Former State employee sued over alleged kickbacks

A former State employee is being sued over the alleged misappropriation of taxpayers' money to the value of almost €500,000, …

A former State employee is being sued over the alleged misappropriation of taxpayers' money to the value of almost €500,000, it has emerged.

A supplier of IT services and equipment is also subject to the action being taken against a former employee of the National Educational Welfare Board (NEWB) - the body created in 2001 to ensure all children get an education.

The Comptroller and Auditor General (C&AG), John Purcell, issued a report today saying almost €200,000 was unnecessarily spent by the board on IT equipment and that €270,000 had been paid for IT services not provided.

The report covers the first two years of the board's operation from 2003 to 2005. In June 2003, the board assumed responsibility for payments processing from the Department of Education.

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In June 2005, following the detection of a missing e-mail, the NEWB authorised an investigation into the procurement of IT equipment and services.

"The investigation revealed that the board's control systems were circumvented and it had incurred nugatory expenditure of approximately €470,000," the C&AG found. The investigation cost €228,000.

"The losses and the surplus equipment were attributable to internal control weaknesses which were exploited by a member of staff, apparently in collaboration with a supplier," the report said.

Internal controls were reviewed in 2004 and the board recognised its control procedures allowed for the same person to order goods, approve payments and sign cheques.

The board drew assurance from the review's finding that the supplier in question won its contract through a proper tendering process.

However, the C&AG found: "Approximately 64 per cent of all information technology purchases were sourced from a single supplier, and only one of 122 individual purchases were the subject of a tender process".

After an e-mail from the finance manager to chief executive Eddie Ward questioning IT expenditure was removed from their PCs, a firm of management consultants was engaged to conduct a forensic analysis of the affair.

The inquiry found evidence of the supplier and IT manager colluding in generating payments for services not provided and overpayment for equipment.

The supplier admitted to paying over €136,000 directly to the IT manager - around half the amount paid for services not rendered. The manager was suspended and later resigned.

The NEWB is suing the supplier and the former IT manager, and it referred the matter to the gardaí.

"The activities of the staff member were clearly in breach of the board's required procedures and practices. The board deeply regrets their occurrence and is seeking full recovery of the monies lost from the former staff member and the supplier," the NEWB said in a statement.

It added that it was unable to comment further pending the outcome of the legal proceedings.