Charities urged to blow whistle on staff they suspect of fraud

CHARITY workers who start driving flashy cars or wearing expensive clothes should come under suspicion for fraud, the sector’s regulator has advised.

Organisations should stay alert to the risk of insider fraud, the Charity Commission said, after its figures revealed a significant number of potentially fraudulent incidents.

To encourage those who work and volunteer at charities to be alert to the issue and prevent the misuse of funds, the regulator is advising they adopt a culture of practices that help minimise the risk.

This includes avoiding placing excessive degrees of trust and responsibility in particular individuals, and using appropriate financial controls, such as dual authorisation.

Charities should also watch for regular, unexplained cash withdrawals and unusual behaviour or lifestyle changes among staff. People should be encouraged to speak out about any concerns.

It comes after a third of fraudulent incidents against charities reported to the regulator during the financial year 2015-16 were suspected to involve volunteers, staff or trustees.

Michelle Russell, director of investigations, monitoring and enforcement at the commission, said it was “crucial” staff and volunteers remained alert to the risk. “This means keeping an eye out for any suspicious behaviour or irregular activity and speaking out when they do have any concerns – and charities need to be robust in dealing with it if it happens,” Ms Russell said.

Stressing that those who work for charities were generally “committed to making a difference in society”, she added: “They are trusting and trusted,” but “unfortunately, for a range of reasons, that mutual trust can be abused. The reality is insider fraud does happen in charities. It might be an opportunistic crime made easy due to a lack of oversight or poor controls.

“It might be a more sophisticated pre-planned fraud, taking place over a number of years, involving significant sums of money.

“Ultimately, whether it happens in a small charity with no employees or a multimillion pound household name, fraud diverts money away from those

‘This means keeping an eye out for any suspicious behaviour or irregular activity and speaking out’

the charity is helping and who need it.”

The warning follows a number of recent high-profile incidents, including that of Robert Davies, head of finance at Cyrenians Cymru, who defrauded the charity of more than £1.3million over six years, causing it to go bust. He was jailed for five years in July.

The commission said clear procedures for reporting fraud should be in place. In appealing for people to report their suspicions, Ms Russell said details sent to them would help form a picture of the crime, how and when it happens and what can be learnt from it.

“Our aim is to help charities increase their own resilience to this kind of abuse and protect donors’ valued funds, as well as protect public trust and confidence in charities,” she added.