New details in $1.5m council fraud probe

20:38, Aug 22 2014

Dunedin City Council is scrambling to regain its ratepayer confidence after releasing further details of an alleged departmental fraud reported to police last week.

The local authority delivered an elaborate media package yesterday afternoon announcing suspected fraud within its vehicle, courier and chauffeuring unit Citifleet was now in the hands of the police.

Details from a three-month-long council-initiated Deloitte probe into the fraudulent activity exposed the loss of proceeds from the sale of 152 vehicles from the council fleet, estimated at more than $1.5 million.

The findings had also been passed to the Serious Fraud Office.

Council chief executive Dr Sue Bidrose said Citifleet team leader Brent Bachop died suddenly on 21 May and his death has been referred to the Coroner.

As for the alleged fraud, it appeared it was possible because of inadequate internal checks and balances within the council, she said.

A small number of staff had been identified to undergo "employment processes".

That was primarily because of the lack of checks and balances.

"At this point my priority has to be both to hold people accountable for their actions and also potentially help recover some ratepayer money," Bidrose said.

The Deloitte spend was $200,000. In recent months Bidrose defended the probe against questioning as to why a police complaint was not laid earlier.

She argued the council had to establish possible fraud before police could be alerted.

In a first-time move Mayor Dave Cull and Bidrose yesterday fronted a video, delivered to media via secure mail, to assure Dunedin ratepayers they could have confidence in their council.

"I want to emphasise that this is an organisation in which people can have confidence," Bidrose said.

"The people who work here are overwhelmingly decent, hard-working public servants committed to the best interests of the city.

"We are changing things here at the DCC ... which, frankly, are long overdue."

Cull said the fact issues had now been found showed the council had been right in its recent push for more transparency and tighter processes.

Inspector Jason Guthrie of Dunedin police yesterday confirmed the council complaint was being assessed and would be investigated further. The case was likely to take months, he said.

Fairfax Media reported in early June the council had begun reviewing accounting and procurement practices within Citifleet and the subsequent Deloitte engagement.

Informed sources told Fairfax Media that investigators unravelled a vast network of vehicle transactions and a list of council vehicle movements through a network of buyers and subsequent owners over more than a decade.

The full Deloitte findings were to have been available to the public on completion of the investigation but that was not now possible, Bidrose said.

"The matter is now with the police and on their advice, and the advice of the Crown Solicitor, we are not releasing the Deloitte report at this stage, to ensure we do not prejudice any police investigation," she said.