'No evidence' of fraud in Dumfries and Galloway Council loss-making roads contract

The roads maintenance contract ran between 2013 and 2018

An investigation has found no evidence of fraud or corruption in a deal which produced a multi-million pound deficit for Dumfries and Galloway Council.

The contract - with the authority's former trading arm DG First - had been expected to deliver a surplus.

External forensic accountants were called in to look at what went wrong.

Based on their findings a probe has concluded there was a failure to properly assess the risks of the deal rather than any fraud or corruption.

Dumfries and Galloway Council operated as a sub-contractor to Amey between 2002 and 2013 on trunk road maintenance across the region.

The council promised to investigate any potential corruption or fraud

DG First - which is no longer part of the council's operating structure - returned an operating surplus on the two contracts secured during this time.

However, a £29m deal with Scotland Transerv covering 2013 to 2018 produced a deficit initially estimated at more than £3m.

An investigation last year blamed what was described as an "organisation within organisation" culture at DG First.

It concluded that meant it had entered into the contract "without fully understanding" its complexity and ended up making a significant loss.

• The roads contract that lost £3m

• 'Thorough' probe vow over road contract deficit

A further probe was initiated to look at the possibility of fraud or corruption.

The council promised its "full support" - including progressing to potential prosecution - should any evidence of illegal activity be found.

The latest investigation has now concluded into what has been described as an "unexpected and unwelcome" occurrence for the council.

A report to councillors said that although there had been a "lack of access to information" which constrained some of the detail of their findings, external accountants had been able to report "fully and fairly".

They found that - with a "high degree of certainty" - the loss on the deal was more than £4m.

'Degree of assurance'

The investigation said that DG First did not "plan, resource and implement effective financial and performance management arrangements".

It also concluded the council's systems of internal control "did not function adequately" to highlight the issues arising from the contract.

However, it said there was no evidence of fraud or corruption and no legal basis for taking action against any employee.

The local authority has previously been told that practices now in operation also provide a "high degree of assurance" there could be no repeat of the issues experienced under the road contract.