Guidelines for handling irregularities

Introduction
SIU enters into running agreements (programme agreements) with various partners; The Ministry of Foreign Affairs, the Ministry of Education and Research, Norad, the EU and others on the administration of programmes focussing on various areas of the world and various target groups. Common elements in the agreements are financial support to institutional co-operation, and the development of capacity, skills, and expertise in the educational sector.

On occasions, questions, suspicions, or confirmation of irregularities arise in connection with the implementation of activities/projects that are supported under programme agreements administered by SIU. Such matters are normally put before SIU as the administrative body responsible for the implementation of the programme agreements. If such irregularities are identified in the contractual relationship between SIU and the institutional partner, SIU can cancel the agreement. This applies to such circumstances as lack of reporting, insufficient progress in activities/projects and so forth. A situation where irregular circumstances are linked to the misuse or embezzlement of funds provided by SIU will therefore clearly fall under the relevant article in the contractual agreement.

On the basis of the above, a common procedure to deal with misuse or embezzlement of funds awarded for all programme activities under SIU has been developed.

Irregular circumstances in connection with SIU’s agreements with recipient institutions are defined as follows:

1. Definition of irregular circumstances

1.1. An irregular circumstance is defined in these guidelines as an irregularity linked to financing awarded by SIU (funds provider) to a Norwegian institution (recipient party). An irregular circumstance arises as a result of an action/deed or the lack of this by a financial operator (recipient party). The action/deed or lack of this will have the potential to negatively affect the budget either by that revenues are reduced or lost or by a false entry in the accounts.

In cases where the actual circumstances indicate that the irregular circumstances has arisen as a result of a wilful act, the circumstance is defined as embezzlement.

1.2. Irregular circumstances as described above will also apply to situations where payments are, as an exception, made directly to the institution in the South, for example in connection with the allocation of funds for administrative expenses.

In the following, the definition of an irregular circumstance will be used to describe both the circumstances described above. An irregular circumstance will also cover, both situations where there is a suspicion of irregularities, and situations where irregularities have already been confirmed in the financial administration of funds awarded by SIU.

2. SIU’s role and responsibilities

2.1. SIU shall, when informed of the irregular circumstance, demand that the Norwegian institution carries out the necessary investigation. The demand shall be made in writing. The demand shall include a requirement for a written report to SIU within a given time limit. SIU shall inform the respective financing sources (The Ministry of Foreign Affairs, the Ministry of Education and Research, Norad, The EU and others) without delay of the irregular circumstance and inform the last-mentioned on an ongoing basis of developments in accordance with SIU’s internal procedures for handling irregular circumstances.

2.2. SIU can, dependent on the category of the circumstance in question, rule to temporarily freeze payments while awaiting the results of the investigation or while the investigation is being carried out (see below). Further, in cases where funds have been transferred to Norwegian institutions, SIU can also instruct the said institution to retain the transferred funds until further notice. SIU shall give such instructions in writing.

2.3. On the basis of the result of the investigation and the final report to SIU, SIU can take the following actions:

• If no evidence is found of an irregular circumstance, SIU shall inform the Norwegian institution and any co-operating partners in writing that SIU has received the institution’s report and that SIU deems the matter to be closed. If transfers of the grant funds have been temporarily frozen, the funds shall again be made available and payments resumed in the usual manner.
• If evidence is found of an irregular incident, SIU shall freeze further payments and decide on further action. SIU can decide to:
  • Impose certain terms and conditions for the continuation of the activity/project.
  • Cancel the agreement

Ad. 1) Dependent on the seriousness of the irregular incident and the number of persons involved, SIU can decide that the project can continue under premises imposed by SIU. One important premise will be that the institution presents a plan to be approved by SIU for the continuation of the activity/project. SIU can in such circumstances consult with the relevant Programme Board in matters that relate to the academic aspects of the project.

Ad. 2) SIU has the right to cancel the agreement due to the irregular circumstance without giving prior notice or compensation

Repayment of embezzled funds shall always be demanded regardless of which of the two alternatives described above is adopted by SIU.

3. Handling financial losses

3.1. Financial losses shall be covered by the institution where the irregular circumstance has taken place. If recovery of the said losses is unsuccessful, it is the source of the finance (The Ministry of Foreign Affairs, the Ministry of Education and Research, Norad, EU and others) that must carry the financial loss.

The financial loss cannot be written off by SIU without the explicit permission of the source of the funds.

4. The role and responsibilities of the institution

4.1. The institution referred to in the following is SIU’s contractual partner. Contracts entered into by SIU vary from activity to activity and project to project, but common to all projects is that funds from SIU are as a general rule paid out to a Norwegian contractual partner. In some programmes funds are transferred on to a contractual party abroad by the Norwegian institution.

Irregular circumstances shall be reported to SIU regardless of the size of the amount and presumed default, by the person or institution that discovers the circumstance. The mandatory obligation to report the incident coincides with the point in time the circumstance is discovered. The report shall include as many of the following points as possible:

• Name of the project, person(s)
• The Project ID Number and identification of other physical or legal persons involved
• The date and source of the initial indication of the irregular circumstance and if known the period of time the circumstance has existed
• A description of the irregular circumstance
• An estimate of the amounts involved

To the degree possible the report shall also describe:

• The measures introduced by the institution to follow up the case
• The plan and schedule for further investigations and the estimated date on which a new report will be available for presentation to SIU

Information concerning the irregular circumstance to the co-operating partner or individual person(s) shall be brought forward by the Norwegian institution. Queries regarding the circumstance shall in the same way and in this phase of the process be addressed to and responded by the Norwegian institution.

II: Internal SIU procedures for handling irregular circumstances

1. Procedures when notification of irregular circumstances is received by SIU
In connection with notifications of irregular circumstances received by SIU, procedures can be divided into three categories:

• a) The first part will deal with the suspicion of an irregular circumstance
• b) The second part will deal with cases where the report from the institution concludes that no irregular circumstance has been identified
• c) The third part deals with when the report concludes that an irregular circumstance has been confirmed

Regarding a): Suspicion of an irregular circumstance
On receiving information concerning the suspicion that an irregular circumstance may exist, the case manager in charge shall immediately inform the Head of Unit who shall deal with the matter in accordance with the procedures described in the guidelines: Procedures for handling of irregularities in contracts between SIU and institutions that are awarded funds under programmes administered by SIU.

The Head of Unit shall inform SIU’s Director and Head of Information of the irregular circumstances in a short memo with a copy of SIU’s letter concerning the case sent to the Norwegian institution. The Head of Unit shall keep the Director up to date on developments in the case.

The Director shall inform the Chairman of the Board of Directors and the financing source (The Ministry of Foreign Affairs, the Ministry of Education and Research, Norad, EU and others), and shall assess whether the Auditor General shall be informed at this point in time.

Regarding b): No irregular circumstance identified
If the report from the institution concludes that there is no irregular circumstance, the Head of Unit shall write to the Norwegian institution and any co-operating institution and confirm receipt of the final report and inform the addressees that SIU deems the case to be closed. SIU’s Director, Head of Information, and the financing source shall be informed through a copy of the letter sent to the Norwegian institution. The case shall be put before the Board of Directors of SIU for information. If the Auditor General has been contacted under item a), his office shall also receive a copy of the final report from the institution.

Regarding c): Irregular circumstances confirmed
If the report concludes that irregular circumstance has been confirmed, SIU’s Director shall inform the financing source, SIU’s Board of Directors and the Auditor General of the matter by forwarding a copy of the report and SIU’s decision in the case. A copy of this notification shall be sent to the Norwegian institution and any co-operating institution.

2. The role of the Programme Board
The Head of Unit shall prepare, after assessment by SIU, the case to the Programme Board responsible for the activity/project. The Programme Board shall in such cases assess only the academic aspects of the project in the light of the irregular circumstance and shall issue a recommendation on the future of the project. The recommendation shall be addressed to SIU’s Director.

3. Queries from the media
All queries from the media shall be dealt with by SIU’s Director or Head of Information.

III. Memorandum by the Norwegian Centre for International Cooperation in Higher Education: Counteraction corruption
Memorandum by the Norwegian Centre for International Cooperation in Higher Education (SIU): Counteraction corruption is developed as a reference for institutions taking part in programmes administered by SIU.

The aim of the memorandum is to increase awareness and knowledge on how to prevent corruption in all SIU supported co-operation and individual projects.

Corruption practices are never to be encouraged in SIU programmes – whether through accepting personal services or favours, or offering these to suppliers, civil servants or other. Means allocated by SIU are to be correctly employed and misuse is not tolerated.

Corruption has to do with unethical behaviour. According to the World Bank definition, “Corruption is the abuse of public power for private benefit”.

Corruption materialises in different forms:

• Bribery - means that a person, organisation or institution improperly provide something (goods or services) against some form of improper remuneration. Bribery involves (at least) two parties.
• Embezzlement - is the theft of resources for own use. It may involve only one person.
• Fraud - is a criminal deception or the use of false representations to gain an unjust advantage. It covers both bribery and embezzlement.
• Extortion - is the act of obtaining something by force, threats or undue demands.
• Favouritism - is the unfair favouring of one person or a group with something at the expense of others.
• Nepotism - is favouritism shown to relatives in conferring offices or privileges.

In the event of suspicion or detected corruption, the matter, when detected, should be reported to the Norwegian university responsible for the implementation of the co-operation activities and to SIU by the detector. SIU’s guidelines, developed in order to handle irregularities, should be applied in any cases of corruption.

Good governance is a key factor in mitigating corruption. Good governance promotes accountability, transparency, participation and responsibility, in the society at large, in civil society organisation and development projects. The Norwegian Development Network (NDN) has in June 2005 developed a document entitled: “ Promising Practices Fighting Corruption by Putting Good Governance to Practice in a Civil Society Organisation Partnership Context.” This document includes best practices by a number of civil society organisations in Norway. Experiences drawn and best practices developed by these organisations are highly relevant and may serve as guide to institutions and staff taking part in programmes under SIU’s umbrella. Please refer to:

Download the full document “ Promising Practices Fighting Corruption by Putting Good Governance to Practice in a Civil Society Organisation Partnership Context” here.