Whistleblowing warning to councils over ‘rare’ fraud

Whistleblowing systems must be working in all councils to avoid a repeat of Aberdeen’s £1m fraud, it has been warned.

Michael Paterson embezzled more than £1m from Aberdeen City Council as a council tax team leader. He took the money from residents’ accounts in a scam discovered by a colleague who reported the wrongdoing to bosses.

A probe uncovered offending that spanned 17 years and efforts to recoup the stolen funds have so far seen around £520,000 returned to the local authority.

Today Andrew Burns, deputy chair of the Accounts Commission, told MSPs that all councils should make sure staff are confident in in-house whistleblowing systems to deal with “rare” exploitation.

Appearing before the Local Government, Housing and Planning Committee, he was asked by Conservative MSP Meghan Gallacher – a former councillor – if whistleblowing procedures within councils are “robust enough”. He said: “I couldn't sit here and say that the whistleblowing policies in all 32 are 100 per cent marvellous. We just don't have that evidence at our fingertips. But every local authority should make sure they're adequate.”

Burns said Paterson’s crimes – for which he was sentenced to four years imprisonment – had come to light because individual staff in Aberdeen had “confidence that they can use the system safely”.

He told MSPs: “It is up to local authorities to make sure that they've got appropriate whistleblowing policies in place, because clearly the Aberdeen example shows that… it was a negative issue, but the whistleblowing had a very positive impact.”

Burns was also asked about the £1m ‘golden goodbyes’ row at Glasgow City Council, in which generous exit packages were awarded to senior officials without councillor scrutiny.

Those packages came to light in an internal audit and council leader Susan Aitken has called on those involved to pay back the monies.

Burns said he was “relieved” to say that such a situation “doesn’t happen very often”. However, he said the commission had been “frustrated” by what had occurred. Burns said delegation on the matter within the council had been inadequate and proper procedures had not been followed.

He said Nolan principles around integrity and objectivity had not been followed and the incoming chief executive of the council had, with input from councillors, rectified many of the issues around the row, including the scheme of delegation.

The commission wrote to all councils about this matter, and that of Paterson’s fraud.

Burns said: “It really underscores the need for all local authorities, which is exactly what’s in my letter to them, to look at their scheme of delegation, to look at elected members’ awareness and senior officers’ awareness of the nine Nolan principles, and to make sure that what we saw in Glasgow can’t happen again.”