23/7/2009 - Statement from Cumbria County Council on CAW : Cumbria County Council

Three men have been jailed at Carlisle Crown Court today for conspiracy to obtain property by deception from Cumbria County Council.

The owner and two managers from Barrow waste management company CAW were sentenced at Carlisle Crown Court today for defrauding the council out of £100,000.

CAW managing director Dave Armer was sentenced to 15 months imprisonment (not suspended) and disqualified from being a director of a company for four years. He was also ordered to pay £60,000 in costs.

Donald Kershaw was sentenced to eight months imprisonment (not suspended) and Peter Newton six months (not suspended).

All three men had pleaded guilty before the trial was due to start in June.

CAW were contracted to the county council to run seven local household waste recycling centres mainly in the South of Cumbria and to collect and dispose of household waste from them.

Cumbria County Council identified accounting irregularities in the way CAW were dealing with the waste. The company was paid on the basis of a fixed fee plus an additional payment for tonnage in excess of an agreed amount. Through a variety of means, the company defrauded the council by over-inflating the tonnage it was dealing with to increase the level of payment. The council's contract management and audit procedures identified the risk and triggered an investigation by Trading Standards officers and the police.

Cumbria County Council's acting chief executive Jill Stannard said:

"We are pleased that the serious nature of the fraud against us has been recognised by the judge and he has handed down custodial sentences to all three defendants. This has been a complicated investigation from the outset, but now the work of county council officers, trading standards and the police has brought these individuals to justice.

First and foremost we should remember that a criminal offence has been committed against the county council –and indeed against the taxpayers of Cumbria. The criminal activity was identified and investigated by council officers before being referred to the police.

There are important lessons we have learned from these events. The issue was not identified and acted upon quickly enough by council officers. A management review of what took place has been carried out, and a number of recommendations regarding practices and culture within the organisation have already been taken forward –including improvements to audit and monitoring arrangements and more effective promotion of whistleblowing policies. Our fraud strategy has also been reviewed and new technology put in place to detect early signs of fraud.

This investigation took place three years ago and many of the staff who were involved in waste at the time have now left the council. As is normal in cases of this type, investigations to determine if any question of capability and or disciplinary actions arises have been on hold pending criminal proceedings, but will now resume.

There is no suggestion that any council officers were involved in corruption or criminal activity. But it is absolutely right that the public should expect the highest standards from public servants.

We intend to continue with the civil proceedings which we hope will claw back considerable amounts of the money defrauded from us by this operation."