The public auditor has blamed the Housing Corporation for failing to detect corruption at a housing association.
In its long-awaited report into fraud at Birmingham-based Focus housing association, the National Audit Office said that routine reviews of the association had not identified the potential for fraud and corruption within the association.

Three men were sentenced to prison in April for their role in the £1.5m fraud which took place between 1991 and 1995 (Housing Today, April 20).

The report into the affair has rekindled the turf war between the National Audit Office and the Corporation over access to housing associations' books.

But it does not draw a line under the affair. Parliament's public accounts committee will hold a hearing on the Focus scandal and report back to the House of Commons early next year, and a Treasury minute detailing the government's response will then be issued.

Audit office head Sir John Bourne said: "It demonstrates the importance of the Housing Corporation's accountability to parliament for their use of public money. The Corporation could have done more before November 1995 but it is now important to learn lessons from the experience."

Property dealer Darshan Ram pleaded guilty at Birmingham Crown Court to making corrupt payments to Focus employees John Hartshorn and Keith Hinson to "oil the wheels" for the purchase of around 50 homes by Focus for £1.8m.

When the corruption was uncovered in late 1995 it emerged the association had paid £1.1m above the market value including £200,00 public money.

The report found that the Corporation had received allegations of corruption by Hartshorn in 1994, but did not take sufficient steps to investigate.

David Davis chairman of the Commons public accounts committee said the fact that fraud went on for four years indicated "a complacent management culture and lack of proper oversight by the Corporation during this time."

"It shows all too clearly the need to ensure the NAO has automatic powers to investigate such risks to public money immediately."

The Corporation accepted the report, but rejected accusations made by some MPs that it had deliberately stalled the NAO's investigation for six months.

Assistant chief executive Simon Dow admitted that the corporation had intervened when the NAO first asked to investigate Focus.

He insisted principles had been at stake and that the corporation had a right to question the NAO's motives.

Source

Housing Today