Repairs scandal bosses ‘buried heads in sand’

Hundreds of documents, which were seen by Deloitte and Lothian and Borders Police investigators, show that senior staff insisted that there was “no evidence” of any  wrongdoing within the property conservation department and they threatened to “close” the internal investigation in January 2010.

Former manager Brian Sibbald, who has since left the council on a full pension, wrote to one concerned party, known as Contractor X: “Sorry but this is getting out of proportion . . . you make property conservation sound like the mafia.”

In another e-mail, he blasted a whistleblower rather than addressing the issue, saying: “The whistleblower does get shot in this instance because if sensitive commercial information is being given out by a member of staff, then it would be time for them to find another job.”

Since Mr Sibbald’s initial response, more than 20 people have been suspended within the department and two have been sacked. Nine employees remain suspended, one of whom has been suspended since October 2010. Insiders said that more will be sacked imminently.

In the property care department, which deals with repairs to public buildings, five people have been sacked and 15 people have been charged by Lothian and Borders Police following an investigation into alleged corruption and fraud. Four former property care employees, and 11 contractors and associates of council workers, have been charged with fraud corruption and money laundering offences.

It is understood that council bosses are “furious” about the way the department handled the grave claims, which weren’t subject to an independent investigation until early 2011.

A damning £1.5 million report by auditor Deloitte – which is being kept under lock and key by officials –  highlighted that the department was highly internalised and did not reveal the issues to council bosses.

One insider said: “The council was told time and time again, and given ample evidence, that there was a serious issue in this department. It was flagged up by Contractor X in 2009, but department bosses refused to listen and they faced hurdle after hurdle when trying to get heard.

“There was a ‘head in the sand’ attitude and bosses within the department could not – or would not – grasp the seriousness of the situation. This should have come to light much earlier. In January 2010, the acting head of services [Janis Dunn] said they planned to close the matter. Then Bill Ness [former head of services] wrote that there was ‘no evidence of contracts having been placed inappropriately’. What a complete joke. There are thousands of pieces of evidence.

“After the initial investigation into the conservation department, serious issues were found within property care and this has led to criminal charges. Both departments are a mess. Staff and contractors were ignorant and arrogant enough to think they could get away with highly immoral, devious and potentially criminal acts.”

While not explicit, the files also appear to show council employees trying to score free holidays, drinks and trips – and suggest they are offering to sell sensitive information that confirmed some contractors not on an approved council list were getting millions of pounds of work.

One text, sent by one of the sacked council workers to a contractor, read: “I had a lot of flys [files]. Spies on me. I also have a major and minor document dated from ******. How much is it worth.”

E-mail correspondence from the 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 for the golf for me and ****** ********.

“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.”

Contractor X, who allegedly used council passwords supplied by a whistleblowing employee to gather evidence to prove the extent of wrongdoing, first provided evidence to the council in November 2009 dating back to 2006. Documents include inappropriate e-mails, invoices showing overcharging, transcripts of  telephone conversations, text messages and sensitive information which would have helped rival companies outbid competition.

Despite the information and specific examples of wrongdoing Contractor X said he supplied, Mr Sibbald insisted that the situation was “getting out of all proportion” and said there was “no evidence”. Shortly afterwards, Ms Dunn, said that she would “close the matter” without any evidence and on January 28, 2010 Mr Ness formally wrote that “He [Mr Sibbald] has concluded that there is no evidence of contracts having being placed inappropriately.”

Mr Sibbald and Mr Ness were later suspended from their posts within the council and have since left their jobs. Ms Dunn remains suspended.

It is understood that a number of contractors are owed hundreds of thousands of pounds in fees by the council, which is currently facing a statutory notice black hole worth more than £39m. More than 800 individual complaints have been made on more than 500 properties across the city.

The Deloitte report, which has not been made public, highlights that staff passwords were not changed for several years. It said the system could be “hacked by a child”.

Mark Turley, director of services for communities, said bosses had addressed the issue of inappropriate relationships between staff and contractors.

He said: “The council responded strongly to the concerns made about property services by changing the  management and beginning an investigation early last year.

“While we aren’t going to comment on individual cases, the information we uncovered included examples of inappropriate relationships between our staff and contractors, on both sides. Where there was evidence to do so we have taken strong action, with seven staff being dismissed and further disciplinary action under way. We are always open to receiving new information but are confident that our thorough investigation has already identified the main issues we need to address.”

• Do you have a property scandal story to tell? Get in touch with Victoria Raimes on 0131 620 8741 or [email protected]

KEY DATES

November 2010: The News reveals several staff at the city council are under investigation over alleged irregularities involving repair contracts. One employee suspended.

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

April 2011: Two more staff suspended. A leaked report reveals all non-urgent repair notices put on hold and a new system due to be put in place later this year. It points out that Contractor X accessed the computer system to highlight the flawed system.

May 2011: An ex-property conservation employee tells the Evening News bosses were told about the problems as far back as 2005. The number of suspended staff hits 14.

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 they were overcharged by £300k. The council announce that they plan to investigate every complaint through a new team of crack surveyors.

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

March 2012: A further five people are sacked from the property care department.

April 2012: The Deloitte report is finished and viewed by party leaders, who dub it “damning”. It is revealed that the computer systems could have been hacked by “a child”. Another council worker is sacked.

June 2012: One of the city’s top council officials, Dave Anderson, is suspended over claims he failed to adequately investigate the repairs scandal. 15 people are charged by police in relation to fraud, corruption and money laundering offences.