Watchdog attacks LEDU over handling of fraud cases

Billy Bell, Chairman of the Northern Ireland Assembly's Public Accounts Committee (PAC), has criticised the handling of an attempted and actual fraud case involving former small business agency LEDU.

Mr Bell said LEDU's conduct into the investigation of how £220,000 of public funds was seemingly diverted into the personal accounts of two LEDU employees smacked of "incompetence and complacency".

Mr Bell was speaking on Thursday July 4 at the launch of the PAC's report "Internal Fraud in the Local Enterprise Development Unit” at Parliament Buildings, Stormont.

He said that from the evidence presented to the Committee, PAC where unable to avoid the impression that LEDU "had not acted vigorously, or with proper regard to good practice in the handling of these cases".

Mr Bell said the report highlighted "a number of serious shortcomings in LEDU’s ability to handle fraud and in the Department of Enterprise Trade and Investment’s ability to keep control of this Non Departmental Public Body".

He added: "To have one of the largest frauds in the Northern Ireland public sector is unfortunate, but to have it followed within months by another major fraud in the same unit smacks of incompetence and complacency.

“I firmly believe that the Department (of Enterprise, Trade and Investment) was too lenient in dealing with LEDU’s inability to address adequately the weaknesses in the control environment after the first fraud, it’s handling of the second fraud and also in its failure to hold those responsible to account.

"We are dealing with a complete breakdown in the application of even the most elementary principles of financial controls. I find it astonishing that a Government agency, whose remit included advising small firms on financial control systems, was incapable of keeping its own house in order."

Mr Bell said LEDU had simply "ignored the Department’s procedures for a thorough and prompt investigation, rejected sound advice from Internal Audit and failed to notify the frauds, when first suspected, to both the Department of Finance and Personnel (DFP) and the Comptroller and Auditor General, as required under departmental procedures".

Mr Bell's comments follow this week's report by the Northern Ireland Audit Office (NIAO), which also criticised the allocation of public funds by LEDU during its time as small business agency in Northern Ireland.

The investigation into LEDU's Export Start scheme revealed that grants were given to small companies without thorough investigation and that this in turn, may have cost jobs elsewhere throughout Northern Ireland.

In the lengthy report, the NIAO said that while the average grant offered to businesses was not major, the total assistance awarded under the scheme was significant.

Over a nine-year period, 1992-2001, Export Start provided offers of assistance totalling more than £20.6 million to 613 companies.

It also found that around £2 million was paid to companies who said they could have proceeded with their plans without LEDU assistance.

(MB)