Belfast Telegraph

PSNI probes Housing Executive property deals

Sales of land to developers now criminal matter

By Adrian Rutherford

A series of controversial deals involving the sale of Housing Executive land to developers are being investigated by the PSNI.

They are among 21 cases which are under investigation amid concerns over fraud and misconduct, a report by the Northern Ireland Audit Office has revealed.

The report refers to “several questionable land deals” over a number of years, and refers to an internal review which has found “widespread” problems of a similar nature.

Issues raised include buyer favouritism, absence of justification for off-market sales and sales which were conducted without proper valuations.

It also flags up concerns over housing benefit, noting “significant levels of fraud and error” costing nearly £30,000 a day, plus ongoing problems with work done by contractors.

The report by Comptroller and Auditor General Kieran Donnelly comes just days after Social Development Minister Nelson McCausland disclosed details of a probe into contracts awarded by the Housing Executive.

It found that half of jobs carried out by contractors were either substandard or overpriced.

Today’s Audit Office report reveals:

  • Some £10.2m was overpaid in housing benefit last year — equivalent to £28,000 every day.
  • Grants of £25.6m were given to housing associations during 2011/12 even though they were suspended from developing projects.
  • Contractors carrying out kitchen replacement schemes were overpaid by £500,000.
  • £240,000 in potential overpayments to a contractor, who was then paid £250,000 for work which had not been inspected or approved.
  • ‘Numerous issues’ of poor work by contractors, including glass fitted inside-out and wall fittings not securely fixed.

The most serious issues raised in Mr Donnelly’s report relate to the sale of Housing Executive land.

Twenty-one cases were passed to the Counter Fraud and Security Unit, three have been referred to the PSNI, with another 11 still under consideration.

In one case, a file relating to a site at Nelson Street in Belfast has been passed to the Public Prosecution Service.

The site was included in the Housing Executive’s social housing programme prior to 2004 and later zoned for social housing in the Belfast Metropolitan Area Plan.

Following an investigation about the Housing Executive’s response to a planning application, details of the case were passed to police in March 2010.

The matter has now been referred to the PPS.

In another case, investigators examined the sale of land at Hardcastle Street in Belfast.

The site was sold before a potential bidder had a chance to buy — despite an earlier order to sell it on the open market to achieve best value.

The report also noted “considerable problems” in controls over work done by Housing Executive contractors. A more detailed report on the issue is expected in the autumn.

Overpayments to contractors included £500,000 to a firm carrying out kitchen replacement schemes for the organisation.

The overspend was detected in a review of only five of 112 similar projects — suggesting the final figure could be much higher.

Grants of £25.6m were given to bodies suspended from development projects including £21.5m to Helm Housing Association, which came in for heavy criticism in a report published in January.

The Housing Executive said the payments were made before the associations were suspended or, in the case of Helm, reprimanded.

A spokesman for the Housing Executive said the Audit Office report highlighted a series of issues which the organisation and its board have been examining.

Audit Office report: 5 damning findings

Case study 1: Buyer denied chance to bid

A buyer was denied the opportunity to bid for Housing Executive land on the open market.

In 1998, the Housing Executive was approached by the developer of an apartment block at Hardcastle Street in Belfast about vesting land to provide car parking.

Two years later a second potential buyer expressed an interest in the site and, in July 2000, the Housing Executive approved a sale on the open market.

However, in November 2004 the land was sold to the developer for £98,000 — with planning permission, but based on a valuation for car parking — in direct contravention of the decision.

The second bidder claimed that, based on the value of the town houses which were subsequently built; he would have paid up to £250,000 for the site. He began legal action and an out-of-court settlement cost the Housing Executive £73,000, including legal fees.

The case was later passed to the Counter Fraud and Security Unit to consider if the actions constituted fraud or misconduct.

Case study 2: Shoddy work

Inspection reports referred to ‘numerous issues’ that appeared to indicate poor work by contractors. Examples included units not securely fixed to walls, smoke detectors being claimed for and paid for but not fitted, cistern overflow warning pipes not piped externally and glass being fitted inside-out to a front door. The Audit Office said the frequency of the issues was alarming. “While each of these examples is not individually significant, it is the number of these issues that is concerning,” the report stated.

Case study 3: £240,000 overpaid

A contractor who was being investigated after receiving “significant” overpayments was given £250,000 for work which had still to be inspected or approved. Concerns about overpayments to the contractor surfaced in August 2011. Around £240,000 may have been wrongly paid over three years. In the same month, the Housing Executive gave £250,000 to the contractor as a payment against work invoices which had not yet been approved. The Housing Executive said, by June 18, £233,157 had been recovered.

Case study 4: Query over kitchens

A major kitchen replacement project across Northern Ireland was queried by the Schemes Inspection Unit (SIU), which operates independently in the Housing Executive. In November 2011 the unit reviewed five replacement schemes from 112 schemes covering 8,000 dwellings. The SIU identified potential overpayments in the five schemes of £500,000.

Case study 5: Suspensions disregarded

Grants of £25.6m were given to housing associations in 2011/12, even though they were suspended from development projects after inspections. The Housing Executive said the payments referred to schemes approved before the bodies were suspended. Some £21.5m of the total went to Helm Housing Association, which was criticised earlier this year.

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