PPT Presentation: CIPFA Governance Summit - UK Public Sector Governance & Corruption

TRAC: TRANSPRENCY IN REPORTING OF

TRAC: TRANSPRENCY IN REPORTING OF

UK Public Sector Governance & Corruption CIPFA Governance Summit October 15th 2013 Dr Robert Barrington, Executive Director

Is there a problem?

Corruption Perceptions Index 2012

Corruption Perceptions Index 2012

June 2011 report

Corruption research

• • • • •

Limited range of methodologies Data scarcity Problems with measurement Use of allegations to illustrate typologies Focus on robustness of systems not scale of the problem

Is corruption always illegal?

• Sometimes illegal – eg bribery • Sometimes unethical but legal – MPs’ expenses – Revolving door – Political party donations – Unregulated political lobbying

National opinion survey

Institutional analysis National Integrity System (NIS)

Scorecard 2013

Corruption in UK Local Government

Local Government: Inherent Corruption Risks

1 Procurement

STRUCTURAL RISKS: •High-value transactions •Complex transactions •Post-award contract implementation •Buyer-user disconnect TYPES AND IMPACT: •Cronyism, favouritism •Conflicts of interest •Mis-allocation of resources •Unfair competition CASE: •Wirral Highways

Local Government: Inherent Corruption Risks 1 Procurement

2 Outsourcing

STRUCTURAL RISKS: •Unclear accountability •Weak monitoring •Little competition among providers CORRUPTION TYPES AND IMPACT: •Conflicts of interest •Revolving Door •Value for Money?

CASE: •SouthWest One

Local Government: Inherent Corruption Risks 1 Procurement 2 Outsourcing

3 Planning decisions

STRUCTURAL RISKS: •Powerful interests •Officer/member discretion •Difficulty of detecting influence TYPES AND IMPACT: •Cronyism, favouritism •Conflicts of interest CASE: •East Devon

Local Government: Inherent Corruption Risks 1 Procurement 2 Accountability of outsourced services 3 Planning decisions

4 Housing: potential collusion in fraud

STRUCTURAL RISKS: •Discretion over allocation •Weak investigative capacity •Monopoly power of monitors TYPES AND IMPACT: •Cronyism, favouritism •Right-to-buy manipulation •Organised crime CASE: •Nottingham City

Local Government: Inherent Corruption Risks 1 Procurement 2 Outsourcing

STRUCTURAL RISKS: •Discretion over allocation of resources for registration •Difficult to detect corruption

3 Planning decisions 4 Housing: potential collusion in fraud

5 Individual Electoral Registration

TYPES AND IMPACT: •Politically motivated allocation of resources for registration

Local Government: weakened accountability of the system

1 Audit

AUDIT COMMISSION ABOLISHED •No standard-setter •No public audit ‘backstop’ •No collection of data on trends INTERNAL AUDIT •Cuts mean reduced capacity •Audit Committees weak EXTERNAL AUDIT •Compromised independence •Disincentives to challenge •Uncertain transparency

Local Government: weakened accountability of the system 1 Audit

2 Standards for elected members

STRUCTURAL RISKS •Accumulation of informal power •Patronage power of leaders PROBLEMS WITH NEW SYSTEM •Weakened monitoring and enforcement •Reliance on criminal offence •(Threat to independence of Chief Execs, Financial Officers and Monitoring Officers)

Local Government: weakened accountability of the system 1 Audit

2 Standards for elected members

3 Armchair auditors?

– Media – Voters – Whistleblowers

LOCAL MEDIA: •In decline •Loss of important arm of scrutiny VOTERS HAVE WEAK VOICE: •One-party councils •Uncontested seats WHISTLEBLOWERS: •High personal costs •Retribution is common •Requires supportive culture – unlikely to exist in most corrupt places

Local Government - Summary • • •

16 areas of weakness identified 22 recommendations Key recommendations – Risk assessment – linking to new Serious and Organised Crime Strategy – Strengthen audit procedures – Strengthen and support whistleblowing – Need for national code of conduct – Extend Nolan Principles and FoI to private sector when operating public services

Local Government - Conclusions • • • •

Unintended consequences of significant changes Cumulative effect Need for greater prioritisation of corruption Importance of standards, audit and transparency

Overall conclusions: enablers of corruption • Creating the space in which corruption can thrive – – – – – – – –

Lack of transparency Lack of accountability Poor governance Poor tone from the top Poor auditing and compliance Poor enforcement Complicity Intolerance of whistleblowers

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Overall conclusions – constructing a robust system • Closing down the space in which corruption can thrive – – – – – –

Tone from the top Risk assessment Effective policies and procedures Due diligence Communication and training Monitoring and review

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