Hackney launches fraud probe

15 Feb 01
Crisis-ridden Hackney Council has launched a fraud investigation following the discovery of irregular cash transfers between bank accounts, Public Finance has learned.

16 February 2001

Finance managers at the authority have found that accounts were created and money transferred between them, with no obvious explanation for the transactions.

Managing director Max Caller notified Hackney's joint leaders, Jules Pipe and Eric Ollerenshaw, of the findings last week. The authority has now brought in external auditors to examine the accounts in more detail.

Ollerenshaw told Public Finance that details of the irregularities are still sketchy. But he added: 'There seems to have been movement of money between accounts, or the creation of separate accounts – false accounts.'

Caller was certain that the figures did not add up, Ollerenshaw added. 'He's convinced that something is not quite right with the accounts and there is an investigation going on.'

The Conservative group leader, who formed a coalition administration with the Labour group last April, said he was not surprised at the latest turn in the beleaguered council's fortunes. 'Given the looseness of financial controls in the council, it doesn't take the Brain of Britain to work out that there may have been some fiddling going on,' he said.

'If you look into the deep, deep cellars of Hackney Town Hall, something is going to turn up. But we are not certain how big or small this is. If it is something major it would help to explain some of what's gone on here recently.'

Caller first indicated that he had found evidence of fraud last week during a speech to local authority executives at an IPF counter-fraud forum. He told the audience: 'We have found malpractice; we have found money going missing.'

But he declined to reveal which departments were being investigated or how wide-ranging the inquiries would be. Nor would he discuss the sums of money involved, and did not indicate whether the authority intended to call in the police.

This is just the latest in a string of problems to hit Hackney, which has been struggling to contain an ever-widening hole in its budget that currently stands at £77.6m for this financial year.

The council is embroiled in a bitter dispute with trades unions after it introduced savage cuts to jobs and services in an attempt to rein in spending.


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