DCC fraud: a salutary lesson

Deloitte's report into fraud at the Dunedin City Council has proved as damning as suspected.

Not only did it involve the pocketing of money from the sale of 152 vehicles, but it appears former team leader Brent Bachop was at the ''centre of'' other potential issues.

The debacle is an indictment on the council and a serious warning to others.

Supposedly, the council had systems and checks, but they failed spectacularly.

It is almost beyond belief that suspect dealings worth at least $1.59 million, and possible considerably much more, took place.

What makes it worse is the way several ''red flags'' were ignored or investigated insufficiently.

These included Mr Bachop's excessive lifestyle as well as questions over the years, including from Cr Lee Vandervis.

While these flags were flying, down the road at the then Otago District Health Board, Michael Swann's place in a $16.9 million fraud was being uncovered and receiving extensive publicity.

His case should have acted as a sharp warning to other large organisations.

Clearly, in the council's case, it did not.

The council, including Mr Bachop's managers, generally has had good and competent staff.

But something went wrong.

Were they too slack, too trusting, too complacent?

All of the above?

A classic instance concerns the finding Mr Bachop spent $102,908 on a council card - which was also used for vehicle serving and maintenance - on miscellaneous items, including soft drinks, chips, milk, chocolate biscuits, bread and fuel for personal vehicles.

Mr Bachop's manager regularly signed off those expenses. Giving the benefit of the doubt, it would appear the manager simply did not check the details.

Mr Bachop himself, and the council says no-one else in the council was found to be directly dishonest, was well liked and capable.

That just goes to show that other councils, institutions and organisations have to be on guard.

They not only need appropriate systems, but must follow them.

Rules, often developed long ago and adapted for the computer age, might at times border on pedantic or petty.

But they developed in recognition of human susceptibility to temptation.

Court proceedings are reported regularly where respected and trusted staff or club stalwarts raid the till.

Often this might be spurred by a gambling addiction or a desire for lavish living.

Sometimes it might be on a smaller scale.

Perhaps those convictions are but a sample of what actually goes on.

When fraud is spotted, it is too easy for a company or organisation to avoid hassle and the potential for unhelpful publicity by allowing the culprit to resign.

The problem then moves elsewhere.

Police need to be called because in instances like this illegalities are likely to arise again.

Not just regular auditing and the following of proper systems has to take place, but any doubts at all need to be thoroughly pursued - while not letting such action drift into undue negativity and suspiciousness.

If something does not seem quite right, like paying Mr Bachop in cash for council vehicles, that needs to ring alarm bells - and be followed up properly just in case.

The ''culture'' of an organisation makes a difference. Some employees have a sense of entitlement that allows them to consider questionable actions as simply being their due.

Even if this is dwarfed in scale and kind by Mr Bachop's fraud, it helps create the wrong atmosphere.

Small indiscretions easily grow and things that are not quite right are more easily accepted.

Fraud is bad enough in private organisations. Public money taken from health board or councils is even worse.

There has been a changing of the guard at the council and we expect lessons have been learned.

The Dunedin debacle is a salutary lesson for the council - and for everyone else.


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