Response to open consultation on Accountability within public bodies - acting on early warning signs.

The Committee on Standards in Public Life is carrying out a review into accountability in public life.

The Committee on Standards in Public Life is carrying out a review into accountability in public life. Please find below my response to this open consultation on accountability in Public bodies (Committee on Standards in Public Life launches new review on accountability within public bodies - GOV.UK (www.gov.uk)).

Firstly, the consultation questions are below (the full consultation detail is reproduced in the Annex of this document):

1. What are the main reasons why public bodies might fail to act quickly and decisively at the first sign of a problem within the organisation?

2. Can you describe any examples of practical measures used by public bodies to ensure that employees are guided by the Nolan Principles at critical decision points, including but not limited to decision-making models, codes of conduct, guidance and training?

3. Public bodies are required to manage a variety of risks to the successful delivery of public services. What role can data play in understanding these risks?

4. Are you aware of any examples of organisations that have good processes in place for identifying patterns and spotting problems that need addressing?

5. What practices and behaviours can the boards of public bodies adopt to ensure that they have proper oversight of their organisation?

6. How should public sector bodies conduct their annual board effectiveness evaluations? What does best practice look like?

7. Accountability in public life can sometimes be associated with blame. How can public bodies build a culture where people feel safe to speak up about concerns, allowing problems to be addressed early and lessons to be learned?

8. The Nolan Principles of honesty and openness require public bodies to be transparent about how they operate and the decisions they make on behalf of the public. Are you aware of any examples of organisations exhibiting good practice in this area?

Response to Consultation on Accountability within Public Bodies

Dear Committee on Standards in Public Life,

Thank you for the opportunity to provide input into the review on accountability in public life. The issues you are addressing are of critical importance to ensuring transparency, integrity, and effectiveness within our public institutions.

I am writing this independently of any institution. With a background in Systems Engineering and extensive experience in designing and implementing public sector IT solutions, including cross-Ministerial performance management systems, health management, and crime reporting systems, I have been actively involved in ensuring accountability and integrity throughout my career.

More recently, I have been voluntarily preparing due diligence reports that scrutinise the integrity of individuals responsible for various Public Bodies. For example, please refer to my due diligence reports on the Serious Fraud Office directors and the board of HMRC (https://open.substack.com/pub/alisonwright/p/due-diligence-on-serious-fraud-office?r=15h096&utm_campaign=post&utm_medium=web) (https://alisonwright.substack.com/p/due-diligence-on-hmrc?r=15h096).

I have identified widespread use of two simple methods of fraud, employed by individuals in control of these Public Bodies, which have compromised the accounts of every Public Body studied and requires police investigation. However, the compromises extend to the leadership of the fraud and cyber-security investigatory services, which are supplied by the City of London Police through their “Action Fraud” crime reporting system. My repeated attempts to report the methods enabling widespread fraud have been deflected and remain inadequately investigated.

I am encountering the risk highlighted by officers of the Botswana Police Force when I was selling them crime reporting systems. “The trouble with crime reporting systems is that you can deliberately or inadvertently restrict what information you allow an individual to report, such that insufficient detail is provided to enable an investigation.” In my experience, this is the case with synthetic identity fraud and clone company fraud. The Action Fraud reporting system provides fields for linking information that are too short to hold Companies House addresses. This field in the reporting system needs to be increased, yet repeated attempts to raise this issue go unaddressed, suggesting that this restriction is deliberate.

Synthetic identity fraud, though described by the Cabinet Office and referenced in law (Section 1082 of the Companies Act 2006) and some guidance, has not led to prosecutions. The Crown Prosecution Service has never prosecuted such crimes. Consequently, the International Standards for Auditing do not specify processes to identify and take appropriate action, and the Action Fraud reporting system fails to provide the fields required to report it.

This practice extends to appointments to positions, such as at a regulator, where individuals can defend attempts to close the loophole. The use of synthetic identities conceals linked directorates operating without accountability or oversight. Regulatory and investigative powers delegated to individuals using this method of fraud pose a high risk of participation in money laundering, terrorism funding, or people trafficking.

Despite the recognition of the threat, there exists a notable gap in proactive measures to address it. Companies House, for instance, acknowledges its authority to merge duplicate records but lacks a proactive approach, leaving vulnerabilities unaddressed and any changes untraceable. Furthermore, auditing standards such as ISA 240 (UK) lack explicit consideration of keywords associated with synthetic identity fraud, hindering the identification of undisclosed interests and leading to material misstatements in financial reporting.

Moreover, law enforcement guidance and reporting systems are ill-equipped to handle the nuances of synthetic identity fraud and cloned company fraud. While there is a focus on imposter fraud, the oversight of synthetic identity fraud and cloned company fraud hampers individuals attempting to report such cases, risking breaches in anti-money laundering, counter-terrorism, and cybersecurity legislation.

To address these challenges and strengthen accountability within public bodies, I propose the following measures:

Expanded Guidance and Protocols: Law enforcement guidance and auditing protocols should be updated to explicitly address synthetic identity fraud and cloned company fraud, enabling more effective detection and reporting of fraudulent activities. Enhanced Reporting Systems: Reporting systems such as Action Fraud should be tailored to accommodate the nuances of synthetic identity fraud, enabling individuals to report such cases more effectively and facilitating appropriate law enforcement action. Proactive Measures by Companies House: Companies House should adopt a proactive approach to identify and address instances of synthetic identity fraud, providing traceability to facilitate later investigation, minimising vulnerabilities, and safeguarding public trust.

In conclusion, addressing the threat of synthetic identity fraud and other forms of fraud requires collaborative efforts to enhance guidance, protocols, and reporting systems. By taking proactive measures to combat these evolving forms of fraud, we can strengthen accountability within public bodies and uphold the principles of public trust and safety.

Thank you for considering these recommendations in your review of accountability within public life. Please find my responses to the consultation questions below.

1. Question: What are the main reasons why public bodies might fail to act quickly and decisively at the first sign of a problem within the organisation?

   Public bodies may fail to act quickly and decisively due to various factors, including inadequate awareness of the problem, lack of clear protocols for addressing issues related to synthetic identity fraud and clone company fraud, fear of repercussions or negative publicity, bureaucratic red tape that slows down decision-making processes, and the widespread abuse of synthetic identities by individuals in positions of control within the executive, legislature, and parliament. This undermines the systems of accountability and creates a culture of impunity. Additionally, the lack of prosecution and reporting systems tailored to synthetic identity fraud exacerbates the problem.

   Role of Synthetic Identity Fraud: Synthetic identity fraud enables individuals to conceal their true identities and interests, manipulate decision-making processes, and compromise the integrity of critical decision points. Addressing synthetic identity fraud is essential to ensuring the timely and decisive response of public bodies to emerging problems and maintaining the integrity of democratic processes.

2. Question: Can you describe any examples of practical measures used by public bodies to ensure that employees are guided by the Nolan Principles at critical decision points, including but not limited to decision-making models, codes of conduct, guidance, and training?

   Public bodies can implement practical measures to ensure adherence to the Nolan Principles by developing comprehensive decision-making models, codes of conduct, and guidance that explicitly incorporate ethical considerations and accountability mechanisms. Regular training and development opportunities for employees on ethical decision-making and the importance of transparency and integrity can reinforce these principles within the organisation.

   Role of Synthetic Identity Fraud: Synthetic identity fraud undermines the effectiveness of measures designed to uphold the Nolan Principles within public bodies, compromising the integrity of critical decision points.

3. Question: Public bodies are required to manage a variety of risks to the successful delivery of public services. What role can data play in understanding these risks?

   Data plays a crucial role in helping public bodies understand and manage risks to the successful delivery of public services. By analysing relevant data sources, public bodies can identify potential risks and vulnerabilities proactively, enabling them to develop targeted risk mitigation strategies. Data analysis can also help identify patterns and anomalies indicative of synthetic identity fraud, allowing public bodies to take pre-emptive action to mitigate these risks.

   Role of Synthetic Identity Fraud: Synthetic identity fraud introduces significant risks to public bodies, including financial loss, reputational damage, and compromised service delivery. Data analysis can help identify patterns and anomalies indicative of synthetic identity fraud, allowing public bodies to take pre-emptive action to mitigate these risks.

4. Question: Are you aware of any examples of organisations that have good processes in place for identifying patterns and spotting problems that need addressing?

   No, there is no evidence of anyone identifying synthetic identity fraud, hence it has not been prosecuted. Synthetic identity fraud presents unique challenges for organisations seeking to identify patterns and spot problems. Traditional detection methods are ineffective against sophisticated synthetic identity schemes, requiring organisations to adopt innovative approaches to fraud detection and prevention.

   Role of Synthetic Identity Fraud: Synthetic identity fraud presents unique challenges for organisations seeking to identify patterns and spot problems. By leveraging advanced analytics and artificial intelligence technologies, organisations can enhance their ability to detect and respond to synthetic identity fraud effectively.

5. Question: What practices and behaviours can the boards of public bodies adopt to ensure that they have proper oversight of their organisation?

   Boards of public bodies can adopt several practices and behaviours to ensure proper oversight of their organisation, including establishing clear governance structures, defining roles and responsibilities, promoting transparency and accountability, and fostering a culture of integrity and ethical conduct. Additionally, boards should regularly review performance metrics and financial reports, conduct independent audits, and engage with stakeholders to identify areas for improvement.

   Role of Synthetic Identity Fraud: Synthetic identity fraud poses a significant challenge to the oversight efforts of public body boards. By prioritising transparency, accountability, and ethical conduct, boards can create an environment that discourages fraudulent behaviour and promotes trust and confidence among stakeholders.

6. Question: How should public sector bodies conduct their annual board effectiveness evaluations? What does best practice look like?

   Public sector bodies should conduct their annual board effectiveness evaluations through a comprehensive and systematic process that assesses key performance indicators, governance practices, and board dynamics. Best practice involves engaging an independent third party to facilitate the evaluation process, ensuring objectivity and impartiality. Additionally, evaluations should incorporate feedback from board members, stakeholders, and external experts to provide a holistic assessment of board performance.

   Role of Synthetic Identity Fraud: Synthetic identity fraud underscores the importance of rigorous board effectiveness evaluations within public sector bodies. By integrating considerations of fraud prevention and detection into their evaluation processes, boards can enhance their effectiveness and resilience in the face of evolving threats.

7. Question: Accountability in public life can sometimes be associated with blame. How can public bodies build a culture where people feel safe to speak up about concerns, allowing problems to be addressed early and lessons to be learned?

   Public bodies can build a culture of accountability and transparency by fostering open communication, promoting a supportive and non-punitive environment, and providing mechanisms for reporting concerns anonymously. Leadership should lead by example, demonstrating a commitment to ethical conduct and accountability in their own actions and decisions. Training and awareness programs can also help employees understand their role in upholding organisational values and encourage them to speak up about concerns without fear of reprisal.

   Role of Synthetic Identity Fraud: Synthetic identity fraud can undermine efforts to build a culture of accountability and transparency within public bodies. By promoting a culture of vigilance and integrity, public bodies can empower employees to speak up about suspicious activities and contribute to the organisation's overall accountability and effectiveness.

8. Question: The Nolan Principles of honesty and openness require public bodies to be transparent about how they operate and the decisions they make on behalf of the public. Are you aware of any examples of organisations exhibiting good practice in this area?

   While there may be examples of organisations exhibiting good practice in transparency and openness, it's essential to acknowledge the pervasive threat posed by synthetic identity fraud and clone company fraud within public bodies. These fraudulent practices, potentially conducted by officials in the executive, Parliament, legal system, and police, undermine the very principles of honesty and openness.

   Role of Synthetic Identity Fraud: Synthetic identity fraud and clone company fraud enable individuals to conceal their true identities and interests, facilitating covert operations within public bodies. Such fraudulent activities compromise transparency and openness by allowing officials to manipulate decision-making processes without public scrutiny. The lack of awareness and proactive measures to address these fraudulent practices further exacerbates the challenge of maintaining transparency and openness within public institutions.

In conclusion, while examples of good practice in transparency and openness may exist, the pervasive threat of synthetic identity fraud and clone company fraud highlights the need for enhanced vigilance and proactive measures to safeguard the integrity of public bodies. Addressing these fraudulent practices is paramount to upholding the Nolan Principles and restoring public trust in governance institutions.

Yours sincerely,

Alison Wright.

Annex

Accountability within public bodies - acting on early warning signs Open consultation

The Committee on Standards in Public Life is carrying out a review into accountability in public life. The terms of reference for the review are available on our website (2024-03-21 Accountability within public bodies - open consultation final (publishing.service.gov.uk)).

The Seven Principles of Public Life Accountability Holders of public office are accountable to the public for their decisions and actions and must submit themselves to the scrutiny necessary to ensure this. In recent years we have seen several examples of major failures within public institutions, where it seems that opportunities were missed to address issues before they escalated. We are asking, when things go wrong in public bodies, why does it take so long for problems to be recognised and the leadership to respond appropriately and, most importantly, what needs to change?

Our review will identify where public bodies should focus their attention to maximise the likelihood of problems being uncovered and addressed before issues escalate and lives are damaged. We have chosen to look especially at accountability within public bodies because we want to help organisations to get better at holding themselves to account for the effective delivery of public services. As part of this review, the Committee is holding an open consultation.

The consultation will run from 09:00 on Monday 25 March 2024 to 17:00 on Friday 14 June 2024. Replies to this consultation should be emailed to public@public-standards.gov.uk Further details on how to respond are set out below.

Consultation questions

The Committee invites responses to the following consultation questions. Submissions need not respond to every question.

1. What are the main reasons why public bodies might fail to act quickly and decisively at the first sign of a problem within the organisation?

2. Can you describe any examples of practical measures used by public bodies to ensure that employees are guided by the Nolan Principles at critical decision points, including but not limited to decision-making models, codes of conduct, guidance and training?

3. Public bodies are required to manage a variety of risks to the successful delivery of public services. What role can data play in understanding these risks?

4. Are you aware of any examples of organisations that have good processes in place for identifying patterns and spotting problems that need addressing?

5. What practices and behaviours can the boards of public bodies adopt to ensure that they have proper oversight of their organisation?

6. How should public sector bodies conduct their annual board effectiveness evaluations? What does best practice look like?

7. Accountability in public life can sometimes be associated with blame. How can public bodies build a culture where people feel safe to speak up about concerns, allowing problems to be addressed early and lessons to be learned?

8. The Nolan Principles of honesty and openness require public bodies to be transparent about how they operate and the decisions they make on behalf of the public. Are you aware of any examples of organisations exhibiting good practice in this area?

How to make a submission

Anyone with an interest may make a submission. The Committee particularly welcomes submissions from public bodies.

Submissions should be emailed to public@public-standards.gov.uk.

Submissions must: ● State clearly who the submission is from, i.e. whether from your or sent on behalf of an organisation. ● Include a brief introduction about you/ your organisation and your reason for submitting evidence. ● Be in word or another editable format. Please do not send uneditable formats like PDF. ● Have numbered paragraphs. ● Comprise a single document. If there are any annexes or appendices, these should be included in the same document. ● Be concise – we recommend no more than 2,000 words in length. ● Contain a contact email address.

The Committee may choose not to accept a submission as evidence, or not to publish a submission even if it is accepted as evidence. This may occur where a submission is very long or contains material which is inappropriate. Submissions will be published online with any contact information removed. The Committee will publish anonymised submissions (where the name of the respondent and any references to named individuals are removed) where a respondent makes a reasonable request to do so. Submissions sent to the Committee after the deadline of 17:00 on 14 June 2024 may not be considered. If you have any questions, please contact the Committee’s Secretariat by email (public@public-standards.gov.uk). If you have any questions you would prefer to discuss by telephone, please include your contact number in the email.