MPs told council fraud could be 'inside job'

A fraudster may be operating inside the British Council, the body that promotes British culture overseas.

John Hanson, director-general of the council, which has a budget of pounds 408m and employs 6,000 world-wide, told MPs yesterday that last December seven blank vouchers had been filled in and put through the payments system. In all, pounds 520,072 had been paid into accounts bearing false names.

Three people have been charged and committed for trial. However, Mr Hanson acknowledged to the Commons Public Accounts Committee that it was not known how the vouchers and detailed knowledge of internal procedures had been obtained.

MPs asked what steps the Treasury had taken to ensure that other departments were not also being defrauded. Tim Burr, the Treasury accounts officer, said they had been told what had occurred, but that was all - payments were 'their responsibility'. Alan Williams, MP for Swansea West, said the 'Treasury's indifference (was) astonishing'.

The committee was examining a memorandum from the National Audit Office, the public spending watchdog, detailing a further three smaller cases of fraud and theft at the council.

Between August 1989 and October 1992, one staff member put in false expenses claims for pounds 51,861. He has since been sacked and will be prosecuted.

In another case, Mr Hanson admitted that a pounds 17,000-a-year official given early retirement for making false expenses claims picked up a one-off voluntary redundancy payment of pounds 22,000 plus pounds 6,000 a year until 2001. Asked why the package was bigger than the salary, Mr Hanson said they had followed Treasury guidelines.