Data matching shows £7.2m of likely council procurement fraud over four years to family or friends

Recently while the sun was shining, and the birds were singing – well not on Princes Parade – Folkestone & Hythe District Council took the decision to suspend Anthony Wallner (below left) for financial irregularities and Alastair Clifford (below right) due to contract irregularities.

This set The Shepway Vox Team thinking.

We, as a team, decided to instruct an independent data matching company to look at procurement fraud, the awarding of council contracts and financial irregularities. They on our behalf have discovered council contracts to the value of £7.2m, have more likely than not been awarded to council officers family or friends. This is more commonly known as procurement fraud, which covers areas such as:

  • Price fixing – Bid rigging – Manipulation of procurement procedures – Bribery for awarding a contract – Conflict of interest – Overcharging – Duplicate payments.

We openly declare we had no friends or family members working for the company employed to undertake the data matching exercise on our behalf.

Anthony Wallner was suspended for financial irregularities of paying nearly £2m in excess of the contract value of £484,056.

Alastair was suspended due to contract irregularities – ie he’s brother won contracts, and it would appear there was no declaration made by him, according to senior council whistleblowers.

It is important to understand that the likelihood of the £7.2m worth of contracts being awarded to family of friends by council officers is “material“.

There are two types of materiality in a council’s accounts

1 – Financial Materiality – Materiality is the threshold above which missing or incorrect information in financial statements is considered to have an impact on the decision making of users of those statements.

An example – A lender considering lending money to the council would look at the history of usable reserves and cash balances to ensure that it’s money would be returned.

2 – Materiality by nature – due to the nature of these items or because they attract public interest.

An example – An officer giving work to family or friends would attract public interest.

The contracts and the payments of these contracts by these two council officers was and is material by nature.

All Councillors must by law, under the Localism Act and other legislation, must declare all their register of interests, and the vast majority abide by the law, with few exceptions.

However, in Part 8 of Folkestone & Hythe District Council constitution which covers the council officers rules and procedures including delegation to officers it states at 13.6:

The Council has established a voluntary register of interests of staff, which is maintained by the monitoring officer. Those members of staff, including chief officers, whose responsibilities are such that they may be in a position to influence the selection of contractors or consultants, the granting of planning and other consents or the conduct of negotiations affecting land and property and those officers with responsibilities associated with confidential information concerning development are asked to complete returns for inclusion in the register. The list of officers is to be reviewed annually.

Officers are advised that entries should include the interests of a spouse/partner where known to accord with the law relating to the declaration of pecuniary interests.

It goes onto say:

All officers involved in the award or management of contracts shall declare on the standard form, or as set out below, any association or friendship with any contractor on any part of the Council’s Select List of Contractors. This shall be recorded in the Register. The declarations should be made, using the standard form, to:

  • The appropriate Assistant Director or Chief Service Officer;

  • The appropriate chief officer if the declaration is made by an Assistant Director or Chief Service Officer; or

  • The Head of Paid Service if the declaration is made by the chief officer.

All declarations are to be forwarded to the monitoring officer for retention centrally.

Mr Wallner and Mr Clifford were both in a position whereby they could influence the selection of contractors. They were in a position able to authorise payments, without payments being monitored, so the evidence suggests.

It’s clear a voluntary register of interests is not sufficient. We say that because, the independent company who undertook extensive data matching exercise, on our behalf, found significant red flags on a 109 occasions.

To date they’ve found 39 data matches, where on the balance of probabilities contracts have been awarded to companies where council officers had family or friends in them.  The value of these contacts total £3.1m over four years They also found 70 possible data matches which tally to a further £4.1m, giving a potential total of £7.2m lost to procurement fraud in the last four years alone, according to their data matching exercise. However, this would not be the sum total of likely fraud within our council.

This figure chimes with the best available data from Annual Fraud Indicator 2017, undertaken by Jim Gee, Partner and Head of Forensic Services & Crowe, a national audit, tax, advisory and risk firm, which estimated the rate of procurement fraud at 4.76% on average. Applying that percentage to our council’s figures gives an average of £1.8m lost to procurement fraud each year, in our council.

This figure is almost the full annual complement of procurement fraud for a council the size of Folkestone & Hythe. This is why we call on all Cllrs and the council to make council officer register of interests mandatory, rather than voluntary.

At paragraph 5.8 of Part 8 of the constitution, it states:

All relationships of a business or private nature with external contractors, or potential contractors, should be made known (in accordance with the Council’s Gifts and Hospitality rules, set out in paragraph 13). Orders and contracts must be awarded on merit, by fair competition against other tenders, and no special favour should be shown to businesses run by, for example, friends, partners or relatives in the tendering process. No part of the local community should be discriminated against.

“Should” is used to denote it is recommended officers make connections to contractors known. It is time to replace should with must,  as this is used to talk about an obligation or a necessity. It is used when people are compelled to do something. And officers must be compelled to to disclose any connection with any contractor, regardless how tenuous it might be.

It was the Shepway Vox Team who highlighted the close relationship between Conservative councillors and Leo Griggs – who donated £1,000 to the local Tories – and the awarding of numerous contracts to him.

What must be remembered as well, is there is more council procurement fraud in the UK than there is benefit fraud, according to publicly available data. So the question is why do we focus on benefit fraud more than council procurement fraud?

As was previously stated to us by a senior Kent Police Officer

If you want to be a criminal go into local government

Finally, it’s time for the Audit & Governance Committee, and Full Council to change the constitution, and request the council undertake their own extensive data matching exercise. Until such time as they do, the procurement of contracts by our council will continue to be tainted by the spectre of impropriety and irregularity.

NB: we stress that many officers in Folkestone & Hythe District Council are decent and honest people. In any barrel there are always rotten apples.

The Shepway Vox Team

Journalism for the People NOT the Powerful


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4 Comments on Data matching shows £7.2m of likely council procurement fraud over four years to family or friends

  1. Remember Robert Morley’s character in Cromwell, when accused of passing laws that favoured themselves, replied along the lines of if you can’t do that, what is the point. Very much our councillors attitude.

  2. Got the money out // July 10, 2022 at 09:09 // Reply

    Some of us – yes there was more than me – got in, got the money out, got out and didn’t get caught. haha

    • There are many cases where ex-employees have been sued/convicted for fraud – I wouldn’t be so comfortable if what the data matching company is saying is true.

  3. Ex Employee // July 10, 2022 at 09:40 // Reply

    I remember in my time Andy Jarrett got caught and sacked 2006/07. Controls then were really lax. He wasn’t the only one who was up to no good, there were others but they managed to get away with it as it only came to light after they’d long left.

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