£100k scam bid aided by council error
A breach of finance rules led to the former Derry City Council almost being scammed out of £100,000, a report has found.
The money was transferred to a fake account, supposedly for a contractor who had carried out work for the council, without proper checks.
The error was only realised when the real contractor asked why he hadn't been paid. The council immediately contacted the PSNI, the fake account was frozen and the money recovered.
An investigation was launched by a panel looking at potential "gross negligence in the failure to follow financial fraud processes and procedures" in the attempted theft of £99,426 in February 2015.
While investigators found that "a serious breach of financial procedures" led to the money being transferred, they did not recommend action be taken against employees who failed to carry out the necessary checks.
The matter is due to be brought before a meeting of the audit committee of Derry City and Strabane District Council on March 3 for discussion.
Five employees were interviewed and two investigated over a letter giving a change of bank details for the contractor. These were accepted without verification and the money was transferred.
The report said: "Information in relation to the prevention of fraud had been communicated to employees, however there was no evidence of additional training or briefings to ensure learning had been successfully transferred.
"Relevant processes and procedures were in place but had not been subject to rigorous review.
"Although the procedures had been communicated to staff, a serious breach of financial procedures had occurred. A number of other circumstances were considered and subsequently the panel were content that gross negligence was mitigated."
The report also noted that "all monies were recouped due to the expedient action of accounts officers at the time" and recommended that "no formal action under the council's disciplinary procedures was warranted".