Youth Service payment cards – “A damning but flawed report”

Following up LW’s previous story of the Youth Workers going on a spending spree using council payment cards under Rahman’s watch we sent the Wapping Mole to the Audit Committee meeting last night where the report on Youth Services would be discussed.

As ever this is not in any way a full report of the meeting and only covers one specific subject. Remember that with all of these meetings it is open to the public. That’s you.

Full details of attendance etc can be found on the Council website here. Membership of Council committees is carefully balanced to ensure all political parties have fair representation so Moley was surprised to see that there were no members of Tower Hamlets First in attendance.

Afterwards Tom and Eric weren't exactly sure at which point during their discussion the elephant had entered the room (Image: David Blackwell)
Afterwards Tom and Eric weren’t exactly sure at which point during their discussion the elephant had entered the room (Image: David Blackwell)

How odd. Especially as the issues regarding Youth Services all happened while Tower Hamlets First was in power.

Wherever Cllr. Ohid Ahmed and Cllr. Harun Miah were they were definitely not at the rally for Jeremy Corbyn which had been cancelled because of the risk of some ex-Mayor turning up.

This lovely story had been broken by none other than Ted Jeory, who is now Investigations Editor at The Independent. This meanz he is a priiper jurnalist who kan spool proper and fings.

That Ted should write his story on the very same day that LW wrote its story was pure chance. Honest. Really.

(Before going into Historical Youth Services Payment Card Land a quick mention that Cllr. Denise Jones (Labour, St. Katharines and Wapping) brought up the issue of surrounding replacement of roofing on the Green Bank Estate in Wapping and John Tunney, Director of Asset Management at Tower Hamlets Homes, responded.)

Historical Youth Services Payment Card Land

Audit is a council-wide function that keeps an eye out to ensure that council operations are undertaken correctly in terms of service delivery (aka doing stuff for borough residents) and spending.

So quite what Audit was up to during Lutfur Rahman’s administration is quite possibly a story in itself. This is not a criticism of any specific individual but of the functionality of the audit process during Lutfur Rahman’s administration.

However for the moment let us put that to one side and concentrate on the matter in hand.

Chair of the Audit Committee is currently Cllr. Candida Ronald (Blackwall & Cubitt Town) who did a very good job of the whole Chairing thing in our humble opinion. Denise Jones is Vice Chair.

Mr Minesh Jani is Head of Audit & Risk Management at the Council and the report presented to the Audit committee is therefore his responsibility.

Mr Jani read through the key parts of the report covering what Youth Services staff got up to and the Councillors present (that obviously does not mean you Cllr. Ohid Ahmed and Cllr. Harun Miah) asked questions.

Here are some highlights. Or lowlights.

  • Mr Jani said that it was not alway possible to find an ‘audit trail’ (who did what when and why documented on paper or digitally) when investigating Youth Services payment card spending.
  • Although it was possible to see that a card had been used it seems it was not possible to find out what the card had been used for as there had been no effective monitoring regime.
  • Usage of cards by Youth Services had grown beyond what had originally been intended.
  • Investigations revealed that low grade Youth Services (YS) staff were earning more than they should be.
  • A comparison between council payroll records and housing benefits payments showed that three YS staff had declared a lower income than they were earning so they could claim housing benefit.

Why were odd card spends not detected sooner?

Chair Candida Ronald asked the basic question as to why issues were not picked up sooner? Seems one reason, according to Mr Jani, was that although individual alert ‘flags’ on odd spending incidents were raised the council did not realise that the individual issues were connected.

This is basic stuff. Bit like someone with a bad case of hives going to see their GP and the doctor only examines one angry red welt.

LW is not formally trained in forensic accounting but knows that a simple way to identify financial irregularities is spot odd spending patterns. So massive #audit #fail there. Stories we have run like Tower Hamlets audit report reveals grants funding shambles confirm these failings. And this story Investigation into £300k payments to Tower Hamlets charity .

Mr Jani said that another problem was that YS management were undertaking their own checks on spending.

LW knows the identities of some of the previous YS management but cannot name them for legal reasons. At the moment.

As both LW readers know Rahman’s administration was subject to a Department of Communities and Local Government (DCLG) audit carried out by PwC [ LINK ]. It was pointed out to the committee that the YS card spending issues were not detected at the time for the simple reason that PwC were not looking for them.

Mr Jani said that alert flags could have been raised earlier but the monitoring systems had failed. As well as this there was a failure by YS management at the time to carry out proper checks and balances and other functions in other parts of the council such as Internal Audit and those responsible for processing card payments failed to spot any problems.

Councillor Andrew Wood (Conservative, Canary Wharf) asked if the bank had any ‘hard controls’ [presumably limits on spending per card?] and what the banks could do to help in future?

This revealed an interesting little detail. Mr Jani said that it seems what happened was that if a member of Youth Services had a transaction declined they simply rang up Barclaycard and “pleaded” for the unusual transaction to go through.

And it would seem go through the transactions did. Big time.

Candida Ronald asked Mr Jani for the exact number of payment cards currently in use but he did not know and would report back.

Cllr. Denise Jones asked for details on what had been bought with the cards? Gift cards, coach hire and meals was the answer.

LW has to confess at this point that we do know what the cards were used for. In fact we have known since last summer. Yes, gift cards, coach hire and meals. But lots more too. Lots. Wapping Mole’s data analysis team is still busy on this and can promise to publish full details of the credit card spending when we have done our work.

After the financial bit it was the turn of the new people in charge of Youth Services to have their say.

Claire Belgard is the Interim Head of Integrated Youth and Community Services and by all accounts has a very good reputation indeed. She has extensive experience in a variety of public sector organisations including six years with Lambeth Council delivering the Youth Offending programme and eight years with the London Development Agency.

Ronke Martins-Taylor is another very experienced professional with over 20 years public service experience in areas such as probation, youth justice and local government Children’s Services.

Claire and Ronke reiterated the fact that Youth Services is well funded and needs to be the ‘gold standard’ with young people feeling that they really “own the service” and so embrace the whole offer.

Experienced honest professionals

From their demeanour and performance at the Audit committee last night it seems that both Claire and Ronke seem to be the type of experienced honest professionals our borough needs to go forward.

Sad that we have to deliberately include the word honest in that previous sentence. But this is Tower Hamlets remember.

Claire mainly covered issues such as a £100 spending cap on card not being implemented properly and the crytpic but very interesting issue of ‘AP1 payments’ being of some concern. AP1 payments cropped up in our PREVENT linked Youth Service scandal in Tower Hamlets story a short time back and is a subject we will be returning to.

Denise Jones asked Claire about three subjects:

  1. What affect mentions of YS card spend issue in tweets and blogs were having on the reputation of the council?
  2. Any issues regarding threats to staff?
  3. Any other risks to the council?

In reply Claire said that YS now had a ‘proactive comms strategy in place (in other words actively putting the good stories out rather than just responding to the bad stories of historical events) but there were areas of concern for her in terms of YS staff going off sick [presumably because of stress?] and that some staff ‘felt unsafe’.

Claire clearly stated that while she was not saying that the tweet and blog coverage of past events was unhelpful she was of the opinion that ’99.99 percent’ of YS did not deserve the negative coverage.

Although LW completely understand Claire’s position the reality of the situation of historical activities of Youth Services in the borough under Lutfur Rahman means that it is now of the utmost importance that the precise details of everything that happened and who did what and why must come into the public domain.

According to Claire and Ronke there are approximately 170 Youth Services staff currently employed by the borough (although the number of part-time staff was not clearly stated).

From the investigative work of LW it would seem that under Rahman’s administration the number of YS workers was somewhere around the 170 mark with part-time workers raising this total to around 250.

What is not clear to LW is where the line can be drawn between those YS staff who were employed by Rahman and those YS staff who are still employed under the Biggs administration.

Which brings us to a fundamental issue surrounding finding out exactly what happened with Youth Services under Rahman.

Card spending just a symptom, not the cause

To be clear it must be understood the uncontrolled spending on payment cards is only a symptom of what went wrong in Youth Services – not the cause.

Love Wapping has known about the YS spending issue since last summer. We were told about it by multiple sources. LW understood at the time that the total spending by YS using payment cards was somewhere around £450,000. Getting documentary proof of this was rather tricky however.

Some basic analysis work was undertaken but due to our limited resources LW had to stop work for quite some time. But it was the first thing we turned our attention to when we started doing our thing again.

We understand that there are currently somewhere between 75 and 150 investigations by the council into the historical activities of Youth Services. This is not just payment card spending but also encompasses:

  • Fraud
  • Corruption
  • Nepotism
  • Failure to declare personal interests
  • Failure to declare criminal convictions
  • Breaches of procurement and recruitment processes
  • Breaches of the council’s financial regulations
  • Breaches of Health & Safety legislation
  • Breaches of Data Protection legislation

We doubt if this is a comprehensive list.

It’s that elephant again

The subject of YS card spending is complex, still mainly hidden and the key to understanding the real extent of corrupt practises under Lutfur Rahman within Tower Hamlets Council.

The only thing that surprised LW during the Audit committee meeting last night was that at no time did any elected representative or council officer address the elephant in the room.

That all the spending happened during the administration of Lutfur Rahman and Tower Hamlets First. This is fundamental.

The spending by some member of Youth Services was not the random work of a few individuals.

Our investigation, which is as we have stated above is not complete, points to a systematic abuse of the payment card system.

This has similarities to the systematic abuse of the council grants making procedure under Lutfur Rahman.

Part of the reason Rahman got away with giving grants to his mates as ‘treats’ in return for votes was that he ignored and or usurped council processes.

Same thing seems to have happened with YS payment cards. Spot the pattern?

It is not credible to believe that the grants payments corruption and Youth Service payment cards problems could have happened without collusion between council officers both inside Youth Services and in other parts of the council. At best people were turning a blind eye to what was happening right in front of them.

Yes the overwhelming majority of council officers are honest, hard working and do an exceptional job for not much reward. It’s called public service.

Sad reality is that within Rahman’s Youth Services there were a significant number of people at all levels who were up to no good. The Audit report is a small first step towards identifying who these people were but nothing more – so don’t get too excited people.

A damning but deeply flawed report

A glaring omission from the Audit Committee report was any mention of sample testing of spends by the council’s Internal Audit function – a routine checking one in every ten spends.

If this checking was not done the question is why? Who should have carried out these checks? And who was their manager? Was any pressure put on council officers by elected members?

Just because the published Audit committee reveals some interesting issues does not mean it is comprehensive. Indeed one local government expert who LW asked to analyse the report described it as “damning but flawed”.

Next Audit Committe meeting

Tuesday 8th November 2016 7pm at the Town Hall, Mulberry Place, 5 Clove Crescent, London, E14 2BG. Nearest DLR is East India. Why not pop along?


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