TL;DR (Too Long;Didn’t Read)
London’s Labour-controlled Tower Hamlets council has spent £156,000,000 using the AP1 ‘spot purchase’ system over three years on various items including £111,000,000 on flats and houses, some of which no longer seem to belong to the council. The data was in the response to a Freedom of Information (FoI) request. A significant amount of personal data was also disclosed in breach of GDPR.
£156,479,721 in 13,747 AP1 financial records
Hidden spending of over £156,000,000 has been discovered by the East End Enquirer as the result of a routine Freedom of Information (FoI) request to Tower Hamlets council and we have no idea what has been going on.
Maybe the council does?
The 13,747 financial records in the FoI response data supplied to us show that during the three years 2018, 2019 and 2020 purchases with a total value of £156,479,721 were made using the council’s ‘AP1’ voucher system.
The AP1 system is intended to be used for exceptional circumstances and not day-to-day business.
Think of the AP1 system as the petty cash box in an office. Probably only a tenner in the box just so that when you run out of biscuits for a meeting you just scribble a petty cash voucher, take a couple of quid and custard creams here we come!
£156,000,000 buys a lot of custard creams.
304 of the payments are property transactions with a total value of £111,658,249.49, mainly for single houses or flats.
The highest value transaction is for £6,930,528.60 to buy multiple flats in one apartment block for a housing assocation.
Wonder what the 60p was for?
The Enquirer has found three property purchases in Erith which are very odd indeed. Odd as in it seems LBTH has bought the properties for private individuals.
Yes, you did read that correctly.
Brew some tea (and get some custard creams), make yourself comfortable and see what sense you can make out of this Tower Hamlets Tale. Because Moley and chums are baffled.
Tower Hamlets council was approached for comment (twice) and the Department for Levelling Up, Housing and Communities but neither have not responded at the time of publication.
Tower Hamlets Council response
Updated 14.20 17 December 2021
Just got the below from the council, we have no idea if it makes any sense. Note that there is no reference to the properties bought with AP1 vouchers which now belong to private individuals.
A Tower Hamlets spokesperson said:
“The properties referred to are purchases the council made to procure homes for use as Temporary Accommodation. These were at market value and bought from individual sellers, except in the case of Angela Court which was as part of a section 106 ‘off-site’ planning agreement where these are let as permanent homes. A small number of properties were also bought out of borough for use as Temporary Accommodation. Now properties are only acquired in-borough as this better meets current housing needs.
“AP vouchers are a legitimate money transfer. For property purchases, we use this payment option to transfer funds to solicitors to hold the money in their accounts ready for completion day, which is agreed between the parties. The payment is generally made a few days in advance so that the funds are ready to be transferred on completion day. We also process rent refunds and compensation claims via AP1s but have ceased using this method for payments to registered providers for Temporary Accommodation.”
Best Value Inspection of Tower Hamlets
In November 2014 government auditors PricewaterhouseCoopers (PwC) published their report ‘Best Value Inspection of the London Borough of Tower Hamlets’, the result of its investigation into the administration of Lutfur Rahman.
Page 101 of the PwC reports states that the AP1 process is an ‘alternative payment process reserved for grants and exceptional one-off requirements’ and that it ‘is intended to be used for exceptional circumstances and not day-to-day business.’
The continued use of AP1 vouchers that bypass the normal financial processes by the administration of directly-elected Mayor John Biggs seems to prove that seven years later ‘poor governance and financial management’ is still the norm in Tower Hamlets.
£156,000,000 is a huge amount of money by any standards.
By comparison this is how much Tower Hamlets council spends on its main service areas in a year.
|Service Area||Annual Spend|
|Social Services Commissioning||£103,528,000|
|Waste & Cleansing Services||£30,690,000|
As can be seen £156,000,000 is equivalent to the entire LTBH social housing budget for two years.
Just a drop in the ocean
In April 2020 the Enquirer ran this story Poplar Papers 4 – £1,288,815 AP1 Voucher Payments where we revealed that in one 15 month period in 2014-15 five Tower Hamlets council Youth Service staff, Dinar Hossain, Abdul Malik, Abzal Ali, Fazlur Rahman and Hasan Faruq submitted 685 AP1 vouchers for payment with a total value of £1,288,815.
Seems that was just a drop in the ocean.
Despite clear evidence no council officer (or anyone else) has ever been held to account for this spending spree.
In 2020 the Enquirer submitted Freedom of Information requests to five London boroughs – Lambeth, Islington, Hackney, Newham and Southwark – asking ‘How many ‘Spot Purchases’ (sometimes referred to as AP1 Voucher payments) have you have made in the last three years?’
All of the five boroughs asked for a clarification and all ultimately responded to say that they ‘did not hold any relevant information’.
Not a single AP1 Voucher between the lot of them.
In plain English none of these councils used any AP1 voucher process or anything similar because (a) there should be no need for such a function in a well-run local authority and (b) it is open to abuse.
Considering the known problems with both the AP1 process and the abuse of AP1s it is surprising that, eight years on from being identified as a risk, they are still being used.
Or is it not surprising at all?
Maybe the whole point of the AP1 system is for it to be abused.
Is the sole purpose of the AP1 voucher process to provide a convenient method of council officers and politicians to access public funds without scrutiny?
This brings to mind another story from May 2020, Poplar Papers 7 The £470,865 Youth Service credit card bill.
Was that story about nobody ever being convicted of any fraud offences despite a small (less than 30) group of young Youth Service officers frittering away nearly half a million pounds?
Or is the story really the reason why the officers were given corporate credit cards in the first place? How much could any single youth leader spend? (£78,039.30 in 2013/14 in case you were wondering.)
Is the real story that members of the Youth Service were given corporate credit cards with no internal audit checks on spending in the full knowledge that they would go crazy with them?
Some might call the money wages. And they might well be right.
Enquirer staff just happen to be professionally qualified forensic investigators who, as expert witnesses, can give evidence of opinion in a court of law. Often handy.
Despite extensive experience of the most serious crimes and in-depth knowledge of the corruption that continues to curse Tower Hamlets, we have all been astounded by the data contained in the FoI response and none of us can currently think of any good reason for spending £156 million using a process intended for occasional exceptional circumstances.
Council officers do not wake up one morning with an overwhelming urge to buy a house using council funds. Or maybe they do? Or maybe they just do what they are told by politicians and kid themselves that they have no personal responsibility?
FoI 6153984 2013/14
One our previous FoI requests from 2016 (FOI: 6153984 2013/14 financial year usage of AP1 vouchers) about AP1 vouchers gave some insight into how they are regarded within LBTH.
We asked for details of 2013/14 financial year usage of AP1 vouchers in Youth Services only and were sent the data.
We asked for an explanation of the “AP1 voucher” system and got a slightly shirty response.
“The AP1 voucher ‘process’ is used for the settlement of non-supplier payments. It is not a system.”
Process? System? Touched a nerve there.
Finally we asked for any existing internal audit reports on AP1 usage and were told:
“The AP1 process is captured within the accounts payable process. There are no reports in existence that specifically reference AP1 usage.”
Note that our request for audit reports was dodged. Funny that.
And no reports that specifically reference AP1 usage? Why not? Or would they make uncomfortable reading for someone if released in a FoI request or something?
Examining The Data
As stated above the FoI response we received most recently asking for AP1 usage consists of 13,747 AP1 records for the three years 2018, 2019 and 2020 and 304 of the payments seem to be property transactions with a total value of £111,658,249.49, mainly for single houses or flats.
The only real information we have been given is the year of the transaction, the order number the description in the text field and the amount.
Compared to other FoI responses this is odd in many ways. There is almost too much information in the text field but almost no information as to specific dates or which part of the council an AP1 was created.
Address information of properties in the text field can be minimal, for example just 21 GIRAUD STREET or 47 dagobert house meaning that a search for the full address for each property has to be made.
Other entries give a full address like 13 Seige [sic] House, Sidney Street, London E1 2HQ or 42 Melwood House 13 Watney Marker [sic] London E1 2QX.
There is a pattern of some entries ALL BEING IN UPPER CASE which is useful from a forensic analysis viewpoint as this probably indicates data coming in from at least two systems, or one system (the upper caps) and the other data being input on the fly.
Invoice Numbers may also be useful for grouping data as the form is AP1RTBBB0125 or similar. So we can break this down to AP1, RTBBB = Right To Buy Buy Back and a sequential serial number.
Other invoice numbers are less easy to decipher, e.g. AP1PHTA00100, AP1PMT053 and AP1OBSP000023. If we ignore the AP1 prefix (the bit at the front) and the number suffix (the bit at the back) we get PHTA, PMT and OBSP.
The Enquirer will probably need to ask the Tower Hamlets FoI team for an explanation of these invoice numbers as well as some other details.
Whistleblower Needed Please
Despite spending four days working on the FoI response content we have not even started any real analysis of the data. Mainly because it is all without context. We have done some preliminary work on some of the properties listed, see below.
What would be better would be for a nice council officer to just tell us what the code means and ideally what the hell is going on here.
If you are that council officer and fancy blowing your whistle in our direction do drop Mole a line at the usual email firstname.lastname@example.org but make sure you do NOT use your work email or the council system (including their wireless connections) ‘cos that can be traced. Email us from home or, even better, some random wireless hotspot.
Mole did have a secret drop point where people could leave bags full of information that the Council would like to keep very quiet but it is so secret he can’t remember where it is.
Significant GPDR Data Breach
In addition to working out what the data means the Enquirer is also having to redact some of it because a significant amount of personal data is in the text fields.
This is a clear breach of the UK General Data Protection Regulations (GDPR) and is inexcusable. We will be reporting this to the Information Commissioner’s Office (ICO) in due course.
Personal data in the spreadsheet which should not have been released includes names of individuals, their addresses, email addresses, even the names of children.
Perhaps the worst breach of GDPR is that the addresses of where Afghan refugees have been housed in the borough can be seen.
How crappy is that? Here are a few examples of how we have had to redact some entries.
So this is why we will be redacting any TH data we publish, but the key stuff will still be available for inspection.
The most interesting data we have at the moment is that relating to property.
We sent this to Cllr Andrew Wood (Independent, Canary Wharf) who is an accountant by profession when not zooming around the borough fixing stuff. Here is what he thinks.
“Tower Hamlets in 2017 and 2019 agreed to spend £169 million on buying affordable homes which started off very mysteriously with an official announcement by email at 7.31pm on a Friday night late in 2017. That email agreed to spend £19 million buying existing Poplar HARCA homes.
In 2020 the Council’s internal audit team found a number of weaknesses in the process not least that by the end of 2018 £53.6 million had been spent on Poplar HARCA homes, not £19 million as agreed.
The Council also agreed to spend £60 million on buying new build affordable homes which private developers built as part of their planning obligations, known as S106 housing.
Normally these would then be bought by housing associations like Swan or Peabody, and residents on the Council housing waiting list would then bid for them. But now Tower Hamlets Homes will manage them so from a residents perspective there is little difference.
But it does allow the Mayor to present these homes as new Council homes, giving people the false impression that they are new build Council homes.
But with the exception of this one internal audit report it has been very difficult to track progress on the £169 million programme, what did we buy? where? how old was it? was it value for money?
Did we maximise the delivery of genuinely new affordable homes which is the only way of reducing the housing pressure in Tower Hamlets or did we just rebadge existing homes as Council homes?”Cllr. Andrew Wood in email to East End Enquirer
Thanks to Cllr. Wood for his take on it.
The big question with the property is quite simple. If we assume that there is no wrongdoing in the property purchases whatsoever why on earth was £111 million worth of houses and flats bought using the AP1 process during these three years?
Why the secrecy?
Baffling. There is no logic to this.
This pushes us towards considering that the AP1 data is evidence of wrongdoing.
But what exactly?
We have no idea. Yet.
We do have one theory that relates to another much bigger (and far more ominous) investigation we have been working on for rather a long time. But for the moment let’s just look at the evidence we have.
Some of the property addresses are well known to borough residents such as 78 Old Church Road E1 and 68 Grindall House, Darling Row E1 but others are most definitely out of the borough such as 218A Riverdale Road, Erith, DA8 and 20 Whimbrel Close, Greenwich SE28.
These four properties were selected at random and their ownership checked with the UK Land Registry. Three came back as being owned by Tower Hamlets council (as you would hope) but one, the 218A Riverdale Road, Erith property did not.
Queensgate Mews Amenity Company Ltd
218A Riverdale Road, Erith is registered to Ralph Reuben Saunders a company director of Queensgate Mews Amenity Company Ltd 29 Harcourt Street, London, W1H 4HS.
Mr Saunders was born in March 1932 but still seems to be active in the property market.
The question with 218A Riverdale Road, Erith is how Tower Hamlets council seems to have purchased this property for £223,250 using an AP1 form then given it to a property management company?
That makes no sense whatsoever. But that is what the data says.
Mr Saunders is also a director of (or has been a director of) several other property management companies.
|Entity||Dates Director||OpenCorporate Link|
|Ralph Reuben Saunders||https://opencorporates.com/officers/174534990|
|Scott House Management (Beckenham) Limited||16-May-02||https://opencorporates.com/companies/gb/04440788|
|Jelicoe House Management (Beckenham) Limited Dissolved 28 March 2017||21 Oct 2002 – 22 May 2007||https://opencorporates.com/companies/gb/04568482|
|Blenheim House Management (Beckenham) Limited||16 May 2002 – 20 Feb 2005||https://opencorporates.com/companies/gb/04440769|
|Nelson House Management (Beckenham) Limited||17 Dec 2001 – 28 Nov 2003||https://opencorporates.com/companies/gb/04341286|
|Elkmoor Limited Dissolved 26 February 2013||7 Jun 1994 –||https://opencorporates.com/companies/gb/00943947|
|Compton House Management (Beckenham) Limited||21-Oct-02||https://opencorporates.com/companies/gb/04568503|
|Wellington House Management (Beckenham) Limited||04-Oct-01||https://opencorporates.com/companies/gb/04298763|
|Gordon House Management (Beckenham) Limited||21-Oct-02||https://opencorporates.com/companies/gb/04568504|
|Queensgate Mews Amenity Company Limited||02-Jul-09||https://opencorporates.com/companies/gb/06950820|
Angela Court, Burdett Road – why such secrecy?
The most expensive property purchase using the AP1 ‘petty cash’ system is Angela Court Burdett Road E14 7EL which was sold for £6,930,528.60.
This transaction seems genuine and you can see LBTH documents relating to Angela Court and its Lease to Mulberry Housing Society here.
Just one thing though.
On 31 July 2019 a report to Cabinet by Ann Sutcliffe, Corporate Director Place, states (para 3.1) that ‘on 10 November 2017, the Mayor agreed a budget of £60m to fund the purchase of new affordable housing in the borough, to be built by developers as part of planning obligations.’
This may fit in with the very late Friday night announcement in 2017 that Cllr Wood referred to in his comments above.
This document Angela Court, Burdett Road; Lease to Mulberry Housing Society refers to this Executive Decision Individual Decision Notice – General Exception document which is from someone called Mark Baigent, (Interim Divisional Director, Housing and Regeneration) which in turn refers to this Reasons restricted document which explains why, by virtue of paragraph(s) 3 of Part 1 of Schedule 12A of the Local Government Act 1972, it a secret.
What is a secret we have no idea. Because it is a secret. A masterful display of local authority bullshit designed to confuse everyone.
Nice work guys. It’s just going to rebound on you though. Sorry.
Mole thinks the secret is the details of the lease to Mulberry Housing Society and nothing to AP1 purchases.
Interesting to see that although someone (maybe Interim Divisional Director, Housing and Regeneration, Mark Baigent?) has spent hours drafting several pages of local authority bullshit but has forgotten to mention that this £7 million was being paid using the AP1 petty cash system.
Odd that, innit? Or not?
But it gets better. And weirder.
Two other properties – 194B Riverdale Road, Erith, DA8 1QF and 182A Bexley Road, Erith, DA8 3HF – caught Mole’s attention because none of them are in Tower Hamlets.
And the addresses are very near to 218A Riverdale Road, Erith, DA8 1QF as mentioned above.
In fact 194B Riverdale Road and 218A Riverdale Road are only about 75 yards apart on the same side of the same road. The Bexley Road address is about a mile away.
The Bestest Weiderest Thing Ever?
Land Registry records show that 194A, 194B, and 206A Riverdale Road, Erith are owned by these three private individuals.
- ROBERTA KINDLER of 11 Chepstow Crescent, Ilford IG3 8JJ
- MICHELLE HELEN HARRIS of 24 Bartholomew Drive, Harold Wood, Romford RM3 0WB
- BRYAN GRAHAM HARRIS of 12917 Valleyheart Drive, Unit 12, Studio City, CA 91604, United States of America.
Roberta Kindler is listed in Erith but has no phone number and we could find nothing relating to Michelle Helen Harris on any of the interwebs.
We did find the address given for Bryan Graham Harris.
12917 Valleyheart Drive, Unit 12, Studio City, CA 91604, USA is a rather lush 3 bed, 4 bath, 2463 sq. ft. townhouse in Los Angeles.
Moley then found the details for Mr Harris below which shows that Bryan Graham Harris is a licensed real estate salesperson (License No. 01961970) in the city of Studio City, California and is an employee of Pacific Union International Referral Inc, a Real Estate Corporation (license number 01869607).
Which is nice.
Which means for some reason LBTH has gifted Mr Harris and his co-owners a property worth £233,697 in Erith.
Kind of odd that, what with him being an LA real estate person and all. Why would he want a property worth £233,697? In Erith?
We have found no trace as yet of Emily Violet Cooper who now owns 182A Bexley Road and have found no proof she exists.
Are property sales just a decoy?
There may well be other weirdness in the Land Registry details of the other 280 properties in the AP1 data but Mole does not have the sort of financial resources to check them all at £3 a pop.
It is also worth bearing in mind that the £111 million of properties might be a decoy and the really interesting stuff is elsewhere in the 14,000 records.
Those will take some time to check but checked they will be.
You can see some of the records here but, as we mentioned above, we have had to redact some of the data so at to preserve the privacy of individuals.
So where are we now? And do we have a map?
Short answer is no and no.
Let’s stick to the facts shall we? Yes? Great.
- It is a matter of public record that in 2014 according to government auditors PwC, the AP1 system is an ‘alternative payment process reserved for grants and exceptional one-off requirements’ and that it ‘is intended to be used for exceptional circumstances and not day-to-day business.’
- This was in the report published into the Rahman administration, not the current administration.
- We know that few if any other local authorities in London (or anywhere else) use anything like an AP1. We might check all of the London boroughs just for fun.
- We know that under Rahman the AP1 vouchers were abused and a lot of cash, £1m+, wandered off into thin air via this route. But that seems to have been absolutely fine because nobody has ever been told off for that, let alone nicked, charged, found guilty and banged up.
- We know that some of the properties listed in the data, 194B Riverdale Road, 182A Bexley Road and 218A Riverdale Road, all in Erith, no longer belong to the London Borough of Tower Hamlets according to HM Land Registry despite the fact that the borough paid for them. (How does that even work FFS?) One belongs to a property management company, one to a private individual who cannot be traced and the other property to three individuals, two of whom cannot be traced and one who is an LA estate agent.
- How many other properties has Tower Hamlets council given away?
‘Best Value’ failure
The PwC report ‘Best Value Inspection of the London Borough of Tower Hamlets’ showed that Lutfur Rahman was not fit to be in charge of the borough.
The AP1 data examined here would indicate that Mayor John Biggs is not fit to be in charge of Tower Hamlets either.
Open democracy failure
For the sake of argument let’s assume that every one of the 13,747 AP1 records is a perfectly legitimate transaction.
If this is the case why has the AP1 system been used?
As Cllr Wood told us, in 2017 the Biggs administration made an official announcement about buying affordable homes by email at 7.31pm on a Friday night. In other words the best time of the working week to bury news.
The AP1 data has to be considered in the context of this (failed) attempt at secrecy. Even if the two events are unrelated why did Tower Hamlets council want to keep the 2017 affordable homes announcement quiet?
What was being hidden?
Four years on and this is still unknown.
Internal audit failure
One tactic that Lutfur Rahman used to screw Tower Hamlets over was a deliberate policy of ignoring basic local authority audit procedures. To ensure that this happened it was made crystal clear to any officers even thinking of questioning the relaxation of these procedures that it would be a very bad thing for them to do.
It might even affect their health. And the health of their family.
That during a three year period £159,000,000 of public money has been spent by Tower Hamlets council in a manner that PwC described as being ‘intended to be used for exceptional circumstances and not day-to-day business’ demonstrates that once more the audit function at the town hall is not fit for purpose.
Mole would love to hear from anyone at the town hall who disputes this. Here’s the email address email@example.com
Overview and Scrutiny failure
Every local authority has an Overview and Scrutiny (O&S) committee. The Local Government Act 2000 established this function for every council, with the key roles of:
- Scrutinising decisions before or after they are made or implemented
- Proposing new policies and commenting on draft policies, and
- Ensuring customer satisfaction and value for money.
How was the Overview and Scrutiny Committee unable to spot the use of AP1 vouchers? Probably because they were not looking and that the AP1 payments were well buried.
So who did the burying?
So what’s changed between then and now?
Maybe the same people who helped Lutfur Rahman avoid all checks and balances during his administration have been doing the same thing for Mayor Biggs?
The only thing we know for sure is that whatever the truth of these issues it is crystal clear that there is no chance whatsoever that they will be cleared up by the current Labour administration.
Chief Financial Officer responsibilities
The role of the Chief Financial Officer (CFO) in local government is of the utmost importance, to the extent that he or she has personal responsibility to ensure that the council’s financial department complies with all professional standards and legislative requirements.
On face value it seems that even if every item of the £156 million AP1 purchase data we have been given is 100% legal there has still been a significant breach of legislative requirements.
The Chief Financial Officer of Tower Hamlets council has a legal duty to report this to central government.
The recent history of the London Borough of Tower Hamlets, especially the comments by PwC on the AP1 process in their report to Whitehall during Lutfur Rahman’s administration, reinforces the need for a full investigation.
You can read more about the duties of a CFO on the Chartered Institute of Public Finance and Accountancy (CIPFA) site here.
One last FoI wrinkle.
In February 2020 we asked LBTH (FoI 20555685) for a breakdown of all AP1 voucher payments since 1 April 2015 for an investigation that had nothing to do with the one described above. The request was refused because it would have taken exceed the 18-hour limit to do the work.
Yet this time no problem at all. Did we just get lucky?
Over to you, central government. You get paid to investigate this crap, we don’t.