Audit, Inspection and Safety

Newham council to set up commission into ‘astonishing failures’ amid £9m fraud allegations

Newham LBC is establishing a wide-ranging commission to review its financial management in the wake of “astonishing failures of system controls” in a £9m fraud claim against its repair division.

The council’s mayor Rokhsana Fiaz has revealed that an Internal Control Commission is to be set-up following an extraordinary meeting taking place on 22 January, a meeting called following claims that the authority’s repair and maintenance division was £9m overbudget.

It was discovered in December that Newham LBC was investigating a catalogue of allegations regarding the fraud and financial mismanagement which led to nine councillors writing to the Metropolitan Police asking it to intervene.

Mayor Fiaz launched an attack on the authority’s previous leadership, saying she was “shocked” by the “scale of financial mismanagement” and “staggering incompetency at the highest level and, frankly, a shambles.”

Now Fiaz and her cabinet are intending to set up the commission to “advise Newham Council on how to become a beacon of good practice in terms of financial management and internal control.​”

This will be discussed at a further meeting on 5 February, and its proposed that the commission will be led by an independent chair and will review two lines of enquiry.

Firstly, how does the council make itself a model of best practice for internal control and governance following the scandal; and secondly how the authority failed to prevent the issue arising in the first place.

At the extraordinary meeting later this month, a report on the scandal will be considered which will raise concerns from a whistleblower.

Four members of staff have so far been dismissed, including two senior managers, and five members of staff have been given their final written warnings.

The £8.78m overspend took place last year, under the previous administration, and Fiaz says the commission is the latest step in her meeting her pledge to ensure transparency across Newham council.