Defence Ministry lambasted for £37m overspend

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The Ministry of Defence came under fierce criticism yesterday for overspending its budget, wasting millions of pounds on defective computer systems and failing to prevent a near half-million-pound fraud.

A Commons watchdog condemned defence chiefs for exceeding their budget by £37.1m and for spending £29.7m on failed computer systems.

A report by the all-party Public Accounts Committee noted that an employee, an executive officer in the Army's pensions office in Glasgow, had embezzled £477,734 before he was detected and eventually sentenced to four years' imprisonment.

The MPs said the fraud, by Marvin Hamill, aged 45, could have been prevented if there had been "robust" segregation of duties and proper protection of computer passwords. Management had failed to ensure "basic financial controls," they concluded.

David Davis, the committee's chairman, said: "This report raises serious doubts about financial management at the MoD. Their ill-considered attempts to develop bespoke IT systems and their inadequate systems of control have led directly to significant losses to public funds. Taxpayers have a right to expect much better stewardship of their money."

The examination of the Ministry's 1998/99 accounts showed that it had exceeded its budget for the fourth successive year. This was primarily caused by failures in financial forecasting and management, though the committee acknowledged that paying for preparations for the Kosovo conflict had also played a part.

Nevertheless, the committee said the overspend was "unacceptable". It noted how the Ministry had to write off £21m on a data system for the Royal Air Force and had lost £8.7m on another IT project intended to handle the Royal Navy's pay and pensions systems.