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Posted by: John Brace | 16th November 2013

Wirral Council reveals how fraudsters conned them out of £45k

Wirral Council reveals how fraudsters conned them out of £45k

                             

Published yesterday as part of the agenda for Wirral Council’s Audit and Risk Management Committee meeting on the 25th November was the report into how fraudsters managed to con Wirral out of £45,683.86 and £95.60 meant for one of Wirral’s care homes.

As the care home had to then be paid, this con cost the Wirral taxpayer £45,779.46. The report goes into detail stating that other local authorities have fallen victim to this particular type of fraud and lost far larger amounts as a result.

The report details that the investigation started when the manager of a care home telephoned Wirral Council on the 23rd August querying why they hadn’t been paid as expected the previous week. Wirral Council confirmed that a payment had been made by bank transfer on the 13th August and that they’d received a request to change the bank details of the payee a few weeks earlier. The manager of the care home informed Wirral Council that they hadn’t made a request to change bank details, so the matter was referred to Wirral Council’s Internal Audit team.

The audit team contacted the bank that the fraudulent payment had been made to and were informed that once the money had cleared on the 16th August that it had been moved to another account. A replacement payment was made to the care home.

On investigation Internal Audit found that a request to change bank details had been made via email in July 2013. This email had been sent to the Wirral Council email address that Wirral Council’s Accounts Payable team request that their suppliers use. The email address used (although an email address can be easily forged) matched the information held on Wirral Council’s records and contained details of the payment the previous month to the care home.

Wirral Council’s procedures require staff to phone the supplier to check such a request is genuine. However as the email address matched and details of the payment the previous month was included this phone call was never made as it was assumed (wrongly) that the request was genuine.

The change was then checked by a supervising officer and the change to the bank details were made on Wirral Council’s Oracle system.

The fraud was reported to Merseyside Police on the 23rd August 2013 and Internal Audit were able to provide the name, account holder and address for both the account that the money was initially transferred to and the second account it was transferred to after the payment had cleared. This information was also passed to Action Fraud, who passed it onto the Metropolitan Police.

The Metropolitan Police contacted Internal Audit on the 5th November 2013 who confirmed that they are “actively pursuing” it. Internal Audit provided the Metropolitan Police with a statement detailing what happened.

A report was also prepared for senior management detailing ten recommendations which “stress the importance of following documented procedures in respect of changes to any account details”. These recommendations are also included in the monthly Internal Audit Activity Summary report which will also be discussed at the next Audit and Risk Management Committee.

Four days later the Wirral Globe wrote about this story too.

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Responses

  1. It could only happen on the Wirral

    • Well according to the report, it’s not just on the Wirral this has happened but also other local authorities, hospitals, universities and supermarkets. The report specifically mentions it’s also happened at Salford (£125k), Wigan, Rochdale, Bolton (£500k and £600k attempted) and Warrington in recent years.

  2. It defys belief that this fraud was executed when employees have to go through the ‘Spanish Inquisition’ to claim even minimum out of pocket expenses!
    They appeared to have taken the ‘information’ on face value. It smacks of totally unacceptable procedures which,to say the least,are slapdash.

    • Well the fact that the fraudsters included detail of the payment the previous month gives the impression it was either somebody at the care home or at Wirral Council that provided this information that helped the fraudsters.

      The report states that details of the previous month’s remittance were included, however payments that Wirral Council make to their suppliers of over £500 are published monthly so it would’ve been possible for the fraudsters to know this information that way instead. It all depends really as to how much detail was provided as to whether it was only possible with help from an insider.

  3. The Local Authority that plundered the accounts of disabled people has its own bank account dipped into….
    My sympathies are firmly with the council tax payer and not the financial abuser…. because IT is as bad if not worse than the unknown fraudster

    • A quote from the report “Provision was made between DASS and Accounts Payable for a replacement payment to be made as it had been established that payment had been made to an alternative account and not that of the Home.”

      What’s interesting was the timescale of the “replacement payment” must have been days or weeks rather than the years it took the disabled people to get money back from Wirral Council.

      Mind you, a nursing home has the financial resources to take Wirral Council to court to recover monies owed.

  4. And isn’t it a travesty that the police didn’t pursue the council after it stole £736k from people who most likely desperately NEEDED THE MONEY

    • As far as the police are concerned, disability discrimination is a civil matter for the individuals to persue through the civil courts. It’s therefore something more for the reputation of the organisation involved and the civil courts to decide.

      However if a hate crime has been committed eg a person has been attacked because of their disability, then the person who committed the crime can get a longer sentence.

      There are some that would say that deliberately overcharging the disabled is a breach of the Theft Act 1968 and therefore is criminal. The basic definition of theft in that legislation is “A person is guilty of theft if he dishonestly appropriates property belonging to another with the intention of permanently depriving the other of it; and “thief” and “steal” shall be construed accordingly” followed by “It is immaterial whether the appropriation is made with a view to gain, or is made for the thief’s own benefit.”

  5. […] Mountney said, “Chair, thank you. Chair your comments about fraud are interesting because I don’t know of one councillor that would not support an employee who […]

  6. […] story is an update to an earlier blog post headlined Wirral Council reveals how fraudsters conned them out of £45k. Video of this part of Wirral Council’s Audit and Risk Management Committee starts at the […]

  7. […] Last month, the Department for Communities and Local Government invited local councils to make bids to it (closing deadline is 5th September 2014) for £16 million of money to help with counter fraud. This is not for the purpose of tackling benefit fraud (which is a different issue) but would be for projects to reduce the risk of for example the £45,779.46 Wirral Council lost in a care home fraud last year. […]


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