“one of the worst examples of bad procurement practice that this Committee has ever seen”

The case of solicitor George Brangam defrauding the Department of Health prompts Máirtín to reach towards a conspiracy theory that isn’t exactly supported by the Northern Ireland Assembly’s Public Account Committee’s report

Weaknesses in supervisory controls
17. The Committee has the clear impression that controls were weaker in some health bodies than in others. In the Committee’s view, Brangam targeted the health bodies he defrauded precisely because he knew that they operated in a lax control environment, and he made a calculated judgement that he could get away with it. Clearly, management with specific responsibilities for making such payments, particularly in these health bodies, were not sufficiently alert to the possibility of fraud.

18. The Committee commends the junior member of staff at Causeway Trust who raised initial concerns about payments to BB & Co but is disappointed that these concerns were not followed up promptly. This failure to act decisively raises questions about the quality of supervision within the Trust. The Accounting Officer has attributed the inadequate follow-up to lack of continuity of staff. The Committee finds the absence of such a basic control disheartening. Supervisory negligence is explored further at paragraph 43.

19. The Committee considers it essential that staff involved in processing payments to contractors are well trained, alert to the possibility of fraud and of the need to comply with controls. The Committee endorses the Accounting Officer’s view that training and leadership of staff working in this area must be reviewed to strengthen controls and secure continuity, particularly in such a period of change within the health service.

The PAC report identifies the primary failure

Weaknesses in financial procedures and compliance

12. One of the reasons why Brangam was able to execute these frauds was the health bodies’ practice of paying cheques into the solicitor’s client accounts, rather than directly to claimants. The Committee expressed its surprise that this approach was considered acceptable and that normal tried and tested market practice was not followed. The Department admitted it had no defence to that point. The Committee concurs with the Law Society that this practice was inconceivable and likely to have been a further reason why these frauds were perpetrated against Health & Social Care bodies.

And the over-reliance on one firm of solicitors is evidenced in the figures

Procurement of legal services

Development of an open market

51. Until 2006-07, BB & Co received 70% of the payments made to legal service providers (other than the Agency) despite 23 other firms being on the Select List. Of the £30 million spent on legal services over the period 1996 to 2006, £11 million was paid to the private sector and £7 million of this was paid to Brangam, Bagnall & Co who effectively became a private sector monopoly supplier.

52. The Accounting Officer has admitted that the philosophy at the time of maximising the scope for competition did not work effectively and that Department procedures should have been tighter. The Committee is concerned at how easily Brangam was able to use his inside knowledge of the health sector to gain the lion’s share of the market, and the impact on other firms unable to get a slice of this business. In the Committee’s view, the Department should have monitored this situation and acted promptly when it was clear that an effective open market never developed for legal services, particularly when concerns were raised by elected representatives in the Assembly and elsewhere as far back as 2000 about the disproportionate amount of business given to BB & Co.

Of course, concerns about the public procurement process continue..

The Belfast Telegraph’s David Gordon noted the Committee’s concerns in this case.

The Assembly members also said it was “appalled” by the way Brangam’s 1995 departure from the CSA had been handled.

“For the six-month period between expressing his intention to leave and actually leaving, Brangam was involved in two conflicting roles,” the committee added.

“On one hand, he was running the in-house legal services function as the Director of Legal Services, and on the other he was establishing his own practice to provide legal services to the health sector.

“The attempt to manage this conflict and the leadership shown by both the department and the agency at this time was woefully inadequate.”

And on the wider view..

The PAC report further said that Brangam’s corruption should have been “capable of detection” through the regulatory regime of the Law Society, the disciplinary body for solicitors.

On the wider issue of regulation within the profession, the MLAs stated: “Since 1998, the Law Society has intervened in solicitors’ practices 63 times, with some firms being investigated more than once.

“The Law Society made the point that intervention often results in a satisfactory conclusion, though 20 firms had been closed down.

“The committee is astonished at the number of interventions, including cases of fraud, within such a small society as Northern Ireland and notes that there are similar problems within other jurisdictions.”

On another note, is it odd that a Sinn Féin MLA on the PAC was replaced by a DUP MLA..

4 With effect from 21 January 2008 Mr Ian McCrea replaced Mr Mickey Brady.

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