Fraud against DFID nearly doubles in 3 years

LONDON — The scale of attempted fraud discovered by the U.K.’s Department for International Development has nearly doubled in the last three years, with the department reporting ever bolder and bigger scams.

Fraudsters tried to con DFID out of £9,153,587.64 (roughly $12 million) from 2019 to 2020, according to government data, while that figure was just £5,891,002 for the 2017-2018 period.

But the money recovered by the department from fraud has simultaneously increased, so net reported losses have actually dropped over the last three years. While £1,049,303 was the net loss for 2017 to 2018, just £401,389.47 was successfully stolen from 2019 to 2020, even as the scale of corruption grew, DFID statistics showed. The DFID data did not clarify if the lost funds were the result of a single scam or multiple, and the department refused to provide further information about cases.

The scale of attempted frauds of DFID’s budget, which funds complex and expensive aid projects around the world, contrasts greatly with the small losses to corruption reported by the Foreign & Commonwealth Office — the second-largest of which was £53,000 for stolen antique clocks in August 2019.

The stark lack of reported losses related to FCO programs — the department spent around £675 million of official development assistance in 2019 — “doesn't sound credible and raises questions on their oversight,” a former DFID official said in an email.

He wrote: “None of the FCO reported cases appear to be coming from programme type spending of the kind overseas projects involve, but rather are minor housekeeping slip-ups. This is probably as they are so new to programme activity that issues on ODA-funding that they're doing ... have yet to surface.”

He added that “It certainly doesn't suggest they are any better than anyone else at this.”

DFID and FCO will merge in September to become the Foreign, Commonwealth and Development Office, and the complex financial management required to deploy and safeguard the multibillion-pound ODA budget — honed in DFID over many years — is a key concern of development advocates.

A U.K. government spokesperson said in an email: “All DFID programmes include a range of safeguards and robust financial controls to mitigate the risk of fraud and protect taxpayers’ money. Where fraud is discovered, we always work to recover funds. The FCDO will use the combined expertise of DFID and the FCO to make sure UK aid continues to be spent on helping the world’s poorest people.”

DFID statistics on fraud show there were no reported attempts to defraud the department of more than £1 million from 2017 to 2018 but four in the 2019-2020 time period. There were scams of more than £1 million in South Sudan, India, and the Democratic Republic of the Congo. In Zambia, DFID was defrauded of nearly £3 million.

With the exception of South Sudan, where the department ended up losing £157,204, all the money was recovered in the largest scams. From 2018 to 2019, there was just one attempted million-pound fraud: £1.2 million in DRC, of which DFID ultimately lost £197,775.

It was unclear whether the increased size of reported frauds was due to improved reporting.

“There's no easy answer to what these figures mean in reality,” the former DFID official said.

He continued: “Given that most observers consider, probably correctly, that our loss rate must be higher than the puny level that actually gets noticed - these reported sums are unbelievably small compared with the contexts in which £11bn is being spent - it's probably more a reflection of slightly more cases being surfaced than any significant change in the management of funds. We are still very likely losing much more that we simply don't know about.”

Unlike the FCO data, the DFID statistics provided no information on the nature of attempted fraud.

But some clues are given by a detailed report commissioned in 2019 by DFID into corruption in DRC following allegations of widespread fraud in aid programs in the country, as well as sexual abuse.

Several aspects of humanitarian work in the country were “exposed to high to very high level of risk,” said the report, which was produced for DFID by Adam Smith International, a development consultancy.

“Kickback payments, diversion, favouritism and nepotism appear common, and individuals and especially NNGOs [national nongovernmental organizations] struggle to adapt and employ strategies to counter these issues,” the report said.

It continued: “Collusion amongst insiders within organisations was reported. These groups coordinate kickbacks in different sectors and enforce collective reprisals against those who resist corruption practices. Within an organisation, corruption usually involves actors across departments, such as logistics, finance, monitoring, with each providing cover for each other along the project cycle.”