The Government Internal Audit Agency (GIAA) said in an investigation report that it had found “sufficient evidence in our view of intent to defraud”. The investigation was triggered by a referral from the European Anti-Fraud Office.
Thanet received €160,282 from the European Regional Development Fund (ERDF) towards a 2005 project to dredge the Port of Ramsgate, which it owns, to enable larger vessels to use it.
Acting on information from a whistleblower, the GIAA said this work was not carried out.
Only routine dredging took place, the cost of which was covered in the council’s budget.
The report noted: "Evidence was provided which showed Thanet District Council staff were aware the works required under the conditions of the funding had not been carried out and on receipt of ERDF grant set this aside in case a repayment was required; subsequently this was re-allocated to the Port of Ramsgate budget.”
Auditors said the project had not had a separate budget or cost code in Thanet’s accounting records.
They said the accounting treatment of the ERDF grant was unusual as it was received in March 2008 and June 2009 but remained on the balance sheet until credited to ‘services 2009-10’.
“We were informed that Thanet District Council’s finance function were not sure how to account for the grant,” the report said.
“It transpired the grant was eventually added back into the council’s own budget and used in 2010 to fund port improvements.”
Thanet was unable to explain the “unusual” accounting treatment used.
Correspondence seen by auditors suggested council officers no longer employed “made a decision to retain ERDF funding knowing dredging works carried out during the project period had been financed within existing budgets and that the works carried out were not those required under the conditions of ERDF funding.”
They concluded the police should be asked to investigate the alleged fraud.
A Thanet statement said: “In accordance with council policy, although there is no evidence of fraud, the matter has also been referred to Kent Police.”
The council said it had worked closely with the GIAA and had commissioned an independent review by East Kent Audit Partnership of its internal controls for externally funded projects.
It said: “The grant claim was made over eight years ago. Since then, the council has introduced new processes and procedures within its finance function; including the introduction of a dedicated external funding officer and the implementation of an external funding protocol which was updated in June 2015.”
