Newcastle City Council investigation into possible fraud among own staff referred to police
An investigation into potential fraud at a North East council has been referred to the police.
The Local Democracy Reporting Service (LDRS) revealed in April that a probe was under way at Newcastle City Council concerning possible fraudulent activity within the council’s transport department.
The local authority confirmed on Tuesday morning that the “financial irregularities”, understood to relate to potential overclaiming involving an unconfirmed number of employees, has now been passed to Northumbria Police to look into further.
It comes at a time of political instability and uncertainty within the civic centre’s corridors of power.
A Newcastle City Council spokesperson said: “We can confirm that, following an initial investigation into financial irregularities in one part of the transport division, the matter has been referred to Northumbria Police. We will offer any support that the police require during the course of their enquiries but we are not in a position to comment further at this time.”
A police spokesperson added: “We can confirm we received correspondence from Newcastle City Council on June 23. We are currently reviewing that material.”
City councillors were informed of the development in an email from chief executive Pam Smith on Tuesday morning.
The council also confirmed that its transport division has been moved out of the portfolio of the council’s director of investment and growth, Michelle Percy, until further notice.
It also said that the council’s internal investigation into the allegations had related to a section of the transport department, rather than any individuals in its corporate leadership team.
Responsibility for transport issues will sit with Christine Herriot, the Labour-run council’s director of city operations, neighbourhoods and regulatory services, for the time being.
The LDRS understands that Ms Percy has since gone on a period of leave from the civic centre.
Civic centre officials also confirmed that, following the launch of the investigation earlier this year, it has had to pay to bring in external staff to assist with the running of a section of its transport department. It described this as “standard practice in instances where additional capacity is needed”.
This episode is the latest in a series of controversies to have surrounded the council over recent years.
Former council leader Nick Kemp resigned his post last year, after it emerged that he was the subject of a bullying complaint from Ms Percy. He has strenuously denied the allegations and an investigation into that complaint is yet to report its findings.
Accusations of bullying within Newcastle Labour have been cited by former councillors John-Paul Stephenson and Shumel Rahman, as well as the now-independent Habib Rahman, as well.
There have also been repeated concerns raised about the behind-the-scenes culture at the civic centre and rumours of clashes between city politicians and council officers.
Members of the council’s audit committee are known to have written to Coun Kemp during his tenure as leader to warn of “grave concerns and serious reservations concerning a number of governance issues” – including claims that some top executives were “unwilling or reluctant to answer challenging questions openly”.
Last December, the council committed to subjecting itself to an independent inquiry into its leadership. However, it has since said that will be delayed until the conclusion of the separate investigation of the bullying complaint against Coun Kemp.
Another senior figure, director of workforce and inclusion Pam Perry, is expected to leave the council later this summer.
Its head of property, Paul Stewart, has also departed.
Meanwhile, the Labour Party has recently lost its majority in the council chamber and is now operating a minority administration.
Council leader Karen Kilgour survived a vote of no confidence last December, but sources have told the LDRS that opposition parties are weighing up whether to make another move to oust her.
Labour lost a vote at a council meeting for the first time in recent memory earlier this month and its councillors are now outnumbered by a combination of Lib Dems, independents, Greens, the Newcastle Independents party, one Conservative, and the new East End and Associates Independent Group that includes Coun Kemp.
Colin Ferguson, leader of the council’s Liberal Democrat opposition, said that it was “absolutely right” that the concerns over financial irregularities had been referred to the police.
He added: “The public deserves clarity on who knew what and when, and for how long this has been going on. They have a right to know whether this could and should have been dealt with a long time ago. This underscores the importance of strong and effective audit and scrutiny functions that can ask challenging questions within a culture of candour.”