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DCC investigating suspected fraud cases

Independent auditors have been called in as the Dunedin City Council continues to investigate five cases of suspected fraud.The council, responding to an official information request from the Otago Daily

Times, has confirmed 18 cases of "suspected or potential fraud" within the organisation have been reported since the start of 2016.

Of those, 13 cases had already been investigated and the file closed with no fraud identified, but a further five cases identified — four of them raised in recent weeks — were still under investigation.

Council finance and commercial general manager Dave Tombs told the ODT the ongoing investigations included a probe into the sale of surplus items from the Dunedin Chinese Garden in a South Dunedin shop.

That investigation was in its final stages and likely to be wrapped up within weeks, Mr Tombs said.

"We’re just going through the formalities of closing the file."

But the list included four other instances in which concerns had been raised, which were still under investigation, he said.

The most serious had been raised by an external party and involved a former DCC staff member said to have failed to declare a conflict of interest dating back to 2016.

Independent auditor Crowe Horwath had been asked to review that case, but details of the "allegation" could not yet be discussed, Mr Tombs said.

Of the three other cases still being investigated, one involved security permissions for access to DCC computer systems, a second centred on the "minor" misuse of council technology for non-council business and a third related to "minor expenditure patterns" involving petty cash.

All three had been raised by DCC staff following recent anti-fraud training and refresher programmes, which Mr Tombs said was "a great success indicator".

"It’s not saying ‘here is fraud’ — it’s them saying ‘we think there might be something here’," he said.

The issue of computer security permissions had been raised before, resulting in changes to internal controls, but was now being revisited as he preferred to err on the side of caution, Mr Tombs said.

The investigation into questions over petty cash was just beginning, but was believed to involve a sum less than $2000, he said.

He expected all five inquiries would be concluded by early next year, if not before Christmas.

The other 13 cases of suspected fraud investigated since the start of 2016 had been closed without identifying any issues, he said.

A request for copies of reports and documentation relating to all 18 instances of suspected or potential fraud was declined.

However, Mr Tombs said the concerns raised by DCC staff showed fraud was now "on everyone’s radar".

The council had introduced a suite of changes since 2014, when it was discovered 152 council vehicles had been sold, and the proceeds pocketed, over more than a decade.

The manager responsible, who subsequently took his own life, was later found to be at the centre of the $1.5 million fraud, which went beyond cars and involved a range of activities, including personal spending of at least $102,908 on council fuel cards.

Mr Tombs said all staff now received formal anti-fraud training as part of their induction, as well as six-monthly updates and ongoing training, while the audit and risk subcommittee reviewed a fraud register at every meeting.

The results were encouraging, Mr Tombs said.

"What’s encouraging is the culture of the place is fraud-resistant.

"Some places can have a culture where fraud’s just accepted. That’s certainly not the case here."
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