Details of the investigation into the theft of almost £100,000 from the now former Derry City Council in February, 2015 emerged this afternoon at a Council meeting in the city.
The information came to light at the monthly meeting of the Open Assurance Audit and Risk Committee of Derry City and Strabane District Council.
Initially, the incident was to be kept within confidential business at the meeting but following a proposal from Independent Councillor Gary Donnelly that it be discussed openly, Committee Chair Sandra Duffy called for a vote that the matter be discussed in front of the press and a majority of the representatives present agreed to that.
The theft of £99,426.24 from Derry City Council first emerged last year after it was revealed that the Council paid the money into a fraudulent bank account. The scam was discovered after a contractor raised concerns that they had not been paid.
At that time a Council spokesperson said:”Thanks to swift action from the bank and Council staff, no financial loss was incurred.”
The fraud was first detected on February 17, 2015 when the concerned company contacted council’s finance department to say they had nor received money they were owed. Next day,a council investigation revealed it had recently been notified of a change of bank details. The contractor said it had not changed its account and at this point the police were contacted.
The bank account that the money was paid into was frozen and by April 1, the full amount had been returned to Council.
In May last year, a Council spokesperson said that it had reviewed and strengthened its procedures to avoid such future incidents.
A document relating to the subsequent internal Council investigation into the theft seen by the ‘Journal’ reveals that the inquiry was carried out by the “Director of Legacy and the Human Resources Officer into what was described as ‘Gross negligence in the failure to follow financial fraud processes and procedures, communication of financial procedures and contributing factors’ by relevant employees in the attempted theft of the £99,426.24 in February, 2015.”
The document also states that two employees were investigated as a result of the incident and that five in total were interviewed in relation to breach in the policies and processes surrounding the matter.
The investigation concluded that whilst information about fraud prevention was given to the relevant employees that there was no evidence of additional training or briefings to ensure that the initial training had been sufficiently understood. In other words, whilst the policies and procedural checks had been put in place, they had not been rigorously reviewed or monitored.
The investigation panel also discovered that at that the time of the theft the Finance Department of the Council was undergoing a significant period of change because two key officers had left their posts and there was a significant period of absence before the incident of the key officer who was in charge of carrying out the checks. The panel also determined that the failure in this instance was “primarily with the provision and communication and validation of key procedures and their implementation by staff working within the section.”
As a result the disciplinary charge of gross negligence was dropped against the Council employees concerned.
Sinn Fein Councillor Eric McGinley said that whilst he was aware of the need to avoid a “witch-hunt” of Council staff to which the organisation had a duty of care, he was not fully satisfied with the explanation that the absence of senior staff was a contributory factor in the theft occurring.
“There is no indication in this report that the staff were ever formally disciplined and so the recommendations about preventing this happening again are weak. I am going to ask for a review of this investigation, internal procedures and disciplinary actions. I am not entirely satisfied with the contents of this report as it stands.”
Independent Councillor Sean Carr said that he accepted that an internal investigation had taken place but asked if the PSNI had been informed as this was potentially a loss of £100,000 to Derry City Council.
In response, a Council officer stated that the PSNI had been contacted and that they had offered all assistance required to the police but as of the middle of last year they had not been made aware of any progress in the fraud investigation.
Independent Councillor Paul Gallagher also registered his dissatisfaction with aspect of the internal report into the theft.
He said: “Council lost almost £100,00 but got it back. It’s a bit like saying that the bank had been robbed but it was ok because the robbers were caught down the street a bit with the money. I am calling for a rigorous investigation into how this happened.”
Councillor Gary Donnelly said: “The Council only got this money back because the thieves did not get it out of the bank in time. And, I have concerns about why today’s matter was to be kept confidential.”
Chief Executive of Derry City and Strabane District Council, John Kelpie, put on the record that the matter related to two separate issues. Firstly, the incident itself and then the Human Resources investigation into it. He said the report outlined rigorous policies assuring no reoccurrence of a similar nature. He also suggested that a more detailed report into policies and procedures, as opposed to a summarised version of it that has already been circulated, be presented at the next meeting Open Assurance Audit and Risk Committee.
Committee Chair, Colr Sandra Duffy agreed that a more detailed report be presented by Council officers at the next available date.