According to the GIAA investigation report, a number of senior council officers appear to have conspired together to dishonestly mislead the EU about how this large grant was spent, and rather than telling the EU that the grant had not been used for the purposes it was intended and offering to return the money, these senior council officers instead decided to keep the cash in the hope that its misappropriation would not be discovered by EU Auditors.
The GIAA, as you would expect, were less than impressed by the actions of these senior officers. They said that their investigations had unearthed “sufficient evidence of intent to defraud” and they recommended that their findings should be reported to the Police “as a potential fraud case”. I totally agree and hope that those who were involved are dealt by the courts as quickly and as sternly as possible.
But this is not just a matter for the police. Thanet District Council also has a responsibility to ensure that its staff and councillors behave in an honest and lawful manner and don’t become involved in fraud and corruption. And on paper, at least, this appears to the case. First, there is TDC’s Officer Code of Conduct which, amongst other things, requires that
· Employees must ensure that they use public funds entrusted to them in a responsibleand lawful manner.
· Employees must report to the appropriate manager any impropriety or breach ofprocedure
Then there are the Council’s financial procedure rules which say that
· All Members and officers have a general responsibility for taking reasonable action toprovide for the security of the assets under their control, and for ensuring that the use
of these resources is legal.
TDC also has an anti-fraud and corruption policy which says that
Thanet District Council takes its responsibilities for protecting public money very seriously. It recognises that the public has the right to expect that the Council’s Members, Senior Management and employees shall:
· At all times fully comply with all the legislation to which they are subject;· Conduct business in a totally honest and ethical manner;
· Take all appropriate actions where fraud and corruption is suspected.
Finally there is a whistle-blower policy which says-Thanet District Council is committed to the highest possible standards of propriety and accountability in the conduct of its activities for the community. This Code is intended to help employees who have serious concerns over any potential wrong‑doing within the Council involving matters such as where:
· a criminal offence (for example, fraud, corruption or theft) has been/is likely to be committed
· a miscarriage of justice has occurred or is likely to occur· public funds are being used in an unauthorised manner
In addition to Thanet Council’s robust anti-fraud policies it’s interesting to note that at least one of the officers involved in the alleged fraud was a senior finance manager. This is the person who according to the GIAA investigation wrote a report about the EU grant entitled “Request for carry forward of ERDF funding dated 24 April 2008”. According to the GIAA this report “instead of recommending repayment of the funds weighed up the likelihood of the project being audited and the Council being found out” . The author of the report was (and probably still is) a member of the Chartered Institute of Public Finance and Accountancy (CIPFA). CIPFA’s Standards of Professional Practice which apply to all its members say thatShould members receive, or uncover, evidence of the possibility of fraud or corruption, they should promptly report the matter to the appropriate person identified in their organisations’ established reporting procedures.
So despite working for an organisation which had in place a broad range of robust anti-fraud policies and procedures, and despite one of the alleged fraud perpetrators being a member of a professional accountancy organisation which encouraged its members to report fraud and corruption, this was not enough to prevent £165,000 being dishonestly used for purposes it was never intended for. Why?Well one of the things which surprises me about this case is that those involved were at the top of the TDC “food chain”. They had years of managerial experience and were fully aware of TDCs policies and procedures and professional ethical codes relating to financial management. To deliberately flout these rules was a very risky thing to do which could have had disastrous, career ending, consequences for all of them.
I can only assume that to take such risks those involved must have been extremely confident that they could get away with it. Getting away with it means that they had calculated, as the GIAA report confirms, that there was little chance of their dishonestly being detected via external audit. More worryingly, it also means, in my view, that the conspirators may have had, or thought they had, the support of their bosses and possibly also TDCs political leaderships (at that time Tory) in acting dishonestly. Finally, taking ethical risks and behaving dishonestly has also been attributed in many studies of corruption and fraud, to be the result of pressure and bullying from above. Is it possible that in Thanet there was, at this time, a culture of aggressive, bullying management by senior officers and politicians? Some people working for the Council at the time have told me that there was. So its clear that a variety of influences were at work which, either singly or combination, persuaded otherwise responsible senior council officers, to allegedly defraud the EU.But this is not an isolated example. The £165,000 misappropriation of this EU grant is not the only case of dodgy grant management at TDC. In 2011 £603,000 worth of EU grants had to be paid back to Brussels for mismanagement/ misuse. In 2014 £70,000 worth of EU grant had to paid back to Brussels for the same reason. It’s likely that a further £700,000 may have to be paid back to the EU for failures of the Kent innovation Centres Project and of course more recently TDC misused its Dreamland Heritage Lottery Grant to the tune of £567,000!
Clearly there is an ongoing saga of massive incompetence mismanagement and fraudulent abuse of external grants worth at least at least £2 million at TDC which despite, promise after promise of doing things better, never seems to happen. I think there is clear case for a major enquiry here.