Examination of Witnesses (Questions 20
- 39)
MONDAY 13 NOVEMBER 2000
SIR JOHN
BOURN, DR
NORMAN PERRY,
MR BILL
HENNESSY AND
MR RICHARD
CLARK
20. I am sure all Members of the Committee will
welcome that. Were you not a bit late in the field when adopting
such methods?
(Dr Perry) Clearly it would have been better if this
system had come in two or three years earlier, or even before
that. All I can say in explanation of what was happening in the
early 1990s is that a lot of systems were changing and while that
certainly does not condone or exonerate sloppiness, and there
was some sloppiness in the regulatory procedure, it was a system
that was in evolution at the time and has evolved further since.
21. You referred to the early 1990s, let us
come a bit more up to date. There is considerable criticism in
the report of the failure of the Corporation to allow the National
Audit Office faster access to Focus. What was the reason for that
delay? Six months I think it was put at.
(Dr Perry) The actual delay in granting access was
four months and then there were two months needed for discussions
to set up the meeting and the visit. I think it is fair to say
that at the time the request came from the NAO in September 1997
it caused a fair amount of surprise because a year earlier the
Corporation had been told that the NAO's investigation would not
require access. In that intervening time the NAO had been given
access, as indeed it is entitled to have access, to all the papers
and documents which were owned by the Corporation, whether at
headquarters or in the regional office.
22. That has not answered my question. When
the NAO were asked for access, why did you not say "yes"
immediately?
(Dr Perry) Oh, for a number of reasons. Firstly, as
I say, there was an element of surprise because the request had
not been expected. Secondly, there was an offer that was made
immediately to the NAO to provide any information that would be
required given that a huge amount of information had gone already.
My predecessor also felt that it was necessary to consult the
department because, as the Chairman noted, there is not an automatic
right of access to RSLs and, as an NDPB, the Corporation felt
it necessary to go and ask the department.
23. Were you not a bit embarrassed in 1997 that
this request was being made when assurances had been given to
this Committee in 1994 that prompt action against fraud and irregularities
was being undertaken but that was at the same time that this corruption
was going unchecked?
(Dr Perry) The prompt action was taken after the fraud
was discovered by Mr Clark and reported to the Corporation. Within
two or three weeks the police had been asked to investigate, formal
regulatory action was being taken, and a number of independent
investigations had been launched. I think the NAO report does
say that action was very vigorous once the fraud was discovered.
That, of course, was about a year and a half before the request
for access was made.
24. Just explain to the Committee why it took
six months to ensure access to the NAO in 1997?
(Dr Perry) I certainly would not want to defend the
length of time it took. I very much hope that if the circumstances
arose again these things would be sorted out much more quickly
than they were. It was a combination of circumstances. The presumption
when the NAO ask for access is that it will be granted but in
this particular instance there was a criminal investigation, the
police were still on the premises at Focus, a large number of
independent investigations had been held and there was a genuine
belief in the Corporation at the time that the Corporation itself
could provide any information which the NAO required.
25. I am also concerned that the Valuation Office
Agency refused to disclose information to the Corporation that
might have helped. I really think that we require an explanation
from the Treasury of whether co-operation is now granted more
readily. I think we all appreciate the need to ensure confidentiality
in taxpayers' affairs but not in the affairs of fraudsters or
potential fraudsters.
(Mr Hull) I have checked with the Valuation Office
what their policy is on disclosure of information and they have
verified that what the report states was their policy at the time
and is their current policy. The reasons are the need to ensure
the collection of tax and also privacy to the individual. It is
recognised across Government that there are conflicts between
issues like this where there is a need to collect information
for fraud investigation and another need to protect the privacy
of the individual. The Performance Innovation Unit of the Cabinet
Office has just begun to undertake a study of privacy and data
sharing which is expected to report in the spring of next year.
I have drawn this particular report to the attention of the Secretariat
and invited them to use it as a case study.
26. To either Mr Clark or Dr Perry, we know
what has happened to the people who have been convicted, I am
trying to look at what happened to some of the people whose actions
seem to have cost the Association considerable sums. The architect
who certified the repairs in figure 3, what is that architect
doing now?
(Mr Clark) I believe he is no longer in practice.
27. No longer in practice. Is that because of
action taken by his or her professional association?
(Mr Clark) I cannot say that for certain, I think
it is possible.
28. The valuer who was declared bankrupt?
(Mr Clark) I have no knowledge of his current activities.
The decision to cease legal action was taken over two years ago
and I have no current knowledge.
29. Could he be working for another housing
association?
(Mr Clark) I think it is highly unlikely, but I cannot
be absolutely certain.
30. Can you give us any guarantee, Dr Perry?
(Dr Perry) No, Mr Griffiths, I have no knowledge of
that particular instance. Whilst the Corporation does have powers
to disqualify people from being on the boards of management of
the housing associations, we do not have the same powers with
regard to employees or consultants[1].
31. Do you know who the valuer is?
(Dr Perry) I do not.
32. Do you not think it would be helpful to
other associations to know who that valuer is and also to circulate
them saying "beware of this valuer"?
(Dr Perry) I think we would need to be very careful.
The West Midlands Police carried out a very wide ranging investigation
into this matter. They brought charges against three people and
considered, I believe, but did not bring charges against a number
of others. I think it would be slightly dangerous for either me
or a body which I represent to make assertions in public about
people against whom no charges have been brought, however difficult
we think the circumstances might be.
33. Was criminal action considered against this
person? I know action was not taken because he was bankrupt, but
was criminal action considered?
(Mr Clark) The police looked at all of our papers
and were examining everybody who was involved in the matter to
see whether or not criminal proceedings could be undertaken and
they decided not to.
34. The architect in question who you said you
believed is no longer practising, do you know that architect's
name, Dr Perry?
(Dr Perry) No, I do not.
35. So there has been no circulation to housing
associations saying "beware"?
(Dr Perry) None that I am aware of.
36. Do you think that is to be regretted?
(Dr Perry) I repeat that it is very difficult territory.
Where people have been prosecuted or where formal disciplinary
action has been taken against them then there are ways of publicising
that.
37. I think we were told, were we not, that
formal disciplinary action had probably been taken against this
person?
(Mr Clark) No. We ceased to use the architect obviously,
but we also considered legal action and decided not to take it
on the grounds that he was no longer practising. That is not the
same as a formal disciplinary. There was nothing criminal or civil
on the record against him.
38. You believe he is not practising?
(Mr Clark) That is right.
39. You do not know whether he has been struck
off?
(Mr Clark) No, I do not.
1 Note by Witness: The Corporation can remove
from office any board member or employee responsible for mismanagement
or misconduct, following a statutory inquiry, under Schedule 1
to the Housing Act 1996. Board members so removed are thereafter
disqualified from being on the board of another RSL. Employees
so removed however are not disqualified from working for another
RSL. Back
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