Business charge card investigation update

Report: 16
Date: 22 March 2010
By: DPS Specialist Investigations on behalf of the Commissioner

Summary

This report is to update members of progress made in reviewing and investigating the potential misuse of MPS Amex charge cards. It is based on information from the MPA Internal Audit, MPS Exchequer Services and MPS Directorate of Professional Standards.

This review was first reported to full Authority on 22 November 2007 and to Corporate Governance Committee on 14 March 2008, 12 June 2008, 11 September 2008, 8 December 2008, 23 March 2009, 15 June 2009, 14 September 2009 and 10 December 2009

A. Recommendation

That

1. members note the progress made by the Directorate of Professional Standards in reviewing and investigating the potential misuse of Amex charge cards within the MPS (including any non-MPS holders of MPS cards); and
2. note the estimate of the likely time to complete the reviews and investigations by the Directorate of Professional Standards and resources required to do this.

B. Supporting information

1. The American Express corporate charge card scheme was introduced in April 2003 as a means of reducing bureaucracy and the need to maintain temporary imprest accounts across the Service.

2. As at 22 November 2007 3,533 officers and staff had been issued with American Express cards, of which an average of 700 to 800 were used in any given month. The majority of cards are held in Specialist Operations and Specialist Crime Directorates.

3. Under previous Standard Operating Procedures (SOP), all cardholders were required to complete a claims form accounting for their expenditure, attaching original receipts and a copy of the relevant statement from American Express. The forms were then submitted through the supervising officer to Exchequer Services to be processed on the accounting system. To accommodate deployments outside the MPD, cardholders were required under the SOP to complete this reconciliation within three months from the date of expenditure.

4. At 31 October 2007, unreconciled overdue transactions stood at £3.7m. This figure was made up of pre-April 2006 expenditure of £1.6m and post-April 2006 expenditure of £2.1m.

5. In October 2007 two officers were identified as misusing their issued Amex cards through excessive personal spend. They were arrested by the DPS and both officers have subsequently left the service, with one resigning and one being dismissed. Both of these officers have now been convicted of the criminal offence of misconduct in a public office.

6. An exercise was conducted by the DPS to ascertain the possible extent of misuse of the Amex card system. In November 2007 the report was discussed with the then Deputy Commissioner, Sir Paul Stephenson. It was decided that the current review and investigation of expenditure should take place.

7. It was decided that any outstanding Amex expenditure as of 1 October 2007 would be subject to the review process outlined below.

8. In addition it was decided that expenditure incurred and still outstanding prior to April 2006 would also be reviewed.

9. Following a review in January 2008 of the pre-April 2006 expenditure by Finance Services, Internal Audit and the Directorate of Professional Standards, it was decided that in relation to the pre-April 2006 accounts only, the files would be reviewed on an intelligence lead approach reviewing, in accordance with para 10 below, only the accounts of:

• the 100 cardholders with highest value outstanding returns,
• all officers of Chief Inspector and above,
• anyone not previously included above but identified by Internal Audit’s analysis of the data and to require inclusion.

Review process

10. A review and investigation process was set up between the MPS finance section - Exchequer Services, the MPA Internal Audit and the DPS. The investigation was also referred to the Independent Police Complaints Commission (IPCC) who decided to ‘manage’ the investigation in its entirety. This means that the IPCC has ‘direction and control’ of the investigation. The process to review expenditure is outlined below.

11. Step 1 - All cardholders were instructed to reconcile their accounts by line managers.

12. Step 2 - Exchequer Services updated the account database and made a first assessment on whether the expenditure was within the corporate charge card policy. All those deemed to have been outside the policy, for any reason, were referred to MPA Internal Audit.

13. Step 3 - Internal Audit reviewed the referred accounts and categorised them into category A and B files. Category A files relate to claims outside of the business card policy that were considered potentially unacceptable or without sufficient supporting documentation. Category B files relate to claims outside of the business card policy and include claims where:

• An officer should have used an alternative procurement process to purchase particular items of equipment or services for operational use.
• Items of personal expenditure were repaid by the officer within acceptable parameters.

14. Step 4 – The DPS review the findings of MPA Internal Audit and make a disposal decision.

15. It was agreed between all interested parties that due to the volume of files involved, and the nature of out of policy use, that those officers that are deemed to have category B files would receive no formal discipline sanction for their card use, but would receive ‘training and guidance’ with regards their use.

16. All files that were categorised A, receive a full review by the DPS. A decision is then made as to the disposal method, which includes:

• No further action taken.
• Training and guidance to be provided.
• The file is returned to the officer’s senior managers to administer local misconduct.
• A formal investigation commences and a regulation 9 notice issued.
• The file being allocated to a DPS caseworker for further enquiries to be conducted, before one of the above disposal methods can be decided.

Status of files within review system

Exchequer Services

17. Exchequer Services figures have been reported under the ‘Barclaycard Work stream’.

18. Exchequer Services has now processed all files under the parameters of the Amex review.

MPA Internal Audit

19. Internal Audit has completed their routine review of documents forwarded to them by MPS Exchequer Services. The final stage of their review involved reviewing the claims of the 28 out of the 182 officers identified in paragraph B9 above. These files were referred to Internal Audit by FSD. Of 28 files 21 related to officers of Chief Inspector rank or above. 12 of these officers were assessed as category A, (9 had retired) 6 were assessed as category B and 3 gave no cause for concern. Of the remaining 7 files, relating to officers below Chief Inspecting rank (1 had retired); all were assessed as category A. All 28 files were forwarded to DPS. Future work on Amex cards will be confined to dealing with queries and providing any support requested by DPS in their investigations.

20. It has previously been reported to Corporate Governance Committee that Internal Audit deemed 1183 accounts to be category B files and 188 accounts to be category A. These figures have been revised following review. It is now considered that there are 1122 B files and 195 A files forwarded to the DPS.

Directorate of Professional Standards

21. All files that have been passed to the DPS have now received a first review by the DPS decision maker. This therefore means that all accounts deemed category A as above, have received a first review as to how they should be dealt with, as under B16.

22. There are approximately 16 of the 195 category A accounts that that are still under review by a DPS caseworker. These files have not reached a disposal sanction in accordance with the options outlined at para B16 above.

23. In total to date there are 55 category A cases that have warranted a sanction being imposed or have warranted a formal investigation. The status of these cases have been outlined below at B25

24. The remaining 124 category A cases have been considered appropriate to be dealt with by either a guidance letter, or no further action taken. The cases of no further action are in the main when the cardholder would have received a letter of guidance, but they have since left the service.

25. The following is a breakdown of the number of category A cases dealt with so far by the DPS.

• Nine officers have been charged with criminal offences at this time.
• Three members of the public have been charged with criminal offences. These members of the public are linked to three of the officers shown above. This is therefore a linked case of whereby six people are charged together and are due to stand trial October 2010.
• Two of the officers charged have appeared at court and pleaded guilty to ‘Misconduct in a public office’. One with £82,000 of personal spend received a 10 month custodial sentence. One for £10,000 personal spend received 8 months suspended sentence, suspended for two years.
• One of the officers charged pleaded ‘Not guilty’ to misconduct in a public office in relation to £12,000 of personal spend. Following a week trial he was convicted of the offence and subsequently received a sentence of 6 months suspended custodial sentence and 120 hours community service (This officer was dismissed at a fast track hearing prior to court proceedings).
• There are therefore four separate criminal trials waiting to be heard in relation to Amex related investigations.
• One member of police staff was identified as using his Barclaycard for an excessive amount of personal spend. He has subsequently resigned from the service, receiving a criminal caution for theft.
• Four cases relating to officers are currently with the CPS.
• Three officers have appeared before misconduct hearings. One officer received a formal reprimand. Two officers received the sanction of deducted five days pay.
• Four officer’s cases are under review at the misconduct hearings unit, to ascertain a level of sanction.
• Twenty two officers have received written warnings.
• One officer has received words of advice.
• In addition to the above figures, two officers have also received regulation 9 notices informing them they are under investigation. These cases have not yet reached a disposal sanction.
• Nine officer’s cases will receive training and guidance letters or no further action. This is due to a formal investigation ascertaining no substantive misconduct.

26. It is therefore the case that there are only six formal investigations that are still to be concluded to the point of decision of criminal charge being made, a misconduct sanction being appropriate or no further action being required. In addition there are only 16 cases that are under review that have yet to reach an outcome as outlined at B16.

27. It is therefore considered likely that a decision will be made by the Summer of 2010 as to whether the final 16 cases require further formal investigation.

28. The timetable to complete the current ongoing investigations will be largely dependant on the judicial and discipline process. There are currently four criminal trials yet to take place relating to the use of Amex, these are all scheduled to take place in 2010 with the last one due to commence November 2010.

29. Media attention has been received in relation to the number of category B officers that will receive training and guidance in relation to their card use, in accordance with the decision noted at B15. The number of category B cases currently stands at 1122 based upon MPA figures. The number of cases that will be disposed of by training/letter of guidance will rise as outlined at B24, as DPS enquiries ascertain further cases warrant this sanction, following review. The majority of the cases referred to at B13 concern the card being used outside of the policy but for an operational purpose. It was agreed with the DPS, MPA, CPS and IPCC that a proportionate sanction in the circumstance was a guidance letter, stating that the card was previously used outside of policy and warning against further misuse. This guidance will be sent out in the form of a letter to all those concerned.

30. The DPS is currently supplying the staff and resources to complete this investigation and have the capacity to deal through to conclusion.

31. It should be noted that this review and investigation has identified significant organisational learning. Due to the recommendations made by the DPS, MPA Internal Audit and MPS Exchequer Services, significant improvement of financial control has been introduced. These are outlined below.

32. A New corporate card was introduced in June 2008, in the form of Barclaycard. This has introduced new policies as a direct result of the Amex investigation, these have included:

• An initial review of all cardholders necessity to posses a charge card, followed by further annual reviews.
• A card limit annual spend imposed on cardholders, with 81% of cardholders having the minimum limit of £5,000.
• A system whereby the responsibility to ensure reconciliation has moved away from a central point of Exchequer Services. Each OCU finance and resource unit now has a responsibility to pursue reconciliation, with regular review meetings held between Business Finance Managers and Exchequer Services.
• A reduction from 90 days to 30 days to reconcile.

33. A new overseas travel allowance policy. This policy has removed the travel allowance element that includes hotel accommodation. All hotel accommodation must now be claimed through production of a receipt.

34. A new corporate hospitality policy that outlines clear parameters for spend.

35. MPS corporate cards are no longer issued to officers who are performing a role outside of the MPS, such as working for an ACPO Unit. In addition all non-MPS officers seconded into the MPS must receive sponsorship from a Superintendent, reviewed annually, to receive a card.

C. Race and equality impact

The equality and diversity implications of this investigation continue to be monitored by the Director of Resources and the Directorate of Professional Standards. There are not considered to be any adverse implications.

D. Financial implications

1. All costs for this review and investigation are currently being met from existing budgets. This has required a significant redirection of resources within Exchequer Services, DPS and the MPA Internal Audit Forensic Branch. Business Groups have also had to dedicate resources to support this process. Resources will continue to be allocated until the reconciliation and related investigations are completed.

2. It is standard policy to recover any money owed to the Authority for any reason. Action will be taken to ensure that all funds are recouped where appropriate subject to legal advice.

E. Legal implications

1. The investigation is being conducted in accordance with the requirements of the Police Reform Act 2002 as an IPCC managed investigation. Cases for possible criminal prosecution are referred for decision to the CPS and for possible disciplinary action to DPS, or HR in respect of staff.

2. Where repayment of sums remains outstanding and it is not possible to deduct the monies from wages, files may be referred to DLS. It should be noted that the time limit to bring civil actions for debt is 6 years from when the debt arose, i.e. from when the unauthorised payment in question was made.

F. Background papers

None

G. Contact details

Report author: Mark Simmons, Commander Directorate of Professional Standards, MPS

For information contact:

MPA general: 020 7202 0202
Media enquiries: 020 7202 0217/18

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