The Ministry of Defence (MoD) recouped less than half the money it spent over the last four years on tackling criminal economic activity including procurement fraud, theft of assets such as laptops, weaponry and armour, and pay and expenses fraud. That’s according to a new National Audit Office (NAO) official report.
The auditors found a limited shared understanding of departmental objectives, a fragmented structure leading to inefficiencies in investigations, and a historic lack of trust between counter-fraud and police – although return on counter-fraud spending is improving. As the NAO reports, like all parts of government, the MoD is vulnerable to economic crime including fraud, bribery and corruption. It has in place a counter-fraud team and several defence police authorities who can tackle such threats.
Recent whistleblowing disclosures to the NAO indicate that allegations can take a long time to resolve or do not reach a satisfactory resolution and that overall, the MoD could manage fraud and economic crime far more effectively. According to the report, ‘the MoD also receives hundreds of allegations of suspected fraud or economic crime each year, but relatively few result in detection, disruption and recovery’. The MoD reports that its potential exposure to fraud can reach up to £1.5 billion a year, mostly from procurement. But, as it acknowledges, this is only a broad estimate that does not take into account the effectiveness of its controls.
UK Government expects that public bodies should save £3 for every £1 spent on counter-fraud work, yet between 2021-22 and 2024-25, the MoD reported a return of just 48p for every £1 spent. In 2024-25, however, it saved £1.34 for every £1 spent.
The auditors report that MoD also has limited assurance that cases assigned outside of its counter-fraud and police teams are handled appropriately and it does not always know and centrally record how its police services investigate fraud against the department.
The NAO has identified things preventing the MoD from strengthening its response to fraud and economic crime. These include not having a department-wide objective to minimise fraud losses and protect defence capability; a fragmented structure that makes it hard for the MoD’s counter-fraud and police teams to acquire the specialist resources to investigate cases effectively; and a historic lack of trust between counter-fraud and police teams, with unclear lines of reporting, duplication and missed investigative opportunities. Internal and external reviews of MoD policing have drawn similar conclusions.
Gareth Davies, head of the NAO, said: “The MoD could make significant savings if it better managed its losses from fraud and other forms of economic crime. Using this resource more effectively will require the MoD to reform the way it goes about tackling fraud and other economic crime, but would enable it to achieve real savings that could be used to enhance the country’s defence capability.”
Ministry objective
Among what the MoD told the auditors, the MoD plans to include an organisation-level shared objective on tackling fraud in its next Defence Counter Fraud Strategy; and police staff have been embedded to work in the Confidential Hotline team alongside Fraud Defence officials.
For the 47-page document, visit the Audit Office website.
