Repairs scandal: Corrupt council staff took bribes

Charles Owenson
Charles Owenson
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TWO former city council officials have admitted accepting thousands of pounds of bribes from contractors as part of an elaborate scam.

Charles Owenson and James Costello took cash and hospitality from Brendan Cantwell and Kevin Balmer in exchange for influencing lucrative contracts for Capital-based firm ABC Ltd.

James Costello

James Costello

Owenson and Costello admitted breaching the 1889 Public Bodies Corrupt Practices Act during a short hearing at Edinburgh Sheriff Court yesterday. The pair, both from the Capital, were officers at the council’s now-defunct property care services section when they accepted the bribes between January 2006 and November 2010.

Three other men – former council officers Martin Rennie and John Markham, and contractor Gordon McKenzie – were cleared after their not guilty pleas to corruption charges were accepted.

It followed a hearing last week, where contractor Gordon Campbell’s not guilty pleas to two charges were accepted by the Crown.

Yesterday, Livingston men Cantwell, 44, and Balmer, 52, admitted giving £42,521 in cash and hospitality to the value of £30,249.21 to Owenson and Costello as inducements to secure contracts for the repair and maintenance of publicly-owned buildings.

How about givin us free transport down to Gullane and back with a courtesy stretch limo. We are looking for free transport and some liquid refreshments”

Council staff email

Owenson, 62, also admitted receiving fees and hospitality worth £28,387 as a reward for the allocation of council work.

He pleaded guilty to concealing and transferring criminal property by moving £28,387 into a bank account, while Costello admitted a similar charge to the tune of £14,134.

Costello, 44, received the cash as a reward for awarding contracts to ABC Ltd.

The money laundering took place between June 2007 and April 2012 at various locations in Scotland.

Brendan Cantwell

Brendan Cantwell

Balmer admitted causing the city council to pay £67,923 to ABC Ltd between April 2007 and May 2010 and obtaining £22,641 by fraud.

He also pleaded guilty to adding £986.51 to a council invoice for materials and labour given to Costello for free – the cost was put on a bill for works carried out at Duddingston and North Leith Churchyards in the Capital.

All of the charges related to work contracts for council-owned public buildings, rather than privately-owned properties.

The four men will appear before Sheriff Michael O’Grady QC again on Friday, to allow depute procurator fiscal Keith O’Mahoney time to prepare a full account of the complex scam. A hearing under the Proceeds of Crime Act will be held on August 12.

The city council's Waverley Court HQ. Pic: file

The city council's Waverley Court HQ. Pic: file

Yesterday’s guilty pleas brought a five-year police investigation to an end and prevented the need for a costly four-week trial.

Detective Inspector Arron Clinkscales said: “Where reports of fraud or corruption in public office are made, Police Scotland will investigate such allegations thoroughly and robustly.

“The outcome at court today endorses the hard work of Police Scotland and the partner agencies involved in a long and complex inquiry.”

Sue Bruce, the city council’s chief executive, said the scandal had prompted a major overhaul in the local authority’s property departments.

She said: “We expect the highest standards from our staff and where allegations are made concerning mismanagement or fraud we will

investigate and take the strongest possible action. We have reviewed and made substantial changes to our management arrangements for this service. It is important that the public have the utmost faith in the services we provide.”

The council confirmed Owenson and Costello no longer worked for the city.

When claims of fraud and corruption first hit the headlines, there were reports that council officials received benefits ranging from golf trips, holidays, rides in limousines and extensions to driveways.

There were also allegations that a book used by council staff to record hospitality “disappeared” when the controversy came to light.

In July 2012, the Evening News revealed the details of a damning £1.5 million report by auditor Deloitte which referred to the council’s property care department, as well as its separate property conservation section, which dealt with privately-owned properties.

The leaked files suggested that some council officials were trying to score free holidays and other benefits.

E-mail correspondence from a worker to a contractor, sent from his work e-mail account during office hours, read: “How about ****** givin us free transport down to Gullane and back with a courtesy stretch limo. We are looking for free transport and some liquid refreshments.”

A separate e-mail added: “When is the trip to Italy for the chosen ones in our department . . . I could bring you back a pair of Italian shoes or bag.”

In the property care department, five people were sacked.

A total of 15 people – four former council employees and 11 contractors – were originally charged with offences in connection with the case.

Among the property care concerns were alleged discrepancies in the cost of works at Colinton Mains Community Centre in 2011.

The venue had been on a shortlist of closure-threatened centres because of excessive costs of keeping it open.

But members of the centre’s management committee won it a late reprieve after questioning a series of bills handled by the property care department for work that they claimed never happened.

The bills totalled £3000 more than the true cost of the work carried out, and documents were passed to police.

The charges, which ran from 2007 to 2010, included a £287 bill for removing offensive graffiti in 2007-8, followed by another £544.50 charge a year later for removing racist graffiti – despite no graffiti having been discovered or reported in that period.

SNP councillor Stefan Tymkewycz, one of the first to raise concerns about property care services, welcomed yesterday’s outcome.

He said: “It’s no surprise to me from what I’ve known of the situation. I’m pleased that there won’t be a lengthy and costly court case with them pleading guilty, and that an appropriate sentence will be handed out to all those concerned.”

‘THIS IS JUST THE TIP OF THE ICEBERG’

Investigations into two separate city council property departments were launched after a whistleblower came forward in 2010.

The property conservation section was investigated following claims that contractors carried out over-engineered or unnecessary statutory repairs, before billing homeowners.

Criminal charges were never brought, however the scandal led to an investigation into the separate property care department, which handled maintenance work at public buildings.

Former city council leader Ewan Aitken, who campaigned for a probe into both systems, said: “I’m glad that justice is being seen to be done but the real challenge now is making sure that what they did doesn’t have a detrimental impact.

“I hope that justice will be done under property conservation and statutory notices as well. This is just the tip of the iceberg. It’s just extraordinary, but there is much more. It’s just whether others will be prepared to give evidence and take it the whole way.”

Timeline

November 2010: News reveals several council staff are under investigation over alleged irregularities involving repair con-tracts. One employee suspended.

March 2011: Council pledges to carry out an independent investigation as five more staff are suspended.

June 2011: It is revealed that the property care department – which deals with public contracts on schools, libraries, community centres, toliets and other public buildings – is under investigation.

September 2011: Four more suspended. Lothian and Borders Police crank up their own investigation.

October 2011: It is alleged that Colinton Mains Community Centre received massive bills for works never carried out. It was claimed it was overcharged by £300,000.

December 2011: Four council workers are sacked in relation to the scandal. Independent surveyors are drafted in to the council.

March 2012: Five people sacked from the property care department.

June 2012: 15 people are charged by police in relation to fraud, corruption and money laundering offences.

January 2014: Eleven defendants appeared in the dock at Edinburgh Sheriff Court in relation to the property care department investigation. All appear in private.