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“LGMA WILG - A Raft in the
Currents”
Governance ….. Is it really that hard?
Governance may be a buzz word which we are all familiar with but what does governance really mean in the local government context?
What do we need to know to keep out of trouble and administer our roles ethically and in compliance with the plethora of applicable legislation?
This session is based on what a senior Council Officer would need to know if they are not a professional expert in this area.
Session Overview
• What is Governance?
• Conflicts of Interests
• Fraud and Corruption Control
• Delegated Authority
What does governance mean to you?
Thought provokers ……
• Integrity in local government is just as important
as workplace health and safety!
• Are we creating cultures of integrity?
• Are our Code of Conducts seen as a tool for
punishment rather than a cultural tool?
• Acting with integrity is doing the right thing even
when no one is looking!
The SCC Journey
• SCC Governance Framework review
• SCC Compliance Framework
• Governance in Action Program
• Governance Awareness Training / Sessions /
Governance Fun Facts - Yammer
• SCC Whistleblower Hotline (external)
• SCC Intranet
SCC Governance Journey
Compliance Motivators
What encourages people to comply?
• The Grim Reaper -
https://www.youtube.com/watch?v=OJ9f378T49E
• Home Safe - https://www.youtube.com/watch?v=14gsJd_HrQQ
• No-one thinks big of you -
https://www.youtube.com/watch?v=SgV9Oa6z5wY
PRIVATE AND CONFIDENTIAL
Conflicts of Interest
Key Elements in the COI Framework
Conflicts of
Interest
Conflicts of Interest
Public Sector
Ethics Act 1994
Local Government
Act 2009
EmployeeCode ofConduct
Conflicts of
Interest
Policy
Gifts and Benefits Policy
FraudPrevention
Policy
A ‘conflict of interest’ involves a conflict between an officer ’s duties and
responsibilities in serving the public interest, and the officer ’s private interest.
• Actual – having an effect on current actions
• Potential – possibly influencing actions in the future
• Perceived – of a nature which others might interpret as having an
influence on actions.
They may be -
• Financial (also known as ‘pecuniary’ or ‘material personal interest’)
which generally involves money or some ‘benefit’;
• Non-financial (also know as non-pecuniary) which is fundamentally
about relationships
Conflicts of Interest
Conflicts of Interest
While it is important to try and avoid conflicts of
interest in the workplace, some personal situations
may arise that are unavoidable and may result in
you having a conflict of interest.
Note: Always remember if in doubt disclose a
conflict of interest
Situations in which a conflict may occur
Conflicts of Interest
Examples• Undertaking secondary employment
• The receiving of a gift or benefit
• Financial and economic interests such as debts or assets
• A family or private business
• Affiliations with for-profit and non-profit organisations, sporting bodies, clubs
and associations
• Affiliations to professional, community ethnic, family or religious groups in a
personal or professional capacity or relationships to people living in the
same household
• Rivalry towards or competition with another individual or group
• Significant family or other relationships with clients, contractors or other staff
working in the same (or a related) organisation
• Future employment prospects or plans (i.e. post separation employment)
Conflicts of Interest
How can a COI arise at work?
• As a member of a tender selection/procurement panel
• As a member of a recruitment/interview panel
• In the determination of development applications
• Considering/deciding grant applications
• If undertaking internal review of Administrative Action Complaint
applications
• If undertaking internal review of RTI applications or appeals
• General decision making
Conflicts of Interest
Disclose, disclose, disclose
Conflicts of Interest
• You have an obligation to disclose if you have an
actual, potential or perceived conflict of interest.
• By making disclosures about personal interests,
potential conflicts can be avoided or addressed
before they affect an employee‘s public duties.
Who is responsible to disclose?
The responsibility
for identifying,
understanding and
managing a conflict
of interest rests, in
the first instance,
rests with you.
Conflicts of Interest
Why is it important to disclose?
Conflicts of Interest
• Even if no unethical or improper act results from having
a conflict of interest, it may impair your ability to perform
your duties and responsibilities objectively.
• Disclosing a conflict of interest protects you as an
individual, maintains your integrity as an officer and
helps to increase the community’s trust and confidence
in your council.
• It isn’t wrong or unethical to have a conflict of interest,
what is important is that it is identified, disclosed and
appropriately managed.
Does it pass the front page test?
Conflicts of Interest
What do you need to do?
Conflicts of Interest
• Always act honestly
• Understand your obligations to disclose a conflict of
interest. It is your responsibility to assess a situation
and consult where you are unsure of whether a
conflict of interest exists
COI Test …What are the three types of ‘conflicts of interest’ ?
Perceived – Potential - Actual
What do you do if you have another job outside of council ?
Declare it as ‘Secondary Employment’
You are offered tickets to a corporate box by a friend and Council is a major
sponsor of the event and you work in the area responsible for the management of
the agreement? Is this a gift that needs to be declared?
Yes – its all about the CONTEXT!!!!!
Someone is retiring and you’re in charge of organising their farewell gift. Is it
appropriate to buy them a gift on the corporate credit card?Refer to the Council Policy Position
Case Study – secondary employment
Susan is a Economic Development Officer for council.
She has just started her own business providing support and advice to
businesses on the coast which she operates on the weekend.
Susan has just organised her new business mobile, business cards and shirt
(with her logo on it) and is keen to promote her new business
Susan has been taking calls on her phone while at work and is distracting her
team members. She is also not focussed on her work responsibilities.
But then….
• Susan wears her new shirt while on council jobs and
meetings with external council clients and has been seen
handing out business cards during work time.
• She has also taken extra sick days but is returning to
work and commenting to her colleagues that she was
meeting with clients to promote her new business.
PRIVATE AND CONFIDENTIAL
Fraud & Corruption Control
Another damning report into the Glenorchy
City Council has found a "loyal trio"
operated in conflict of interest for financial
gain, potentially to the tune of $1 million. 22 May 2018
The Blue Mountains City Council
has seven days to explain why it
should not be suspended over
alleged "conflicts of interest"
during an investigation into
serious asbestos safety breaches.15 Feb 2018
A former City of Perth employee has been sentenced to 22
months in jail for corruption and bribery. 25 June 2018
8 May 2019
6 June 2019
Business Email Compromise (BEC)
Fraudsters may conduct this scam as follows:
• The perpetrator adopts or hijacks the electronic identity of a trusted supplier or
employee.
• Using ‘lookalike’ email addresses / names and stolen brand imagery,
communication is made with an employee of the target organisation and often
starts with ‘grooming’ the employee to build rapport and create trust with the
perpetrator.
• At some point the perpetrator drives the employee to provide them with a copy of
the organisation’s finance manual (or similar), make an ‘urgent’ electronic funds
transfer (EFT) to a specific bank account or change a valid supplier or
employee’s bank account.
• The alarm is raised only when the supplier or employee becomes aware they
haven’t received their payment
What scams abound, comes aroundSource: KPMG NewsRoom (https://newsroom.kpmg.com.au/scams-
abound-comes-around-2/ )
What is fraud?
There are many definitions – SCC defines fraud as:
“Deliberate, intentional and premeditated dishonest activity, or omission of
activity, that causes actual or potential financial loss to any person or to
Council. Fraud is a major subset of corruption and may include theft of
moneys or other property; the deliberate falsification, concealment or
destruction of documentation; or the improper use of information or
position.”Source: SCC’s Fraud and Corruption Control Strategic Policy and
Fraud and Corruption Control Plan (Guidelines)
What is corruption?
SCC defines corrupt conduct, based on the Crime and Corruption Act
2001, as:
“Corrupt conduct is conduct by anyone that adversely affects a public agency
or public official so that the performance of their functions or the exercise of
their powers:
• Is not honest or impartial
• Knowingly or recklessly breaches public trust, or
• Involves the misuse of agency-related information or material.”
Source: SCC’s Fraud and Corruption Control Strategic Policy and
Fraud and Corruption Control Plan (Guidelines)
What are the characteristics of a fraudster?
Autocratic,3x more likely to be
regarded as
friendly as not
Well respected (38%), nearly 4x more
likely than someone with a low
reputation
Has a sense of
superiority
Has unlimited
authority
44%
36–55years of age
65% of fraud
lasted between
1 and 5 years
Type of Fraud:Misappropriation of
Assets (47%);
Financial reporting
fraud (22%).
Cost of Fraud:Cost to company
exceeding
$1M (27%).
Source: Global Profiles of the Fraudster, KPMG International, 2016
Holds anexecutivelevel position
(38%)Manager (32%)
Staff (20%)
Who are the victims?
Source: Fraud Barometer (Oct 16 – Mar 17), KPMG Australia, 2018
Examples of fraud and corruption
• Theft of property.
• Unlawful or unauthorised release of confidential information gained from
working for your Council.
• Dishonestly obtaining or using property that belongs to your Council.
• Dishonest use of intellectual property.
• Knowingly making or using forged or falsified documents that is dishonest
• Misusing Council equipment.
• Falsifying invoices for goods or services
• Receiving or giving kickbacks or secret commissions to or from third parties.
What are some “red flags” of fraud?• Lack of segregation of duties - Opportunities for collusion
• Lack of oversight of outsourced arrangements (e.g. Shared Services)
• History of control weaknesses
• Ineffective / inadequate supervision
• Unusual access / authority
• Ability to override controls
• Positions of trust – (remember trust is not a control!)
• Undeclared gifts or benefits from suppliers
• Employees overly protective of routine information
• Signs of excessive wealth and spending
• Supplier favouritism or unusually close relationships
• Projects consistently run over budget
• Consistently paying premium prices - Favorable payment terms
• People who do not take holidays
• The long serving employee that everyone trusts
• Bypassing procurement procedures i.e. control override
• Inadequate managerial response to non-compliance
Fraud scams targeting employees
Source: Europol (https://www.europol.europa.eu/sites/default/files/publications/fraud_scams_infographic.pdf)
What to do if you suspect fraud in your organisation?
• Consider making a public interest disclosure - A (PID) is a disclosure of
suspected wrongdoing in the public sector
Case Study
You are a manager and your department is going to market with a large tender.
You have been placed on the tender committee and are in charge of making
the final decision for which vendor will win the tender. As you are going through
the tenders, you notice a vendor with a familiar name. You realise it is your
brother-in-law’s business who is bidding for this tender.
The most appropriate course of action from the available options is to:
a) Inform the tender committee and excuse yourself from being involved in the
tender any further.
b) Inform your superior.
c) Inform the tender committee and ensure them you will not be swayed by this
potential conflict-of-interest.
d) Say nothing and promise yourself you won’t let this sway your decision.
PRIVATE AND CONFIDENTIAL
Delegated Authority
Delegations put simply?
Conflicts of Interest
• A short video
• Ensure that you understand the powers, limitations and
responsibilities of your delegations
• Be aware of the criteria and follow procedures regarding
your delegations including any limitations placed on them
• Approvals, transactions and/or payments must not exceed
the delegated officer’s financial delegations.
• Disclose conflicts of interest, not make a decision about any
matter that conflict with your personal interests.
• You cannot sub-delegate (give) all or any part of the power to
any other position or person.
• Document decisions and be able to justify your reasoning
Tips for Delegated Officer
Case Study
You are an officer dealing with a contentious matter. Several
Councillors, the Mayor and the local newspaper are all
involved. You have the delegated power to make the final
decision regarding this matter.
What do you need to consider?• Recording keeping
• Process/procedure
• Did you have the delegation
• Natural justice
• Judicial review
• Seeking advice with team members/supervisors/stakeholders
• Limitations to your delegations (due to administrative procedures/criteria
within delegation or legislation)
A thought to leave you with …..
Thank you
PRIVATE AND CONFIDENTIAL
