Local authority's catalogue of 'fraud and malpractice'

IT IS eight years since Lambeth council published its accounts on time, according to yesterday's report by the District Auditor, which added that without a clear understanding of its financial position the council 'is falling lamentably short of minimum acceptable standards, but matters have been compounded by an unacceptable incidence of fraud and malpractice'.

'One officer who has been convicted and given a suspended sentence by the court still works for the council, as do three others who have fraudulently claimed benefits totalling several thousand pounds,' the report said.

The auditor's list of Lambeth's shortcomings included:

Totally indequate financial controls and 'profit-sharing' arrangements under which direct labour organisation received substantial additional sums;

Unlawful expenditure of pounds 20.2m on highways maintenance. Work was carried out by the council's own Direct Labour Organisation without being subject to competition, and some of it was not authorised by members, or they were misled;

In 1986, a DLO bid for a contract was changed after tenders had been accepted, in order to make it the lowest bid. The DLO subsequently sub-contracted the work to the company which had actually put in the lowest bid. In 1988, a successful contractor withdrew after receiving telephone 'threats';

In July 1992, the council subjected highways maintenance work to proper competition for the first time. On average, the difference between prices tendered by the DLO and those of successful tenderers was 29 per cent. Had competition been in place before, Lambeth might have saved pounds 5m;

Last year the DLO was awarded the street lighting maintenance contract. A report on performance showed that in the first six months only 66 per cent of work invoiced as completed was finished within the five-day specified time limit; 12 per cent of the work took more than 30 days to complete;

At December 1992, money owed in terms of rents, community charge, rates and other debts exceeded pounds 173m, compared with an annual revenue budget of pounds 318m. The council has set aside pounds 103m to cover losses as 'it is inevitable that large sums will prove to be irrecoverable'.

The auditor found it 'astonishing' that a council claiming to be seriously under-funded had done little to claim government grants, mainly because its submissions were not made on time. Little effort had been made to recover more than pounds 1m in salary overpayments to teachers after they transferred from the Inner London Education Authority. In 1990, one teacher was placed on both the weekly and monthly payroll. By the time it was discovered there had been an overpayment of nearly pounds 10,000. At the time of the report 'only pounds 30 had been repaid'.