From Barnet Unison
Grant Thornton was commissioned by the London Borough of Barnet (the
Council) to provide support in its response to the discovery of an
alleged fraud.
On Friday 21st September 2018 Barnet Council published the Grant Thornton (
GT) review
LINK
The GT review looked the two Capita contracts below.
Contract 1: The London Borough of Barnet and Capita
(BRDS) Limited relating to the provision of Development and Regulatory
Services signed 5
th August 2013 “DRS”
Contract 2: New Support and Customer Services
(NSCSO) Partnering Agreement between the London Borough of Barnet and
Capita Business Services Limited. “CSG” contract commenced September 1
st 2013.
The combined worth of both contracts over a
10 year period £424 million.
GT review reported:
“The individual is believed to have committed a fraud to a
detected value of £2,063,972 by directing CPO payments to personal bank
accounts.”
“Our view of both contracts has identified a number of
significant weaknesses which may have resulted in contractual breaches.
We have identified and reported what we believe are fundamental
weaknesses in budgetary control and financial accounting.”
“We note both the DRS contract and the CSG contract detail consequences for the Service Provider of Persistent Breach”.
“Lack of effective review of controls over financial ledgers.”
“The monthly and annual budgetary control process provided by CSG
Finance for capital projects in Re lack sufficient rigour to challenge
unusual transactions and journal entries.”
“Significant financial control weaknesses”
“Poor accounting controls
“Weakened scrutiny over regeneration scheme KPIs”
SOURCE
The
GT review goes on to develop five broad themes and referred as control ‘Pillars’. GT had this to say about their
‘Five Pillars’
“In our view, if any one of these controls Pillars was
functioning effectively at any point during the period (July 2016 to
December 2017) on question it should not have bene possible for the
individual to perpetrate the fraud…”
John McDonnell Shadow Chancellor said:
The
Grant Thornton (GT) review of the two Capita contracts in Barnet
provides yet more evidence of the folly of privatisation of public
services. When I read “significant financial control weaknesses…“poor
accounting controls” in the GT review it summed up what I have been
saying about the current Tory government. They have failed our economy
by rewarding their friends in big business, leaving our communities and
public services to suffer at the hands their brutal austerity policies. I
want to send a personal message of solidarity from the Labour Party
Conference to Barnet UNISON and the residents who have fought side by
side against a right wing mass outsourcing ideology. I fully support
your campaign to #KickOutCapita from Barnet and bring services back
in-house.
Professor Dexter Whitfield who recently published a joint review entitled “’Future Shape’ ‘
easyCouncil‘, ‘One Barnet’= Failure” with Barnet UNISON on both Capita contracts had this to said
:
The Grant Thornton audit reveals very serious flaws and
inadequate operational practice in both the Capita regeneration and back
office services contracts. The fact that it took a fraud case to reveal
the full nature and scope of these flaws is a damming indictment of
Capita and Barnet Councils contract management and monitoring.
Furthermore, implementation of the remedial action plan may address the
current inadequacies but gives little reassurance that there are no
other serious flaws that remain to be exposed. The audit provides
further significant evidence for the Council’s review of both contracts
and a decision to terminate the Capita contracts and return to in-house
provision as a matter of urgency.
John Burgess, Barnet UNISON Branch Secretary said
I am shocked but not surprised at the content of the GT review
of both Capita contracts. Barnet UNISON predicted that service quality
would suffer once the services were privatised however there is little
comfort in saying “we told you so” for the hundreds of local jobs in
Barnet that were lost as a direct result of Capita winning the
contracts. What is surprising, is that it took a fraud, to deliver the
forensic scrutiny we have long demanded.
Over the past five years
frontline in-house services have endured vicious cuts whilst the two
Capita contracts have drained badly needed public money, in order to
satisfy the needs of Capita shareholders who put profit before quality
services to residents. When Capita issued a dramatic profit warning on
31 January 2018, why did the Council not begin discussions to bring
services back in-house. It seems clear from the GT review that even at
an early stage there were serious endemic financial and budgetary
issues. The Council is currently preparing a review of both Capita
contracts.
It is my view that in light of the GT review, it is untenable
that the Council could even consider allowing Capita to run any of
their services again. The relationship between the Council and Capita is
in my opinion irreversibly broken, it’s over, and now is the time to
end it, no expensive divorce bill, Barnet Councils services, and
residents have tolerated enough of the mass privatisation ideology.
Never mind #Brexit it’s time for #Capzit”.