Preventing Corruption: A Compendium of Global Case Studies

A selection of best practices and global case studies focusing on tackling fraud and preventing the vicious circle of corruption. Here, we explore nine key topics, pulling together specific examples and further resources.

Good public financial management (PFM) is central to achieving and building trust across communities. Aligned to UN Sustainable Development Goal 16 (peace, justice and strong institutions), a key element of effective PFM is the detection and prevention of fraud and corruption. While the prevalence and forms of corrupt behaviour may vary from one economy to the next, no one country or jurisdiction is immune. Acknowledging this reality is integral to shifting the vicious circle of corruption closer to a virtuous circle of integrity.

The COVID-19 pandemic increased opportunities for corrupt activity worldwide and served as a ‘stress test’ for organisations’ internal controls and policies. This is a key reminder that organisations must continually revisit and review their processes and risks.

However, when setting anti-fraud and corruption strategies it is important to recognise that all markets, governments, organisations and cultures face different levels of exposure to fraud and corruption. Each sector must be familiar with and focused on its own risks. It is also important to recognise that tackling fraud and corruption is not a standalone activity by any one organisation and there is no silver bullet to eliminating fraud and corruption. Bodies need to think globally while acting locally and collaboratively.

At CIPFA we believe that there are two primary motives for corruption: greed or need. The former arises when personal gain becomes more important than obtaining something through honest means. The latter arises when a corrupt action serves as a way to alleviate poverty. In essence, fraud and corruption are crimes against society and have a debilitating impact on citizens and communities worldwide.

There are many factors involved in the evolution of corruption, including:

  • cultural shifts in society, for example society becoming increasingly individualist
  • increased digitisation of processes and transactions
  • organisations and public bodies not believing that fraud and corruption exists.  

Fraud and corruption impact every citizen across the globe every day, whether they realise it or not. More than ever before, action needs to be taken at government and transnational levels to reduce it to an absolute minimum. The impact of not doing so includes:

  • less money to spend on public services
  • reduction in inward investment at a national level. 

Fraud negatively impacts a country’s image if uncertainty, favouritism and obscurity are encouraged and funds meant for public services fall into private hands.  

Public and third sector organisations can play a vital role in addressing corrupt behaviour and improving the quality of life for citizens. In the Foreword to the United Nations Convention Against Corruption 2004 (UNCAC), then Secretary-General of the United Nations Kofi Annan described corruption as “an insidious plague that has a wide range of corrosive effects on societies” that “hurts the poor disproportionately by diverting funds intended for development, undermining a government’s ability to provide basic services”.

UNCAC Chapter II sets out preventative anti-corruption measures that should be taken at a state level. For any country to successfully implement UNCAC Chapter II, public sector organisations need to contribute to their national government’s anti-corruption activity and work to prevent corruption at an organisational level.

What does this mean for public bodies? 

Public bodies globally are at a critical point in the fight against the hidden crimes that threaten their financial resilience and their communities.  

As soon as money is lost to fraud and corruption it sets off a vicious circle of wasting time and resources to recover those funds. It is much more strategic and cost effective to stop fraud and corruption occurring in the first place, although this will also take time and money. It is everyone’s responsibility across public sector bodies to help prevent it – from leadership to frontline staff.

The foundation of prevention is having the right leadership team who recognise that fraud happens. The fact it is a hidden crime that is hard to detect does not mean it is not happening. 

As well as having the right skillset and culture, it is also essential to have in place the right internal governance processes and procedures. This helps remove opportunities for fraud and increase prevention.

There are a number of areas of best practice that public bodies should look to address while understanding that what works in one organisation might not necessarily work in another. Local culture, context and legislation matter, and each organisation has to tailor its approach to address both generic and unique risks.

With special thanks to John Baker, for his significant work and contribution in the development of this compendium.