Fraud inquiry adds to Hackneys woes

8 Mar 01
The fraud investigation launched last month at the London Borough of Hackney has identified financial irregularities within the education department, Public Finance has learned.

09 March 2001

The inquiry, which is just the latest misfortune to befall the crisis-hit council, was set up after evidence emerged that false accounts had been created. Following the discovery of irregular cash transfers, managing director Max Caller called in external auditors.

A senior source within Hackney council has now told Public Finance that the investigation has suggested there was malpractice by individuals within the department, and that inquiries were continuing.

'I can confirm that there has been an investigation within education that has found evidence of fraud…within the directorate,' the source said. 'In corporate terms the amounts were not considerable, running to thousands of pounds. The investigation is still going on, but I have not had an update recently.'

The source also said Caller and his investigators were trying to establish whether there had been fraud on a larger scale, but added that so far no definite evidence had emerged. 'I have not heard that any action is going to be taken yet,' he said.

Hackney's education department has faced an onslaught of criticism in recent years, with a series of fiercely critical Ofsted reports slating it as 'bureaucratic', 'incompetent' and 'incapable' of running its schools. Allegations of fraud within the department are certain to cause staff morale to plummet even further.

Meanwhile, the council's woes continued as members of trade union Unison staged a one-day walk-out on March 7. It was estimated that up to 1,000 members of staff took part in the action, which was staged as part of the union's campaign against the swingeing package of cuts approved by council members in February.

Hackney is facing a budget deficit of £77.6m and has committed itself to reducing staff numbers and changing terms and conditions in an effort to rein in spending.

Unions are incensed by the plans to scrap a range of top-up allowances, reduce overtime bonuses, and abolish perks such as lease cars and mobile phones. They estimate that some staff earning £15,000 a year could lose £2,000 from their wages.


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