Where’s our money?

In 2015 the Council made a payment of more than £626,000 to a local man, Sohab Jalil, by crediting his bank account. It should not have done so for Mr Jalil was not due any money from the Council. Once he became aware of this huge sum in in his account, Mr Jalil should have realised that an error had been made and he should have returned the money. He did not return it but instead started spending it.
This was all reported extensively in the Daily Express and the Daily Mirror and you can read all about it here:-
https://www.express.co.uk/news/uk/687693/man-mistakenly-given-hundreds-thousands-money-council-thought-reward-God-jailed

https://www.mirror.co.uk/news/uk-news/carer-accidentally-given-more-500000-8378779

Both of these reports conclude with the same press statement from Lorraine Norris, the Chief Executive:-

“Lorraine Norris, chief executive of Preston City Council, said £7,243 of the cash had yet to be repaid.

She said: “Clearly, there has been system error.
“We have therefore worked with our internal and external auditors, as well as our third party IT system suppliers, to carry out a detailed and forensic review of what went wrong.
“We have now put in place additional procedures and further system security measures, to ensure such payment errors cannot occur in the future.”

Remember the figure “£7,243” and the words external auditors and a detailed and forensic review of what went wrong”.

WIPCUT wanted to know more so it served a request on the Council under the Freedom of Information Act. The request asked seven questions, which the Council’s Governance Officer answered. They were:-
1. The exact amount of money erroneously paid to Sohab Jalil. Answer: £626,256.77
2. The exact amount of money recovered from Sohab Jalil and Barkat Ali Yousaf. Answer: £609,014.78
3. The identity of the legal suppliers and amount of fees paid to them in connection with the prosecution of Messrs Jalil and Yousaf. Answer: The Crown Prosecution handled the case and therefore there was no charge to the Council.
4. The identity of the legal suppliers and amount of fees paid to them in connection with the recovery of the erroneous payment. Answer: No external legal suppliers were appointed.
5. The identity of the external auditors and the amount of fees paid to them in connection with the erroneous payment. Answer: N/A – dealt with by Internal Audit
6. The identity of the external IT suppliers and the amount of fees paid to them in connection with the erroneous payment. Answer: Sapphire Technologies Ltd. – £2700
7. What disciplinary steps have been taken against any member of staff in connection with the erroneous payment. Answer: N/A

According to the answers to the questions:-
(i) the Council had lost £17,000, not £7,000, and
(ii) no external auditors were involved.

So a letter was sent to the Council raising two queries:
“The first is about the amount of money recovered. Lorraine Norris, the Chief Executive, stated in the press that £7,243 of the money had yet to be repaid. But the difference between the two figures you have stated is £17,241.99, which is £10,000 more than Lorraine Norris told the press. What is the explanation for the erroneos figure given to the press?
“Lorraine Norris also stated in the press that “We have therefore worked with our internal and external auditors, as well as our third party IT system suppliers, to carry out a detailed and forensic review of what went wrong”. But in reply to my question as to the identity of the external auditors and the amount of fees paid to them in connection with the erroneous payment, you have said that there were no external auditors appointed and that the erroneous payment was dealt with by “Internal Audit”. What is the explanation for the incorrect information given by Lorraine Norris?
“Also, I would like a copy of the “detailed and forensic review of what went wrong”. Please send it to me.”

The Council replied:
“With regards to the discrepancy between the two figures you quoted I can advise you that this was not an error. I can advise you that the sum of £10,000 was paid to Preston City Council as a goodwill gesture from the software supplier.
“The Council’s external auditors, Grant Thornton were made aware of the issue at the time of the investigation. No additional costs were incurred as any advice and work was covered by existing arrangements with Grant Thornton.
“Your request for a copy of the details of the review that was carried out is refused under Section 31 (1) (a) of the Freedom of Information Act 2000 which encompasses general law enforcement activities and specifically the prevention and detection of crime.
“It is not considered to be in the public interest to disclose this information.”

WIPCUT responded:
“Just so I correctly understand the payments, could you please confirm that you paid £2,700 to your external IT suppliers Sapphire Technologies Ltd for their work following the erroneous payment and that subsequently they paid £10,000 to Preston City Council as a goodwill gesture.
“By my calculation, the actual sum lost by the Council is £9,943, being the £7,243 that has not been recovered plus the £2,700 paid to Sapphire Technologies Ltd.
“In addition, there would have been the time spent by officers of the Council. How much time was spent by the Council’s officers in dealing with every aspect arising from the erroneous payment? I imagine that a record would have been kept, bearing in mind that any work arising from the erroneous payment would not have fallen within the usual work of the Council’s officers.
“So far as Grant Thornton were concerned, you write that they were “made aware of the issues at the time of the investigation”. But did they actually do any work? Your letter is not clear because you say that “No additional costs were incurred as any advice and work was covered by the existing arrangements with Grant Thornton” but were they involved in the “detailed and forensic view of what went wrong”?
“You refuse to send me a copy of the “detailed and forensic review of what went wrong” and you have referred me to section 31(a) of the Freedom of Information Act 2000. I cannot see that it applies. The crime has taken place, the offenders have been prosecuted and the criminal proceedings are at an end. No doubt whatever weakness or failure in the Council’s systems that was identified by the review have now been addressed so as to prevent a reoccurrence. So I cannot see that the disclosure of the report would, or would be likely to, prejudice the prevention or detection of crime.”

The Council replied:
“I can advise you that Sapphire Technologies did not pay the £10K. It was paid by Capita as a goodwill gesture. Capita supply our mainframe benefits computer system.
There are no records of the specific amount of time spent by officers in dealing with this matter.
I can confirm that Grant Thornton did not do any work in respect of this issue.
As I stated in my letter of 26 June, if you are unhappy about the decision not to disclose a copy of the review paperwork you may complain to:-
The Information Commissioner…”

Remember the words: “I can confirm that Grant Thornton did not do any work in respect of this issue.

WIPCUT did make a complaint to the Information Commissioner. It sent the Information Commissioner the correspondence and said to the Information Commissioner:-
“My correspondence with PCC is self-explanatory. It discloses that contrary to what Lorraine Norris stated, the Council did not work with its external auditors.
“Further, the Council refuses to disclose the review of what went wrong.
“The reason that I am writing to you is that I do not accept this refusal and would like you to investigate.
“My view is that there is no good reason for the review document to be supressed. A huge sum of public money was transferred to the wrong account, some of that money is unrecovered, the Chief Executive, has given the false impression that independent auditors were involved in looking into what went wrong, a supplier has made a goodwill payment (one can only speculate as to the reason for that) and the Council refuses to discloses the review.
“There should be transparency in local government. But here, the Council is trying to ensure that residents do not find out what happened.
“This is unacceptable and I ask that you oblige the Council to disclose the review”

The Information Commissioner has accepted the complaint and is currently investigating it.

But even without sight of the Council’s review, the information disclosed by the Governance Officer has revealed:-
That the Chief Executive was not telling the truth when she stated in her press release that the Council had worked with its external auditors when it carried out “a detailed and forensic review of what went wrong”.

WHAT IS PRESTON COUNCIL UP TO?
1. Falsely creating the impression that there has been an independent body involved in the “detailed and forensic review of what went wrong.”
2. Failing to take advantage of the expertise of Grant Thornton. “Grant Thornton is one of the world’s largest professional services network of independent accounting and consulting member firms which provide assurance, tax and advisory services to privately held businesses, public interest entities, and public sector entities.”(Source: Google – https://www.grantthornton.co.uk/)
3. Such a serious mishap, with potentially severe financial consequences should not be investigated by those apparently responsible for it.
4. Conducting itself in a secretive manner, determined that residents should not know what happened by disclosing the review.
5. Incurring not just the loss of the £7,000 plus that was erroneously paid out and which has not been recovered but also the fees paid to Sapphire Technologies of £2,700 and the cost of the unquantified time spent by officers.

Let’s remind ourselves of what the Council promises us:-

  • “Fairness at the heart of decision making”
  • “Open and acceptable”
  • “Doing the best we can for the people of Preston”
  • “Value for money”
  • “Ambitious, striving for EXCELLENCE in all that we do”
  • “Act honestly and responsibly, being open and accessible to all”
  • “Deliver value for money, ready to embrace change and innovation”

Seems more like sweeping under the carpet?