Procurement fraud costs taxpayers almost £500k

10 November 2008
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10 November 2008

Corruption in purchasing accounted for nearly £500,000 of central government fraud in the last year, according to a report.

The study of 47 central government departments by the Treasury found fraudulent activity totalled nearly £4.3 million in the period between April 2007 and March 2008. Procurement fraud alone accounted for £446,900 of this sum and was almost four times as high as had been recorded in the previous survey.

There were 70 instances of purchasing corruption, with two cases accounting for over half the total. The most costly procurement scam defrauded the taxpayer of £182,000 and was discovered following a review of a purchasing project. It involved "widespread" collusion resulting in the defrauding of money and materials, the theft of fuel and "manipulation" of accounting records. The incident was blamed on "a lack of management oversight".

The second largest case involved the misuse of a procurement card by a senior manager over a four-year period, which cost the government almost £78,000. The irregularities were reported by another member of staff and the official was later sacked. The police are currently "considering" a criminal prosecution against the individual.

The Treasury review also noted examples of external fraud. Seven cases involving government suppliers were reported, with losses totalling £1.4 million. One contractor defrauded £297,600 after over-claiming for payments, while another incident saw a vendor secure £367,500 by submitting false time sheets.

A Serious Fraud Office spokesman said the level of purchasing fraud was "modest".


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