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A rogue council officer who falsely billed for work totalling £12.5million has been sacked.

The officer, who worked in Newcastle City Council’s highways department, falsified documents over a 12-year period and charged for work that the council was never asked to do.

The rouse was rumbled in June when the unnamed officer was transferred to another department and a new member of staff realised what was going on.

The council launched an investigation and found that between 2003 and 2015 the officer had been adding money to the balance sheet by billing for projects, such as roadworks, that did not exist.

The accruals had been subject to authorisation, quality review and external audit, however the employee had fabricated evidence to support the transactions and this had been accepted as genuine.

When hauled before superiors the individual failed to give an adequate explanation as to why this took place.

Investigators were left puzzled by the man’s actions as the department’s accounts were healthy and he was not being asked to meet any targets.

An internal report into the matter revealed that the employee was perceived as having significant experience and understanding of the financial arrangements and requirements relating to highways operations within the council.

As such, he was in a position whereby both the business area and finance trusted and accepted financial information and his responses to questions raised through internal challenge.

Transactions were therefore processed without recourse to the business area or any other independent person or body.

Police were called in to investigate the matter but as the individual had not benefitted personally they said they could not prosecute the case.

When the council’s audit committee met on Friday to discuss the matter they were keen to stress that “no one had run off with any cash” - it was however conceded that due to the overstatement of the council’s budget, by some £12.5m, there had been a hefty impact on reserves and to debtors.

Tony Kirkham, director of resources at Newcastle council, said: “We were made aware of this issue in June, we have undertaken a significant internal and external audit into this area and we are now confident that there is no loss of money to the council but we have had an overstatement in relation to the balance sheet.

“This is a single area of concern, both the internal and external audits have looked to see if this occurred elsewhere in the accounts and they have come back with a clean bill of health.

“We have subsequently taken disciplinary action against the individual who was operating in a rogue manner.”

Steven Reed, who is the engagement partner with the external auditors, was asked what lessons could be learned from the saga.

He said: “It is worth bearing in mind that the internal audit carried out a thorough review and made recommendations, but the council had a position here where an individual was employed who deliberately misled officers and falsified documentation to cover up on fraud.

“At the end of the day where an individual is determined to falsify documents, no controls can safeguard or protect from that. This was a very difficult situation that came to light as a result of the individual changing role.”

As to the rationale of the individual who billed for the work, audit committee chair Hamish Moore said: “Almost everybody who has had a hand in this has asked this question endlessly, there will be a prize if you can find out what the motive was.”

The committee were told that council finance staff have been booked “on an away day” outside of the civic centre to “learn the lessons” of this case.