Committee of Public Accounts: Press Notice

REVENUE AND CUSTOMS PROSECUTIONS OFFICE

Publication of the Committee's 51st Report, Session 2007-08

Edward Leigh MP, Chairman of the Committee of Public Accounts, today said:

"The new Director of the Revenue and Customs Prosecutions Office was thrown in at the deep end when appointed from outside the public sector.

"With no previous public sector experience and little guidance, he started by concentrating on how the organization was performing. He did a good job, but it was at the expense of establishing robust financial procedures and controls. HM Treasury must set a date with the National School of Government for introducing bespoke training and support for new Accounting Officers.

"A weak control system contributed towards the Chief Operating Officer of the organization being able, first, to award his wife a lucrative consultancy contract and, secondly, to become company secretary of her newly established limited company. HM Treasury needs to remind departments of the overriding importance of demonstrating propriety in procurement. It must also drive home the message that, where transactions involve conflict of interests, HM Treasury written approval is needed in advance for those transactions."

Mr Leigh was speaking as the Committee published its 51st Report of this Session which, on the basis of evidence from the Revenue and Customs Prosecutions Office (the Department) and HM Treasury, examined the events that led to the qualified audit opinion on the Department's 2005-06 accounts, the measures taken to address the shortcomings identified and the lessons learned for other new organisations.

The Revenue and Customs Prosecutions Office was set up on 1 April 2005 to prosecute offences for the former HM Customs and Excise and Inland Revenue (now HM Revenue and Customs) and from April 2006, for the Serious Organised Crime Agency. It is headed by a Director and is one of the Law Officers' Departments. This was the Director's first appointment as Accounting Officer and he had no previous public sector experience. Operationally, the Department has performed very well under his leadership.

Shortcomings in the Department's internal control system resulted in the Comptroller and Auditor General issuing a qualified audit opinion on its Resource Account for 2005-06. The Director acted decisively in response to the National Audit Office's concerns and all weaknesses have now been rectified. Yet for the first year and a half of its operations, the Department did not have a fully functional internal control system. The finance team was under-resourced and inexperienced, the human resources section was short staffed and the Department did not have basic finance, procurement and human resources policies and procedures in place. The Director lacked the necessary support, training and experience to identify or mitigate the risks.

Three of these risks were serious and draw into question the adequacy of the training and support provided to the Accounting Officer by HM Treasury and others. Firstly, the Department did not inherit adequate records of counsel fees outstanding from earlier years. By allowing the practice of negotiating counsel fees for work done on completion of the work to continue, the Department compounded the uncertainty over its expenditure and accrual for counsel fees. Secondly, a senior member of staff (a member of the Management Board) awarded consultancy contracts totalling £98,000 to his wife without due regard to proper stewardship of public funds. Cleared by an independent disciplinary tribunal of dishonesty, he was subsequently dismissed for gross misconduct. Thirdly, having decided to award the consultancy contract, the Department failed to seek HM Treasury agreement in advance to make payment.