FRAUD PREVENTION & DETECTION POLICY
The corporate policy for fraud prevention & detection is established to facilitate the development of controls which will aid in the detection and prevention of fraud against SEVERUS. It is our intent to promote consistent organisational behaviour by providing guidelines and assigning responsibility for the development of controls and conduct of investigations. In order to oversee the best practices of Corporate Governance, this Fraud Prevention & Detection Policy has been framed.
2. POLICY OBJECTIVES
The “Fraud Prevention and Detection Policy” has been framed to provide a system for detection and prevention of fraud, reporting of any fraud that is detected or suspected and fair dealing of matters pertaining to fraud. The policy will ensure and provide for the following:
- 2.1. To ensure that management is aware of its responsibilities for detection and prevention of fraud and for establishing procedures for preventing fraud and/or detecting fraud when it occurs.
- 2.2. To provide a clear guidance to management including all employees and others dealing with SEVERUS, forbidding them from involvement in any fraudulent activity and the action to be taken by them where they suspect any fraudulent activity.
- 2.3. To conduct investigations into fraudulent activities.
- 2.4. To provide assurances that any and all suspected fraudulent activity will be fully investigated (subject to verification of ID of the compliant). Genuine informant to be protected for any harassment that may be inflected on them.
- 2.5. In case any informant is providing wrong information to harass and create unwarranted and undue hardship for any employee, such employee needs to be protected to boost the morale and appropriate disciplinary action to be initiated against the informant for providing wrong information as per the applicable conduct rules and in case of outsiders (other than employees) appropriate administrative or legal action is to be taken.
3. SCOPE OF POLICY
The policy applies to any fraud, or suspected fraud involving SEVERUS employees (all employees full time, including the management or employees appointed on adhoc/temporary/contract basis) as well as representatives of vendors, suppliers, contractors, consultants, service providers or any outside agency/ies doing any type of business with SEVERUS directly or indirectly involved in unlawful / illegal or beyond the approved principles and procedures of the Company.
4. DEFINITION OF FRAUD
No precise legal definition of fraud exists; many of the offences referred to as fraud are covered by:
- – Prevention of Organised Crime Act (No. 121 of 1998) (POCA).
- – Financial Intelligence Centre Act (No. 38 of 2001) (FICA).
- – Public Finance Management Act (No. 1 of 1999).
- – Protected Disclosures Act (No. 26 of 2000) (Whistleblower Act).
- – Companies Act (No. 71 of 2008).
- – Prevention and Combating of Corrupt Activities Act (No. 12 of 2004) (PRECCA).
- – Local Government: Municipal Finance Management Act (No. 53 of 2003).
- – Banks Act (No. 94 of 1990).
- – Inspection of Financial Institutions Act (No. 80 of 1998).
- – Mutual Banks Act (No. 124 of 1993).
- – Co-operative Banks Act (No. 40 of 2007).
The term is used to describe such acts as theft, deception, bribery, forgery, corruption, false accounting and conspiracy to commit these offences. For practical purposes fraud may be defined as the use of deception with the intention of obtaining an advantage, avoiding an obligation or causing loss to another party.
5. ACTIONS CONSTITUTING FRAUD
While fraudulent activity could have a very wide range of coverage, the following are some of the act(s) which constitute fraud. The list given below is only illustrative and not exhaustive:-
- 5.1. Forgery or alteration of any document or account belonging to the Company
- 5.2. Forgery or alteration of cheque, proof of payment or any other financial instrument.
- 5.3. Misappropriation of funds, securities, supplies or others assets by fraudulent means.
- 5.4. Falsifying any records, which may include but is not limited to, pay-rolls, removing the documents from files and /or replacing it by a fraudulent note.
- 5.5. Wilful suppression of facts/deception in matters of appointment, placements, submission of reports, tender committee recommendations etc. as a result of which a wrongful gain(s) is made to one and wrongful loss(s) is caused to the others.
- 5.6. Submitting false/forged documents by the tenderers/ vendors/ suppliers/ consultants/ while submitting their offer for subcontracting.
- 5.7. Utilising Company funds for personal purposes.
- 5.8. Authorising or receiving payments for goods not supplied or services not rendered.
- 5.9. Destruction, disposition, removal of records or any other assets of SEVERUS with an ulterior motive to manipulate and misrepresent the facts so as to create suspicion/ suppression/ cheating as a result of which objective assessment/decision would not be arrived at.
- 5.10. Any other act that falls under the gamut of fraudulent activity.
- 5.11. Coercion in doing any act beyond the principle, procedures, practices of the company leading to disruption in normal activities having direct or indirect bearing in business activities.
6. REPORTING OF FRAUD
- 6.1. Any employee(full time, or employees appointed on adhoc/ temporary/ contract basis), representative of vendors, suppliers, contractors, consultants, service providers or any other agency(ies) doing any type of business with SEVERUS as soon as he / she comes to know of any fraud or suspected fraud or any other fraudulent activity must report such incident(s). Such reporting shall be made to the designated Compliance Officer.
- 6.2. The reporting of the fraud normally should be in writing. In case the reporter is not willing to furnish a written statement of fraud but is in a position to give sequential and specific transaction of fraud/suspected fraud, then the Compliance Officer should record such details in writing as narrated by the reporter and also maintain the details about the identity of the official /employee / other person reporting such incident.
- 6.3. Reports can be made in confidence and the person to whom the fraud or suspected fraud has been reported must maintain the confidentiality with respect to the reporter and such matter should under no circumstances be discussed with any unauthorized person.
- 6.4. All reports of fraud or suspected fraud shall be handled with utmost speed and shall be coordinated by the Compliance Officer to be nominated, failing which it may lose significance and cause loss and damage to the company.
- 6.5. The Compliance Officer receiving input about any suspected fraud shall ensure that all relevant records documents and other evidence is being immediately taken into custody and being protected from being tampered with, destroyed or removed by suspected offenders of fraud or by any other official under his influence.
7. BASELESS / MALICIOUS ALLEGATIONS
- 7.1. If it appears to the Compliance Officer that a complaint has no basis or it is not a matter to be pursued under this Policy, it may be dismissed at that stage and the decision documented.
- 7.2. Malicious allegation by the Complainant/reporter may result in disciplinary action against him/her.
8. INVESTIGATION PROCEDURE
- 8.1. The Compliance Officer will be nominated by the Directors from time to time.
- 8.2. The Compliance Officer shall refer the details of the fraud/suspected fraud to the Accounting Officer for further appropriate investigation and needful action.
- 8.3. This input would be in addition to the intelligence, information and investigation of cases of fraud being investigated by the Legal Department of their own as part of their day to day functioning.
- 8.4. After completion of the investigation, due & appropriate action, which could include administrative action, disciplinary action, civil or criminal action, banning or blacklisting of the vendors/contractors/suppliers/or closure of the matter if it is proved that fraud is not committed etc. depending upon the outcome of the investigation shall be undertaken.
9. RESPONSIBILITY FOR FRAUD PREVENTION
- 9.1. Every employee (full time, ad-hoc, temporary, contract, trainees under probation), representative of vendors, suppliers, contractors, consultants, service providers or any other agency(ies) doing any type of business with the Company, is expected and shall be responsible to ensure that there is no fraudulent act being committed in their areas of responsibility/control. As soon as it is learnt that a fraud or suspected fraud has taken or is likely to take place they should immediately apprise the same to the concerned authority as per the procedure.
- 9.2. All managers shall share the responsibility of prevention and detection of fraud and for implementing the Fraud Detection and Prevention Policy of the Company. It is the responsibility of all controlling officers to ensure that there are mechanisms in place within their area of control to:
- 9.2.1. Familiarise each employee with the types of improprieties that might occur in their area.
- 9.2.2. Educate employees about fraud prevention and detection.
- 9.2.3. Create a culture whereby employees are encouraged to report any fraud or suspected fraud which comes to their knowledge, without any fear of victimisation.
- 9.2.4. Promote employee awareness of ethical principles subscribed to by the Company as per the prevailing policy.
- 9.3. Due amendments shall be made in the general conditions of contracts wherein all bidders/ service providers/ vendors/ consultants etc. shall be required that they would adhere to the Fraud Prevention and Detection Policy.
- 9.4. These conditions shall form part of documents both at the time of submission of bid and agreement of execution of contract.
10. ADMINISTRATION AND REVIEW OF THE POLICY
The board of directors shall be responsible for the administration, interpretation, application and revision of this policy.