Community news and investigative journalism for Wapping E1W and Tower Hamlets London

Revealed: Massive payment card spending spree by Lutfur Rahman’s Youth Services

By on September 20, 2016 in News, Youth Services

A £91,000 spending spree over a two year period by a single Tower Hamlets Council Youth Worker during the administration Lutfur Rahman is just one of the details of uncontrolled spending by the troubled council’s Youth Services team that has been published by the current Labour administration.

Additionally some ‘Youth Projects’ did not exist, spot checks revealed some Youth Clubs with no-one attending,  some staff were delivering services despite not being on the Council’s payroll and other had financial interests in the suppliers they were paying.

The Tower Hamlets Council Audit Committee report (PDF 2Mb) reveals spending of £149,000 on council payment cards by 14 purchase card holders during the 2014/15 financial year. Download the PDF document and scroll down to page 52 for the details.

Love Wapping understands from its own 14 month long investigation that there were nearly 30 payment cards being used by Youth Services during the financial periods 2013/14 and 2014/15 and that the total spend during the entire two year was in the region of £490,000.

This will be the subject of future posts on LW.

The Audit report also sheds more light on the real reasons for the recent closure of various ‘Youth Clubs’ and ‘Youth Projects’ around the borough – it seems some of them may not have even existed but were funded by the previous council administration.

Tower Hamlets Youth Services were brought in-house in 2010 soon after Lutfur Rahman was first elected as Mayor despite having a reputation as being very well run and good value for money.

£91k card spend by one Youth Worker in two years

The Council’s Audit Committee report states that in eight cases card holders had exceeded their monthly limits on seven occasions with one card holder exceeding their monthly limit on fourteen occasions and spending a total of £91,000 over a two year period.

All spending took place under the administration of disgraced ex-Mayor Lutfur Rahman who was found guilty of corruption and banned from office in April 2015.

As with any local authority Tower Hamlet’s Youth Services normal role is to engage youth on the street and provide them with suitable activities and in Tower Hamlets was also partly responsible for the delivery of the government’s PREVENT anti-radicalisation strategy.

In May this year the Labour administration of Mayor John Biggs revealed that allegations of a wide variety of offences including fraud, corruption, nepotism, failure to declare personal interests, failure to declare criminal convictions and breaches of procurement and recruitment processes by members of Rahman’s Youth Services team were being investigated.

It is understood by Love Wapping that there are between 75 and 150 different investigations into Tower Hamlets Youth Services personnel.

The Audit committee report also states that:

  • 21 of the 260 staff members had business interests that were not disclosed to the Council
  • Individuals were delivering youth service provision without being formally on the Council’s payroll
  • There were four cases where Youth Service staff had a direct interest in the suppliers who were paid with the council payment cards
  • A lack of effective spending controls under Rahman’s regime that resulted in some organisations being paid when the organisations did not exist
  • Cases were identified where either duplicate or excessive claims were made for hours worked
  • The recruitment system had been compromised leading to…
  • Disclosure Barring Service* (DBS) checks not being applied
  • A person being re-employed having previously been dismissed for gross misconduct

*Previously known as disclosure of previous convictions.

The report states that as a result of the findings of the enquiry into the Youth Services staff payment card spending during the 2014/15 financial year the investigation has been extended to cover card use during 2013/14. This review is continuing and the results will be reported to the audit committee in due course.

Tower Hamlets council has now established proper controls around the use of these cards so that the maximum spend on any one card is £4,000 per month and no transaction can exceed £1,000.

Disciplinary action has been instigated where the Council considers officers’ conduct has fallen short of its ethical standards and proper systems put in place.

Biggs – Youth Services money now being spent properly

The following statement was issued by the Mayor’s office to LW and is published in full.

“This report shows just how out of control some elements of the youth service had become on the previous administration’s watch.

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Mayor Biggs – “discovered a youth service in chaos”

“When I became Mayor I discovered a youth service in chaos as a result of poor management and the actions of a small number of individuals. The majority of our youth workers are honest, hard-working and dedicated to providing an excellent service but they were let down by a small number of their colleagues acting inappropriately for their own benefit. I am pleased we can now bring these matters into the open. For a range of legal reasons they have been shrouded too long. 

“Unlike the previous mayor I will not shirk my responsibilities, where there is evidence of wrongdoing I will act. As this audit report reveals, it wasn’t just serious financial problems, our young people were being let down with many youth projects totally abandoned by the young people they were there to serve. 

“We now have an interim model in place for the youth service offering more and better quality activities for young people than previously. There have been no cuts to the service and we still have the second highest youth service budget in London, it’s just being spent properly now.

“Over the coming months we will be working closely with young people to design a new model which provides an even better service with a wide range of activities on offer and to draw a line under this sad saga.”

Management#fail, audit #fail

Compounding the unusual spending patterns by Rahman’s Youth Services staff was the failings by those in charge of Youth Services to deal with the seemingly unrestricted spending of borough residents money.

A local authority, like any well run organisation, has systems and procedures in place to stop abuse of spending by employees. But then ‘well run’ are two words never used to describe Lutfur Rahman’s council.

At the time of publication LW was unable to publish further details on this issue but we will in due course.

£100 sign-off limit now introduced

According to the Council’s press office the changes implemented since 2015 to prevent further abuse of the council system include:

  • Withdrawing credit card usage from some members of staff and introducing a sign-off on all spend over £100
  • Introduced additional scrutiny into payments for supplies and services
  • Introducing recruitment control measures to design out bias and personal patronage
  • Reminding staff about the code of conduct and the council’s strengthened whistle blowing policy
  • Ensuring all service managers have completed their declarations of interest. Any declarations are flagged directly to the Interim Head of Service
  • Reducing additional hours and overtime and implementing a strengthened checking procedure of timesheets before they are sent to payroll
  • Implemented a booking and fee charging policy for youth centre usage by third party organisations.

Spot checks revealed Youth Clubs shambles

In addition to the issue of payment card spending by Youth Services workers the report also sheds light on the reasons why Tower Hamlets Council recently concentrated its Youth Club provisions to eight Youth Hubs across the borough.

During the Rahman administration many ‘youth projects’ were established – some of which it is believed never existed – and so it became unclear to the Labour administration what was a real Youth Club so that correct provision of youth services could be delivered to those who could benefit from it.

To find out what the real situation was Mayor Biggs’ team carried out 37 spot checks on youth clubs over three days in February 2016 to check attendance figures and found that although most organisations provided detailed session plans with activities in line with approved plans:

  • 10 clubs had between 0–5 participants
  • Nine clubs had between 6 and 10 participants
  • Seven clubs had over 10 participants
  • In 11 cases the number of young people attending was simply not known

The spot checks also discovered that:

  • Six organisations appeared to be offering only indoor games, pool and PlayStation games
  • Different variations of attendance registers were in use so that it was very difficult to establish accurate attendance figures
  • The registers had no details of entry / exit times so causing potential problems in the event of a fire or other need for evacuation of the premises
  • Further Health and Safety concerns were raised at eight organisations who could not provide evidence of carrying out basic fire alarm tests or checks of fire extinguishers
  • Anti-Social Behaviour and graffiti was happening at four organisations – the very sort of behaviour a Youth Club is designed to prevent

Audit Committee meeting tonight

The report will be discussed at Council Audit Committee meeting today Tuesday, 20th September, 2016, 7.00 p.m at the Town Hall.
Should be fun.

LW Comment

None of the details in the Audit report are of any surprise to LW. Our Investigative Team first heard about the creative use of payment cards by Youth Services staff last summer and the Wapping Mole has been digging away ever since. Well, he had a short break, but not for long.

Rumours are one thing, proving suspicions with facts is another. This is what the Council has published so far:

  • Youth Services staff paying council suppliers that they had a direct interest in
  • Council suppliers paid that simply did not exist
  • Insufficient management or audit systems
  • ‘Youth Clubs’ with no youth
  • ‘Youth Projects’ that simply did not exist

All behaviour typical of the Rahman administration.

LW is currently in the middle of a significant amount of data analysis which should reveal the full picture of who spent how much and when. Some of the results have amazed us. We would like to publish this as soon as possible but, as ever, we are very restricted in terms of time, resources and office space. (As in not much, very little and none, in that order.)

All borough residents are aware of the budget cuts that the current Labour administration have been forced to make. Only last week we flagged up a meeting organised by concerned parents regarding cuts to Early Years budgets.

The bottom line is that the misuse of council funds as detailed in the Audit report are one of the main reasons cuts have to be made.

By the estimates of LW millions of pounds may have gone adrift during the Tower Hamlets First administration. How many children could have benefited from this money being spent properly on vital services?

If you voted for THF – even in good faith – don’t complain that there is not enough money to provide the council resources for those who need it most.

For further information

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