Pounds 10m corruption inquiry finds little evidence

LAMBETH council in south London, which according to an internal inquiry has lost at least pounds 10m through corruption and mismanagement, has failed to find enough evidence against anyone to call in the police.

The internal inquiry under three officers of the council, first revealed in the Independent a fortnight ago, and shown to members last week, produced evidence of probably the most widespread corruption uncovered in a local authority, but named no culprits. But a week ago the ruling Labour group, alarmed that so much evidence seemed to have been 'cleaned out', passed a resolution calling for officials to be instructed to seize documents to protect them from being destroyed.

They hope that a public inquiry into the corruption stretching back a decade, to be conducted under a barrister, may be in a position to pass harder information to Scotland Yard.

Yesterday John McCay, chair of the Labour group, said the inquiries about work carried out by the council's direct labour organisation had begun with complaints that jobs had not been carried out, yet invoices had been paid.

The leader of the Labour group, Stephen Whaley, said: 'If you have specific evidence of criminal activity the police will investigate.' The problem was that they lacked evidence on how any alleged frauds worked.

A police spokesman confirmed that the fraud squad had not been asked to investigate any complaints.

Councillors at an all-night meeting in the town hall, which ended at 5am on Saturday, agreed to set up an independent public inquiry to investigate abuse of procedures and malpractice catalogued in a report issued by the chief executive, Herman Ouseley, after a six-month investigation by three of his officers. It details abuse of procedures involving civil engineering, and housing repairs and maintenance, and says large amounts were spent on highways without the council committee's approval, making the work unlawful.

There were breaches of planning regulations, and 214 staff were made redundant, or retired early, at a cost of pounds 1.8m, 'without any authority at all'.

The report says that retrospective approval could not be given for much of the unlawful expenditure, and 'major issues of negligence and/or wilful misconduct for individual officers arise'.

The council leader, Steve Whaley, survived a no confidence vote by just one vote. The councillors had heard officials admitting that work contracted to the Direct Labour Force was not done; double invoicing was used and prices for jobs were vastly exceeded.

The Conservative group leader, Hugh Jones, said that he believed the amount of money involved in the malpractice and corruption could be even higher than the pounds 10m already identified.

Mr Ouseley conceded that the failure to curb corruption over a 10-year period had extended to the top of the council.

The borough has the highest poll tax in the country at pounds 425 a head. Mr Whaley said the hope was for the report to be published within six months.