Health fraud inquiry ordered

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THE Audit Commission has been asked to undertake an investigation into any fraud and corrupt practices in the National Health Service, the Commons Public Accounts Committee was told yesterday.

Sir Duncan Nichol, chairman of the NHS Management Committee, who was appearing as a witness in a hearing into the waste of pounds 10m by West Midlands Regonal Health Authority, said that he had asked the commission to begin a national inquiry.

He said that this would be directed at uncovering 'any abuses that may be current'. Asked if he was anxious about the results, he replied: 'We should have an investigation in case there are any doubts.'

The committee considered evidence contained in two new reports - one by the Comptroller and Auditor General and one by the District Auditor - into alleged negligent management and possible fraud in the health authority. Sir James Ackers, the former chairman who retired in January after it was revealed that at least pounds 4m had been spent on management consultancy contracts, confirmed yesterday the police were still investigating.

The committee was told that the authority had appointed a number of consultants, intended to advise on cost-cutting, who had cost them more than pounds 50,000 in expenses alone. Only pounds 11,500 had been recovered, but the authority had decided against further legal action.

It was also told that Sir James had authorised the renewal of the contract of Chris Watney, the authority executive alleged to be responsible. He did so days before a report was due on suspicions of mismanagement in Mr Watney's department.

Mr Watney was eventually paid severance of pounds 87,000. The committee expressed surprise that the authority had chosen not to dismiss him - if they had done so, they would not been liable for such a payment.

Sir Duncan acknowledged, under hostile questioning, that this was not 'a reasonable course of action . . . it was a very curious thing to do indeed'.

Sir James said he had agreed to renew the contract because the authority wanted to revise its contracts with all senior managers. Mr Watney is accused by the District Auditor of 'a cavalier disregard' for NHS procedure.