Brown packages, Travis cards, and a 'fraternity': What was going on in this council division?
PUBLISHED: 12:35 21 December 2018 | UPDATED: 14:26 21 December 2018
Ex-workers have spoken of a "1970s" working culture at Newham Council's troubled repairs and maintenance service (RMS) as questions remain over why fraud allegations were not passed on to police.
This week the Recorder highlighted a massive overspend in the repairs department last year, where irregular procurement, extraordinary overtime and bonus claims and fuel cards handed to external firms contributed to a so-far recorded deficit of £8.7m.
Former staff have now come forward, raising even more serious concerns.
But despite allegations of potential fraud having being flagged up within RMS as far back as 2015, the council opted to investigate the issues itself rather than go to police.
This week, the local authority has not answered any questions at all.
But we saw and heard independent reports of:
• One individual receiving kickbacks in cash and gifts from suppliers while providing them with work
• Two individuals using RMS staff and vehicles to have their houses re-fitted, on council time and money
• Workers using Travis Perkins cards to buy materials for jobs they may or may not have worked
• Staff claiming “make-up pay” from the council despite having been working
• Freemasons being able to influence the procurement process
When two people raised the alarm over possible financial mismanagement last July, the council launched a lengthy internal audit and councillors have since been told it did not find evidence of fraud.
But as we reported earlier in the week, concerns have been raised about the scope and direction of the inquiry.
A former council employee, who asked not to be named, said: “When I left I could see that they were trying to look at RMS and there was no resource for this. We were cutting staff left, right and centre and employing auditors to sit there week on week.
“From cleaners to repair people to management, there were allegations of corruption everywhere [in RMS]. There were so many agendas and political nonsensing. I was happy to be gone.”
A ‘free-for-all’: Questions hang over Travis Perkins cards
One of the council audit’s areas of focus was operatives’ use of their access to supplies from Travis Perkins, which has an office at the RMS depot in Bridge Road.
For seven years the builders’ merchants has provided materials, from sink drainers and nails to pumps and shower mixers, to RMS employees for their work.
It is due to end its current contract with the council in January 2019 but Newham is looking for an extension.
Employees at RMS have cards they can use to book out materials for jobs, from nails and cement to boilers and street lighting.
One council report seen by the Recorder states: “There has been challenge that operatives book out more materials than are required for repair jobs.”
A former worker said that in certain circles this alleged practice was “matter-of-fact sort of stuff”.
When this was raised with them, Newham officers carried out a random sampling of 100 jobs on the system, led by the interim operations manager and the then-head of repairs, Barry Marbe, who was suspended in 2017 and has since resigned.
They found that in all cases, materials booked out of Travis Perkins for jobs did appear to correspond to the described task.
But this week, the council could not confirm if any work had been done to check if or when the jobs actually took place.
The former operative said: “People would order whatever they fancied. Stuff was blatantly being taken out of the store and taken home by people to use for themselves. It was that much of a free-for-all.
“I think they were potentially creating false jobs; no-one was monitoring. You could raise a job to replace a kitchen in a flat when you know it’s already had one put in.”
Travis Perkins was paid £10.6m through RMS last year.
It is the only one of 78 major suppliers that was procured according to council rules.
A Travis Perkins spokeswoman said they were not aware of any fraud investigation by the council into misuse of their cards.
They said: “Travis Perkins purchase cards are subject to the parameters our clients set for them, including the products available, purchase limits and who have access to the cards. All purchases made on the cards are matched against order numbers, and there is a full audit trail of all transactions.”
Allegations over make-up pay, freemason ‘fixes’ and working culture
Concerns related to Travis Perkins cards were first raised by an employee in 2015, who emailed managers to say a colleague was engaged in “misusing Travis Perkins card, theft, fraud, and deliberate falsification of records”.
They also wrote: “I have been coming across a lot of financial irregularities on a much larger scale”.
On September 4 that year, the same person reported that a number of employees had been regularly receiving make-up pay – a payment to workers if they have not had enough work that month - of up to £10,000 over six months.
Three days later, then-operations director Tony Abbs emailed three other senior managers asking for “a report from you explaining why all the people on make-up pay are on make-up pay and why they have not been managed out of the company”.
It is not known if such a report was produced.
Allegations over make-up pay have been echoed by other ex-employees.
One told the Recorder that on occasion, two people would work on jobs that had been booked for just one, but the other person would then claim make-up pay from the council and labourers would pool money and split it between them.
From April onwards the council has been re-assessing these payments and one report states: “Trade Unions have been engaged and are aware a review will be undertaken.”
Another ex-operative claimed: “People have been committing fraud and they were still doing it while the auditors were there.”
They added: “I can’t believe there won’t be a criminal investigation.
At the same time, they added, there were deep-rooted issues with the way RMS was running its affairs across the board.
One long-standing suspicion that was re-reported to auditors last year was the alleged influence of freemasons over how certain suppliers had been given jobs.
Internal auditors were told of this in June this year and the council’s head of assurance was made aware of them, as was the Mayor of Newham, Rokhsana Fiaz.
The ex-worker said: “A little fraternity was going on. They looked after each other.
“We would be told we’ve got to use this supplier, and they’ll decide at what cost.
“It was like walking into the 1970s. There were brown paper packages and talking round corners in little huddles. The only way to sort it is to have a massive clear-up.”
For the majority of the division’s 250 employees there is no evidence they did anything wrong.
Among the explanations auditors received for their vast overtime claims were a huge backlog of work, staff absences and emergency works after the Grenfell Tower fire.
One manager said that staff had become “pretty much institutionalised” within an antiquated working culture.
They added: “I enjoyed my work but they were so very far behind in their processes and procedures. We were working very hard to get into the position we have with new builds; that was a success because of the determination of staff, working long hours, long days and long weeks.
“Guys were swinging the system, but that doesn’t mean it was the whole company.”
Damage control: Where are Newham’s fraud investigators?
Earlier this week, the council told us that it “still has, and will continue to have, an in-house fraud team” comprising two full-time members of staff.
This week it could not confirm if either person was a qualified fraud investigator, or if anyone in the council’s in-house team was currently still looking into RMS.
Between July and September last year a team from Mazars, a private accountancy firm, was brought in to give the council ‘investigative support’.
They produced one report into misconduct allegations and according to Freedom of Information data, the council paid £18,715 for the service.
Separately, Mazars operatives have been brought in to offer ‘counter fraud support’ and ‘fraud support’ – but they are working across the whole of oneSource, the back-office service shared by Newham, Havering and Bexley.
Confusingly, some appear to have been provided with Newham job titles and email addresses over the course of their work.
According to information provided by Newham, the total projected cost of the Mazars employees in oneSource is £62,000 and the amount paid so far is £27,501.
The council was unable to explain the precise scope and remit of its own team’s work.
It also has not answered queries as to whether it had been appropriate to launch an internal audit, scrutinising itself, rather than go to police after allegations of corruption and criminality were made by multiple parties in 2015 and 2017.
The ex-Mayor of Newham, Robin Wales, who was in power at the time, said: “When an allegation of impropriety is made, the council has a duty to investigate and establish the facts. If there is evidence of any potential criminality, then it should be referred to the police for further investigation.”
The former cabinet member for finance, Lester Hudson, has also been approached for comment.