CORRUPT?

1:18pm Thursday 10th August 2006

AN anonymous tip-off has sparked an investigation into alleged malpractice within Newham Council's housing department.

Chief executive Dave Burbage was so concerned about claims, made in a unsigned letter sent to East Ham MP Stephen Timms and passed to the council, that he has ordered a full independent inquiry.

The Guardian understands the allegations relate to a lucrative contract to renovate privately-owned properties used by the council to house homeless families.

Repairs would usually be carried out by the council itself, but two years ago a decision was taken to contract the work out in a deal estimated to be worth up to £2m.

It is thought the contract was awarded to a firm owned by the landlord of properties used by the council, creating a conflict of interest and resulting in him using taxpayers' money to increase the value of his own assets.

Members of staff, believed to be in junior positions, have been suspended.

However, inquiries are expected to involve top-ranking management because the decision to commit such a large sum of public money would need approval and elected members were not formally consulted.

A council spokesman said: "As always with such allegations, the council takes them very seriously.

"The chief executive has decided that it would be appropriate to hold a full investigation and this should be conducted independently by someone external to the council.

"The investigation is under way and no conclusions have yet been drawn. It is anticipated that a final report will be made by the end of September."

The probe is being carried out by solicitor Amanda Kelly, who investigated malpractice allegations within Newham's Parks Constabulary last year.

Some of the allegations centred on alleged abuse of the contract tendering process and Ms Kelly ordered an internal audit.

The resulting report found no evidence of criminal activity but highlighted an "almost complete lack of a control framework and a failure to always comply with the Procurement Code of Practice and financial regulations."

She went on to say that the situation was exacerbated by the scale of the payments and possible relationships between staff and contractors.

It was suggested to Ms Kelly by a "number of people" that managers and contractors were freemasons and that favours were being done for fellow lodge members.

Elected members must declare their membership of the masons and Ms Kelly called for council officers to be required to do the same.

Further details of the allegations were included in an appendix to the report which has never been made public.

A source, who has seen the document, said it details how management awarded a lucrative contract which did not go through the required approval process and jobs were created for associates.