Council told to watch out for staff ‘on the take’

Midlothian Council Building
Midlothian Council Building

Scams involving school fairs, refunds on bin bags and sick leave have been revealed as costing local authorities thousands of pounds across Scotland last year.

A report to Midlothian councillors on Tuesday will warn them of the signs that employees may be stealing from them as Audit Scotland reveals some of the cons carried out.

It estimates that over £670,000 was defrauded from public bodies across Scotland during 2018/19.

It also estimated that nearly £500,000 in lost assets was caused to one public body after workers used its vehicles for “unauthorised activities” for cash payments after they were left unsupervised.

Signs that a staff member may be ‘on the take’ include if they are living beyond their means, not taking leave, unwilling to share duties or getting into financial difficulties or battling addiction.

Audit Scotland said it was important local authorities recognised these signs as “red flags”.

It added: “Organisations should have systems in place to identify and report any of these behaviours if they appear.”

The report being presented to Midlothian’s audit committee does not identify which local authorities fell victim to the cons used as examples in it.

It says one occasion saw an employee collecting money at a school event for a supplier fail to pass on around £6000 of it and subsequently led to the police being called in.

Another saw a fraudster buying tickets for overseas events on behalf of a public body using stolen credit card details and then reselling them for around £12,000.

Audit Scotland said that last year alone over £82,000 which was due to go to legitimate suppliers for services was redirected to fraudulent accounts by third parties.

In one case, an employee sold refuse sacks to residents before fraudulently processing a refund and pocketing the money themselves.

The same person was also later discovered to have discovered council tax and housing rent accounts in credit and processed refunds on those, again pocketing the cash.

It was only when a check by the sales ledger team flagged up how unusual it was for people to ask for a refund over bin bags that the scam was exposed.

Payroll frauds were also highlighted, with workers signing off sick while moonlighting at other jobs.

On one occasion, an occupational therapist defrauded £8,000 from a council by falsely claiming to be unfit for work.

The report revealed: “The therapist was on sick leave for 10 months. The fraud was identified when colleagues advised the manager that the size of the employee’s private business had expanded significantly during the period of absence.”

The vehicle scam, which saw one public body miss out on an estimated £500,000 in business, was uncovered after a whistle-blower contacted them expressing concern at the misuse of vehicles by drivers carrying out private jobs.

Four employees subsequently left their jobs and Audit Scotland said the body involved was looking at ways to recoup the lost revenue.

The report urges local authorities and public bodies to review internal weaknesses and procedures to avoid future cons.

Maria Sharp - Local Democracy Reporter