Defence is watching the odometer after $585,000 fuel card fraud
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Defence is watching the odometer after $585,000 fuel card fraud

Canberra's Defence establishment is pledging to scrutinise odometer readings as it continues to deal with the embarrassment of having $585,000 racked up on a fuel card after it was left on a mini-bus.

It has also revealed the huge fraud was allowed to happen because the manager overseeing expenses on the card in question was on leave for three months and because of inadequate training for managers with oversight of expenses.

In June the Defence Department revealed the huge amount had been spent on behalf of taxpayers across a 12-month period before bureaucrats became concerned.

Defence had left the card on a mini-bus sold at auction and the card was used by a member of the public.

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Despite one person being prosecuted, top officials from Defence told a Senate Estimates hearing the department could not get the money back.

The fuel fraud led the department to reform its checks and balances.

In answers to questions on notice published in recent days, Defence outlined how it hoped to avoid situations in the future which included linking fuel cards to vehicle or equipment registration numbers.

A computerised system will provide reports to fleet managers red flagging instances where excessive fuel has been bought or when fuel cards have been used more than three times in a 24-hour period.

Also available will be incorrect odometer reading reports while Defence is also trialling a way it could red flag three incorrect odometer readings in a day.

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"Since April 2015, Defence's Fuel Services Branch is providing independent oversight of fuel card management and independently tests for compliance with the new fuel card arrangements," one answer to a question on notice said.

"The Defence electronic supply chain manual was updated on March 1, 2015, to cover the new fuel card management arrangements for green fleet vehicles."

Defence confirmed there had been a breakdown in the controls framework operating across fuel card management, administration, usage and acquittal areas in the department when the card was misused in 2011.

"As the transactions were not disputed at the time due to the absence on leave of the card supervisor for three months, the expenses were paid through the normal monthly electronic fuel card payment cycle," the answer said.

No PIN was coded for the two cards and the cards were not restricted to a particular fuel type or linked to a specific vehicle.

"At the time, the card management policy and system included appropriate audit processes to detect card misuse," the department said.

"However, card delegates did not receive any formal training on their roles and responsibilities, which led to incomplete awareness and adherence to the policy.

"These issues were identified by a Defence audit following the incident, and led to the reforms described.

"Defence has put in place a new fuel card management framework."

Tens of thousands of Defence's civilian staff and Australian Defence Force members have access to departmental credit cards but the ratio of fraud has been tiny.

In 2013-14 a total of $96,429 was defrauded from the department, or .02 per cent of the total amount Defence spent using credit cards.

Phillip Thomson is a Public Service Reporter at The Canberra Times.

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