each year publish an overview of the corruption cases that were closed the previous year.

NRC encourages open discussions and acknowledges that corruption may occur even under the best of control systems. Our policy is to be transparent, and one element of that is that we by June 30 each year publish an overview of the corruption cases that were closed the previous year.

Corruption is found in all countries, but the extent and scope varies. Fragile and conflict affected states are in particular exposed to corruption. Transparency International’s corruption index ranks countries based on how their public sector is perceived. Not surprisingly, many countries where NRC works are ranked as the most corrupt countries in the world. Hence understanding and fighting corruption in the different contexts in the countries we work, require extra attention and efforts. 

NRC defines corruption as “the abuse of power for illegitimate individual or group benefits”. This involves financial and non-financial benefits. We have zero tolerance against corruption, and NRC employees are not allowed to provide for, request or receive anything that can be defined as corruption. 

To help and support staff and management in avoiding and handling corruption cases, we have a detailed Code of Conduct, an Anti-corruption handbook and strict Human Resource, Logistics and Financial procedures. This is coupled with whistle blowing procedures and Monitoring & Evaluation and Risk Management systems put in place. Our procedures and control mechanisms are constantly strengthened and adjusted to further improve our global and country specific prevention measures.

Support and program functions in humanitarian operations and acute emergencies are in particular exposed to corruption. However, our experience is that regular monitoring, including unannounced spot checks, and segregation of duties generally serve as effective prevention measures. 

In 2015, a new Anti-corruption policy was adopted by NRC’s Board of Directors. NRC’s Anti-corruption handbook describes how the policy should be implemented and helps NRC’s managers and staff to better understand the overall corruption threats and how to apply appropriate control measures throughout the organisation. Awareness raising and context specific anti-corruption trainings were done in the programme countries. In addition staff and implementing partners have been strongly encouraged to take Transparency International’s and IFRC’s new e-learning course Preventing corruption in humanitarian aid, launched in September 2015. By year end,  382 staff members had completed the e-learning course.   

Assessing and investigating alleged corruption and proving evidence is important, but can be resource demanding, difficult and even dangerous. In criminal cases we alert the police and take legal action, if appropriate. In some countries however, the police and prosecutors can be part of the crime or otherwise corrupt, thus in certain cases/countries extra care and discretion must be used before taking legal action. An investigation training was held for Finance Managers, Heads of Support and controllers working in the field. The investigation training was  arranged by PwC Norway in cooperation with NRC’s Anti-corruption and Investigation Adviser.

During 2015, 26 cases of possible corruption were investigated. All cases were detected as a result of NRC’s internal control measures or through whistle blowing.  In each of the cases where irregularities and/or misconduct were detected we have learned from the incidents. Proper prevention measures were applied accordingly and appropriate level of disciplinary actions have been taken according to NRC policy and local law.

Affected donors have been informed along the way and where money has been lost the loss has been covered by NRC.

4 cases were investigated by external experts, the rest by internal investigation teams, following NRC’s investigation procedures. One case is (PR early June 2016) pending conclusion and 8 cases were found to be groundless or could not be substantiated. In 17 cases, presented below, the investigations concluded that corruption had taken place.

 

Afghanistan | Staff member ran away with 3 month salary advance

In April, a staff member ran away after having received a 3 months’ salary            advance for medical treatment of a close family member. The money had been booked as advance and not charged to any donor funded project. NRC has covered the loss of 6,703 USD. 

 

CAR | Cash theft

In January,  a team was sent to Cameroun to arrange some procurements and one staff member ran away with 5, 800,000 XAF ( 9,600 USD ). The case was reported to the local police but to date they did not manage to catch the person. The money was booked as advance and has been covered by NRC. No donor was affected.

 

DRC | Possible kickback extortion in DRC - Conflict of interest

Based on the extraordinary size of a bulk procurement and rumours received that a staff member had got a 10% kick-back from the transaction, NRC decided to investigate the matter. PwC Norway was commissioned to conduct the investigation. The investigation was executed from august till October (actual investigation in DRC from 19.09-26.09). They could not find any clear evidence of corruption committed by our staff related to the bulk procurement.

The investigators however detected two conflict of interest cases involving two  staff members as it was detected that they were running private businesses during NRC working hours and these private businesses had not been declared.

 

Ethiopia | Fraud

Early May 2015 NRC detected possible signs of fraud, including information about falsification of vouchers within its construction activities in an area office.. Due to the possible magnitude of the fraud and the potential security risks,  NRC decided to let externals conduct the investigation. Auditor Baker Tilly Merali’s, Kenya was engaged and the forensic audit report concludes that in end February and during March 2015 some NRC staff members in the area office took advantage of a critical situation within NRC’s construction of NRC’s office and guest houses and committed fraud amounting to 136,952 USD. Payment to casual workers were proved to be fictitious and NRC’s internal documents (such as Good Received Notes) were falsified to match the supplier’s invoices. All fraud incidents happened the last 8 days of February and during March 2015. This was at a time when the office  was under severe time pressure due to its committed and challenging refugee response, while also constructing an NRC office and guest houses.

 

Iraq

1)      Kickback extortion in Erbil

NRC received allegations about possible kick back extortions in Erbil end 2014. The internal investigation was done in several stages and was first concluded in June 2015. It found that there were signs of corruption in the following two cases:

  • Overpricing of forklift rental for the warehouse –  3000 USD
  • Fraud/overpricing related to procurement of 11 laptops from one supplier (Microsoft software being fake) – 1120 USD

There are clear indications that the staff in question had been involved in the above mentioned cases. Total loss is 4120 USD.  

2)      Manipulated invoices

 End July, a staff member reported possible fraud related to an invoice which seemed to be manipulated. The case was investigated and revealed that a staff member  had been involved in fraud.  He bought spare parts for the office generators and increased the prices of the items brought to the warehouse.  The items were in the warehouse with the exact quantities as per the invoices, but one invoice had been manipulated. The exact amount was 284 USD and has been recovered from the employee’s salary. 

3) Misuse of NRC phone

In September a case of mis-use of NRC’s phone was reported and investigated.  It was detected that a staff member had transferred credit from MOVCON post-paid line to his personal phone 6-8 times each month during the past 4 months.

The total transfers amounted to 476.80 USD.The money has been recovered from the staff’s salary.

 

Jordan | Possible theft of 80 WFO food packs in the Za’atari camp

In October two NRC employees working in the Za’atari camp were accused of altering a document to hide that 80 WFP packs were missing from the storage. The case was investigated by an investigation team, led by an investigator from UNHCR’s investigation roster. The investigation proved that the two suspects colluded by collaborating in regards to their explanations for their actions with the intent to mislead the investigators. The daily report for the actual day was fraudulently completed and signed in the names of two other staff members by one of the accused and the other suspect destroyed the original document. The allegations relating to fraud were substantiated, but it was not possible to confirm that WFP Meals had been misplaced nor stolen.

Possible total loss: 350 USD.

 

Kenya

1)   Stolen iron sheet (from backfilled and demolished latrines) in Kakuma camp

In September NRC detected that iron sheets from backfilled and demolished latrines were not getting to the store,  but instead were sold within the camps.  This matter was reported to the police who apprehended 2 incentive staff (refugee workers). The police later dismissed the case for lack of evidence and NRC decided to carry out an internal investigation.

NRC recycles some of the super structure materials (including iron sheets) and puts up new latrines to replace the filled ones. NRC did not have a clear procedure  regarding back filling and subsequent demolition of the filled up latrines and the recovery and re use of the materials. The investigation concluded that some  incentive staff (refugee workers) had taken advantage of this loophole to collude with some community leaders and instead of recovering the materials, sell off (iron sheets mainly) to the refugees who use them for other purposes such as individual shelters, compound fences and private business premises. Of 301 latrines backfilled and demolished only 145 iron sheets could be accounted for out of a total of 2,408. This amounts to iron sheets worth 6,089 USD, which could have been reused for the replacement of the filled up latrines. As a lessons learned NRC is developing guidelines and tools to better monitor the recycling of these materials without undermining the powers and the capacity of the community to take care of their  own resources.

2)      Allegations of double claimed funds of Ksh 2600 ( 30 USD) between January and February 2015 and inflation of prices

In November, it was detected that a staff member had submitted double claims (total value USD 30) related to some office services and that the prices were inflated (sampled materials for maintenance and office repair). The case was investigated and after a thorough process the investigation panel concluded that the staff’s actions were based on negligence and not intentional fraud. Checks of previous procurements done by the same staff showed no signs of fraud/misconduct. The 30 USD double claims were recovered/ paid by the staff in question.

 

Lebanon | Embezzlement

In April, cash theft committed by a staff member amounting to 398 USD (264 + 134) was quickly detected. The staff member paid back the money.

 

Pakistan | Possible corruption within NFI kit distributions in Pakistan 2012 and 2013

In August 2014, NRC identified insufficient compliance with procedures and systems relating to procurement, warehousing and distribution of NFI kits in the Pakistan programme from 2012 to 2013. As we could not exclude that corruption had taken place NRC informed potentially affected donors of the situation and it was agreed that BDO Pakistan would conduct an investigation of NRC’s NFI distribution projects for the years 2012 and 2013. The audit commenced January 2015 and was concluded in July 2015. 

BDO’s fact finding report points at serious shortcomings in adherence to NRC’s logistics procedures and indicates that corruption and collusion among vendors and provision of incentives have taken place. However, the report does not provide concrete evidence proving that NRC staff were involved in corruption or that the NFIs in question did not reach the beneficiaries. Nor does it  say which donor funds that (possibly) were affected. As a response NRC made a review of the financial procurement records  which shows that 124,030 NFIs were procured and 9,551 NFI kits were received in-kind from UNHCR, totalling 134,381 kits, while the number of NFIs distributed as PR the beneficiary lists is 133,571. This means that we cannot account for the distribution of 810 kits which represents a total value of 37,847 USD. NRC has therefore proposed to the donors that this amount is reimbursed proportionally to the affected donors according to their funds provided in 2012 and 2013, acknowledging the gravity of the situation.  Since 2014 the management and NRC’s internal procedures in Pakistan have been significantly strengthened.

 

Somalia

1) Looting of nutrition supplies and furniture from a nutrition centre

In May, one of NRC’s international partners in the BRCiS Consortium, suffered looting of nutrition supplies and furniture from a nutrition centre. The international partner and its local partner organization, supported by the community elders, made efforts aimed at returning the looted items. Despite all the efforts,  it has not been possible to recover the looted items. The items were allegedly taken to a place which is controlled by the actors whose militia were behind the incident. An offensive by AMISOM and Government forces which forced the concerned actors to retreat have unfortunately dashed any hope of getting the items back. All efforts were made by the local partner and NRC’s international partner to recover the items but in vain (the attackers kidnapped one of the local elders, antagonising the traditional system of negotiations). This resulted in the loss of materials worth 1,186 USD.  

The donor has processed  this according to their counter fraud / loss rules, which resulted in a write off. 

Case 2)  Forged receipts and participant lists

NRC Somaliland contracted a service provider for three months to conduct Housing, Land and Property information sessions in pre identified regions of Somaliland. In September, on payment request for the final contract instalment the service provider submitted forged documents (receipts and participant lists). NRC did therefore not issue the payment, terminated the contract with immediate effect and appointed an investigation team. 

The findings of the investigation revealed that the service provider according to contract and terms was to carry out an HLP group information session in Burao, following which the third and final instalment of 2,448 USD was to be paid out by NRC on satisfactory submission of all the supporting documents to enable release of the payment. NRC discovered that the documents submitted were forged and there is reasonable doubt as to whether the last activity is completed according to contract terms. NRC’s ICLA team therefore later conducted an extra training in line with the plan.

The first and second installment of payments to the service provider were proved to be correct and in line with the contract. NRC and the beneficiaries did not suffer any loss since the forged payment related to the last training was discovered before it was paid. NRC’s ICLA team themselves later implemented the last training.

 

Uganda | Conflict of interest

Through a whistle blow early August 2015 it was informed that a staff member  was running a print shop (not declared) and that NRC recently had used his shop for printing services. An internal investigation team was established end August and the investigation concluded that the allegations were correct. In total NRC had used his shop for services amounting to USD 330. Out of these, 35 USD have  been paid. The balance of 295 USD remained outstanding due to the circumstances. The investigation established that the prices were in accordance with market prices and therefore no loss for NRC.

 

Ukraine | Detected bribery attempt during a tender process

In November NRC became aware of possible corruption involving a procurement staff and a supplier in regards to a tender process of heating blankets where there were signs of irregular communication between the supplier and the NRC employee. The employee was allegedly giving the supplier information about the prices of another supplier and guiding him in order to become a winner in the tender. As a response an internal investigation team was appointed. 

The investigation revealed that one supplier had tried to manipulate NRC’s procurement staff in order to win the tender and that the staff member had requested “compensation payment” (3000 USD) in return.

Since the case was detected early, the staff member had not yet received any kickbacks. The investigation found no evidence that he had made similar bribery requests to other suppliers.

 

Yemen | A former staff member collecting fuel in NRC’s name

NRC Aden Office was closed due to the conflict from 25th of March 2015. From 1st September 2015 the office was reopened with a skeleton staff. In October 2015 it was reported that a former NRC employee had been collecting free fuel from WFP since April until October. His last working day was 19th June 2015. Unfortunately NRC had not informed WFP that the office was closed and that no-one was authorised to collect fuel on the organisations behalf.

NRC did not suffer any financial loss because NRC fuel was free during that period. WFP did not want to peruse the matter. The alleged incident appears to be occurred while NRC had suspended its operation and there was open conflict in Aden.