SECRET
PAPERS EXPOSE LAMBETH AS
A BOROUGH ROTTEN TO THE CORE
By
Brian Deer
The
Sunday Times (London) May 30 1993
THE
real state of chaos within Lambeth council, believed
to be Britain's worst-run local authority, is
revealed this weekend after the completion of secret
internal inquiries into financial scandals and
rackets that have rocked the beleaguered London
borough in recent months.
Confidential
papers obtained by The Sunday Times reveal a picture
of fraud and mismanagement in the Labour-controlled
borough on a far greater scale than previously
suspected. Councillors believe that direct
intervention by government may be only weeks away.
Among
the papers are damning internal audit reports on the
maintenance of council housing, the single biggest
local concern among the borough's 240,000 residents.
The findings, which have been kept from Conservative
and Liberal Democrat councillors, are that Lambeth:
*
Charged thousands of times the real cost for simple
repairs and maintenance. Most of this was done by the
council's own direct labour organisation (DLO) or
sub-contractors.
*
Altered or destroyed documents to allow unnecessary,
unauthorised or fictitious work to be billed to the
authority. Papers relating to millions of pounds of
public money are missing.
*
Handed out £2m of work for the environment
department's homelessness initiative programme to
"a small select list" of contractors,
without tenders and on the say-so of one council
officer.
The
internal papers surfaced just a week after the
government's District Audit Service issued a
"public interest" report accusing the
council of unlawfully misdirecting more than £20m.
Paul Claydon, the district auditor, spent two years
investigating Lambeth and spoke of "an
unacceptable incidence of fraud and
malpractice".
Among
his discoveries was an elaborate racket surrounding
the DLO, preventing competition from private firms.
This included an unlawful "profit-sharing"
arrangement through which, in a single year, 21
officers and 90 manual workers split £215,000
between them, in addition to their normal pay.
Claydon's
report, and a similar inquiry by Herman Ousley, the
borough's former chief executive, published earlier
this year, focused mainly on road maintenance, also
the DLO's domain. The new papers are the first study
of housing maintenance and paint an even worse
picture.
For
the first time it has been possible to examine
specific jobs carried out by council staff or
sub-contractors. In one instance, a repair to a wall
had a correct price of £184.30, and a special
Lambeth price of £8,573.54. In another, a £33.86
job to replace ceramic tiles was billed at
£1,055.62. One item which rightfully should have
cost £7.26 was billed for £10,204.74.
It is
believed the vastly inflated bills disguised not only
simple theft but complicated long-term frauds. They
were also used to justify the existence of the DLO,
employing more than 3,000 people.
More
than a third of the borough's residents are council
tenants and the picture revealed is likely to cause
outrage.
Further
scandals are expected to surface, including a
suspected racket in housing benefit payments. The
sums of money misdirected are huge. Based on
auditors' best guesses, about £5m a year may have
been lost to the rackets - 10% of council taxes.
Police
investigations have so far been thwarted by what
appears to be systematic weeding of documents from
council files. The new reports show that paperwork
relating to more than £2.5m of housing work is
missing.
This
weekend, The Sunday Times uncovered a new problem
that some Labour councillors concede may force
government intervention and the closure of the DLO.
While many council tenants could not get satisfaction
from repair services, others were compelled to have
work done that they had not asked for and did not
need. Council employees and sub-contractors would
approach tenants directly, do unnecessary work and
then submit inflated bills to the authority.
One
tenant duped in this racket was Winnifred Jennings, a
74-year-old widow. She said she was surprised by a
council employee in September 1991 who said he was
the "gas man" and insisted that she have
two fires replaced in her one-bedroom flat in
Streatham. He showed council identification and
wanted to do the work the following day.
"Nothing
was wrong with my fires," she said. "But it
just seemed he was so eager to put these new fires
in."
In
fact, the new equipment was of poorer quality. But
according to the confidential internal papers, the
council was charged £71,620.82 for building work on
Jennings's home, more than the flat was worth.
At
Lambeth's town hall in Brixton, once the scene of
"loony left" protests about government
cuts, there was an atmosphere of panic as officers
and councillors sought to clarify their positions.
Lambeth's
Labour group met in emergency session on Thursday
night to find a way out of the crisis. Members argued
that to prevent the government from seizing the
initiative by sending in commissioners or closing the
DLO, the council should shut the labour organisation
itself.
The
leak of the internal papers comes at the borough's
lowest point since 1986, when Ted Knight, the leader,
and 30 other councillors were disqualified from
office and surcharged for refusing to set a rate.
After Knight's removal, the borough went on the break
all records for high spending and taxation.
John
Harrison, deputy leader of the council, said
yesterday: "The internal audit reports are
extremely serious. It's unacceptable that the council
can continue without fundamentally sorting out the
problems, which we have begun to do. If you turn a
blind eye to basic facts you are not acting
responsibly."
| brian deer |
Read a Sunday
Times investigation by Brian Deer of Lambeth Council
and its Member of Parliament Kate Hoey
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Brian Deer. All rights reserved. No portion of this
article on corruption in the London Borough of
Lambeth may be copied, retransmitted, reposted,
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