Local Authority: Waterford City and County Council
Issue: Misuse of council credit card
A Waterford City and County Council employee took a council credit card and went on a three-day spending spree involving personal purchases in restaurants, hotels and shops amounting to €700, RTÉ Investigates has learned.
The employee also attempted to take out €3,200 in ATM withdrawals, make a €100 purchase with Paddy Power, and a €360 purchase from Argos, but the credit card was declined.
After the incident came to light, the employee was given a written warning.
The matter raises questions for council management, who did not make a formal complaint to the Gardaí or inform the council's audit committee about the employee and the credit card.
Credit cards are widely used across local authorities, especially for low-value purchases, because they help reduce administration overheads.
But they are also open to abuse, so there are supposed to be checks and balances in how they are used and various financial controls in place.
At Waterford City and Council, the Local Government Auditor highlighted a striking example of what can happen when credit card usage is not adequately supervised.
Its 2019 audit report of Waterford County Council noted that over 140 credit cards were used to make more than €1.6m in purchases that year.
It also referred to "a number of significant weaknesses in the usage, supervisory oversights and controls exercised over the cards."
RTÉ Investigates sought additional records relating to this audit finding through a freedom of information request from the Local Government Auditor.
Those records, which include correspondence between the auditor and council officials and various printouts of credit card expenditure, reveal an incident in August 2019, when a credit card was left in a council vehicle by one employee and was later taken by another employee without approval.
That employee then used it for personal use over three days in August 2019.
The records indicate that another employee noticed that the credit card was missing and reported this to their supervisor that day.
After the spending on the credit card was noticed, an investigation under the council’s disciplinary policy was initiated in September 2019, while the employee paid the money back at the end of that month.
One council official told the auditor that the disciplinary process was "completed with [a[ written warning."
Other records released to RTÉ Investigates show that the auditor was unhappy with the assistance he obtained from the council during his audit.
Before conducting the council’s audit, the auditor sent the council a "Letter of Understanding," which sets out the requirements of the Local Government Audit Service before audit fieldwork.
The letter, which the council’s chief executive signed, states that it is expected that "any known instances or allegations of fraud and non-compliance with legislation" will be communicated to the Local Government Auditor as part of the audit process.
But in an email sent to a council official in June 2020, the auditor stated that he was "hugely disappointed that you did not bring the inappropriate use" of the credit card to "my specific attention".
He also said, "There is an expectation that any such matter is immediately brought to the attention at the commencement of audit."
"The matter only came to my attention through audit sampling and queries with other staff who immediately advised me of the issues surrounding these transactions when I raised the matter."
Meanwhile, notes from the auditor’s fieldwork also stated that he had checked with the internal audit unit of the council and that "neither [internal audit] or the [council’s] audit committee were advised of this issue".
In a subsequent letter sent to the council in December 2020, as part of the 2019 audit, the auditor referred to "a number of failures in internal controls in respect of credit cards".
The letter also referred to an "absence of appropriate reporting to those charged with corporate governance, including the [council’s] audit committee" and recommended that management should ensure "required disclosures" are made to "those charged with governance".
Furthermore, it referred to a "failure to disclose certain matters as required by the Letter of Understanding, Council policy and legislation".
In response, the council’s management told the auditor that "These instances were investigated, and where appropriate, monies were recovered by the Council".
It also said, "There was an instance of inappropriate use of an LVPC [Low-Value Purchase Card] by an employee. This led to a disciplinary process by HR".
When asked if they had received a complaint about the inappropriate use of a credit card by the council employee, the Gardaí told RTÉ Investigates that "no matter as outlined in your enquiry was referred to An Garda Síochána".
RTÉ Investigates asked the council why it had not referred the matter to gardaí and if the written warning letter issued to the employee was the only sanction used.
It told us: "Waterford City and County Council does not comment on such matters as they relate to individual staff members."
The council added that it "takes most seriously any issues of fraud or theft", which "ordinarily would lead to significant sanction by way of dismissal or suspension from work without pay".
"Equally, we would always apply our policies of formal investigation and reporting in any such occurrence, seek recovery of any losses and where appropriate refer matters to An Gardai," the council said.
"Any such actions have to be weighed between our different statutory responsibilities and the duty of care to our employees."
"The Chief Executive is satisfied that procedure was followed in exemplary fashion subsequent to the event outlined in the auditor’s report."
