NI Water slammed over meter installation errors and internal fraud farce
NI Water paid a meter installer £110,000 for undertaking thousands of appointments where no work could be carried out because of faulty instructions.
The Public Accounts Committee said it was "dismayed" to learn that 40% of all installation visits it examined were aborted due to errors in information provided by the State-owned company.
"It is difficult to understand how NI Water put itself in a situation where it paid this amount of public money for work not to be done," the committee said.
The issue is outlined in a wider PAC examination of how an internal fraud probe was carried out.
The PAC report identified "serious failings" in how the NI Water probe into potential 'invoice slicing' was handled. Invoice slicing involves chopping one large bill up into a series of smaller ones that come to the same total value, but are not big enough individually to require a senior boss's signature.
Concerns emerged when NI Water's internal audit unit investigated payments of £465,000 made between April and July 2009 to one of its contractors.
Auditors identified a large number of payments for amounts close to – but not exceeding – £20,000, and found the contract manager had instructed the firm, identified only as Company E in the report, to invoice this way.
The contract manager claimed he was acting under the instructions of his line manager and director, although both denied any knowledge of this.
In January 2010 the then-chief executive instructed the director of customer services at the time to conduct interviews, under the disciplinary process, to find out why the invoice slicing took place, and under whose orders.
Within two hours the director interviewed the contract manager by telephone, while he was on holiday and without written warning or representation by a colleague or trade union.
The PAC said it was "astonished" that a senior official would consider it appropriate to launch a disciplinary probe in this way.
The investigation found a breach of duty by the contract manager and line manager and recommended disciplinary action.
A formal disciplinary hearing took place in July 2010 to consider the charges. But letters notifying managers contained a significant error which "seriously undermined" NI Water's case. The hearing found the managers had no case to answer.
The PAC branded the errors "gross incompetence" and questioned why no one was held to account.
The PAC said this approach was flawed because suspects were alerted before evidence had been secured.
The accounting officer said he did not believe a fraud occurred and, while the investigation was "slightly flawed", it was not a "flawed outcome" and had arrived at the right conclusion.
NI Water declined to comment in detail on the report. In a statement it said: "NI Water would note, however, that this report relates to matters which arose in early 2010 in the context of the PAC report into procurement governance in NI Water at that time. All relevant recommendations arising from that report have already been implemented by the company."