Cameron's foreign aid reforms could increase fraud risk - watchdog

Investigations into fraud involving foreign aid quadrupled in five years at the Department for International Development (DfID), a spending watchdog has found.

Reforms introduced by David Cameron to plough billions more into overseas support and change the way it is targeted could increase the risk of wrongdoing, according to the National Audit Office.

It warned that it was "particularly challenging" to detect fraud in more than half of DfID's spending because the money was routed through other international organisations such as the United Nations or World Bank.

Financial crimes in UN organisations are believed to be under-reported and the problem could be "significant and endemic", the NAO's report said.

Nearly 40% of DfID's fraud cases between 2003 and 2016 involved non-governmental organisations (NGOs) while governments accounted for 6.5% and radical groups 0.3%, according to the report.

Under Mr Cameron, the Government committed to spending 0.7% of national income on international aid, which came to around £12 billion last year.

As part of the 2015 Strategic Defence and Security Review (SDSR), DfID was ordered to spend at least half of its cash in "fragile states and regions" until 2020.

The reforms could increase the risk of fraud in DfID's budget, the NAO warned.

Around 80% of the aid budget in 2015, £9.7 billion, was spent by DfID.

The department has seen its budget rise by more than a quarter since 2011, when it spent £7.7 billion.

The watchdog found that DfID's fraud caseload quadrupled between 2010/11 and 2015/16 to 429.

Most of the increase related to "lower priority" allegations while the most serious cases remained steady at between 20 and 25 incidents a year.

The largest number of the top priority investigations involved allegations in Afghanistan, Somalia, Syria and the Democratic Republic of Congo.

But the report found the number of cases in the current financial year had already hit 475 by the end of December, 11% more than the total for 2015/16, and the most serious cases hit 26.

Fraud losses in 2015/16 amounted to £3.2 million, just 0.03% of the department's budget, the report said.

Since 2003, DfID has recovered two thirds of its fraud losses, it added.

The increase in the number of allegations being dealt with by DfID is going up as a result of its work to increase awareness of fraud, the NAO said.

But the department has "significantly" reduced the way it publicly reports fraud in its annual report and accounts.

The Foreign Office has also seen a "significant increase" in its fraud caseload, with 50 allegations last year, twice as many as 2011.

Around three quarters of the cases involved staff making claims for travel and subsistence or procurement.

It has taken five cases to court in the last seven years, with two leading to convictions and one dropped as a result of rising costs.

International Development Secretary Priti Patel said: "The UK operates in the most fragile countries because these are the places where the poorest are dying from starvation, drought and disease; these are the places where conflict and economic failure drive mass migration; and these are the countries where it is in the UK's direct national interest to keep them stable and secure.

"In the last three years DfID has overhauled its approach to fraud, meaning our robust systems are better at preventing and detecting fraud, and better at getting taxpayers' money back.

"We expect all international agencies to have the same zero tolerance approach to fraud that we have if they are to receive taxpayers' money.

"It is time for the global aid community to be honest about the challenges it faces to increase the transparency and accountability of the international aid system."