Fraud and corruption in the public sector have two elements - the physical act (actus reus) and the state of mind (mens rea). Corrupt practices are actions intended to improperly influence others, while fraudulent practices knowingly mislead to obtain benefits. In the UK, detected fraud is estimated at £27.6-72.9 million annually out of £306 billion in expenditures, much lower than estimates of 3-5% in other countries. Typical fraud schemes include theft, fake invoices, false reimbursements, ghost employees, ineligible benefits, and bribes. Fraudsters may exhibit extravagant lifestyles, anomalous IT activity, and personality traits like resentment and addiction issues.

1. Fraud and Corruption
in the Public Sector
Dr Alberto Asquer

2. Like every crime, fraud and corruption have two
elements:
• The actus reus (the physical act) – this is an act
or omission which results in a permanent
intention to deprive.
• The mens rea (blameworthy state of mind) –
the fraudsters know what they are doing.
Fraud and corruption in the public sector

3. “Corrupt Practice” means the offering, giving,
receiving or soliciting, directly or indirectly, of
anything of value to influence improperly the
actions of another party.
“Fraudulent Practice” means any action or
omission, including misrepresentation, that
knowingly or recklessly misleads, or attempts to
mislead, a party to obtain a financial benefit or to
avoid an obligation.
https://www.ebrd.com/downloads/integrity/FCguidelines.pdf
Fraud and corruption in the public sector

4. In the UK
https://www.nao.org.uk/wp-content/uploads/2016/02/Fraud-landscape-review.pdf

6. Examples
Fraud and corruption in the public sector

7. Examples
Fraud and corruption in the public sector

8. “Detected fraud across government was equivalent to
only 0.02% of total expenditure (excluding tax credit
and benefit fraud). In 2014-15, detected fraud across
government ranged from £27.6 million to £72.9
million, depending on the source, from a total
expenditure of £306 billion.”

9. “There is a large disparity between the level of fraud and
error that is reported and the level that other available
estimates suggest might be occurring which needs
explaining. The UK figure of 0.02% of expenditure
compares with estimates of 3% to 5% in the European
Union and United States.
While these comparisons need to be treated with caution,
they suggest that there could be significant fraud and
error that is unreported or undetected and losses that are
not being adequately addressed.”
Fraud and corruption in the public sector

10. Some typical acts or schemes:
• Theft of wealth (cash, stocks, asset, etc.)
• Payment of fake invoices
• Payment of false claims for reimbursements
• Payment of salaries to ghost employees
• Payment of subsidies to ineligible people
• Bribes for winning procurement contracts
• Sale of assets at discounted price
Fraud and corruption in the public sector

11. Typical traces of fraudsters:
• Theft of passwords
• Anomalous email traffic
• Anomalous failed logins or keypad entries
• CCTV trails and telephone records
• Display of an extravagant lifestyle that is
abnormal with respect to the fraudster’s
earnings
Fraud and corruption in the public sector

12. Some traits of fraudsters:
• They may over-estimate their contribution to
the organisation
• They may be resentful of others, thinking how
clever but neglected they are
• They may have sexual or gambling problems
and be alcohol- or drug- dependent
But traits are also culture and context dependent
Fraud and corruption in the public sector

13. The end