Question Period Note: Ensuring Accountability: Measures to Prevent Misuse and Corruption of Foreign Aid

Concerns over aid embezzlement and corruption have prompted stronger accountability and investigations to ensure aid is protected and reaches the intended beneficiaries.

• Prior to signing any financial instrument, Canada conducts rigorous due diligence. High-risk organization face stricter controls. Canada protects aid integrity through fraud prevention, financial oversight, regular monitoring and audits.
• Canada has zero tolerance for inaction to fraud, corruption or misuse of aid. All partners must implement robust anti-corruption policies and controls and report any suspected misuse of Canada funds immediately. These terms and conditions are mandatory in all funding agreements.
• Canada has a dedicated team managing fraud and corruption in international aid. This team advises on fraud prevention, raises awareness, investigates allegations and strengthens safeguards. Canada also conducts annual risk-based compliance audits.
• Canada takes a risk-informed approach to funding decisions, balancing country needs with fiduciary risks. No country is excluded, instead tailored safeguards are applied to mitigate the likelihood and impact of funds being misuse.
• Fraud or gross negligence constitutes a breach of the funding agreement, which allows Canada to reduce or terminate the project. When allegations arise, Canada works with partners to investigate, report findings and recover funds, while recommending risk mitigation measures.

Global Affairs Canada's takes a comprehensive and transparent approach to risk management in its international development assistance. This approach is grounded in the department's Integrated Risk Management Policy, aligned with Treasury Board Secretariat guidance and reflects international risk management standards.

Before any financial instrument is signed, the recipient organization undergoes a thorough due diligence assessment. This includes a review of governance structures, financial viability, historical performance, fraud and procurement management capacity, as well as project-specific risks. The results of this assessment determine the administrative requirements of the financial instrument. For higher-risk organizations, more stringent measures may be applied, limiting GAC's financial exposure and increasing reporting obligations to protect public funds and ensure accountability.

Global Affairs Canada has general terms and conditions applicable to international development assistance which include mandatory declarations and guarantees. These require signatory organizations to confirm that they have internal policies, rules, and controls in place to prevent corruption, fraud, and bribery. Organizations are also required to report immediately any allegations or confirmed cases of misuse of GAC funds. These contractual requirements are central to GAC's accountability framework and serve as the basis for enforcement and corrective measures when necessary.

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