Aberdeen City Council has made “no attempt” to contact or refund any taxpayers defrauded by a corrupt official’s £1 million crime spree, a public spending watchdog has concluded.
Greedy Mike Paterson, 60, was jailed for four years in July after embezzling £1,087,444.47 from the local authority over a 17-year period.
Now, an Audit Scotland report into his crime has revealed the council has only identified “around 25%” of the accounts affected more than a year since his swindle was discovered.
“No attempt has yet been made to contact taxpayers and make refunds,” it added.
Aberdeen City Council has been contacted for comment.
Council criticised for ‘failures in controls’ and ‘lack of monitoring’
Audit Scotland published its findings on the “significant” fraud ahead of the Accounts Commission meeting to discuss it on Thursday.
The report blamed “failures in controls within the council” and “a lack
of segregation of duties and monitoring” for allowing Paterson to offend.
It added that a “failure to implement controls enabled an abuse of authority” leading to Paterson withdrawing funds “inappropriately”.
However, Audit Scotland found the local authority was “quick to respond” once suspicions of Paterson were raised in September last year.
Internal counter-fraud officers then probed the matter before referring it to Police Scotland.
The report stated: “Disciplinary proceedings were quickly enacted. This resulted in the individual pleading guilty to the embezzlement of funds and receiving a prison sentence.”
‘Weaknesses in the council’s internal controls facilitated the fraud’
Audit Scotland said the swindler’s scheme went undetected “for some time” due to “weaknesses in the council’s internal controls” that “facilitated the fraud”.
The regulator added that “the council had controls in place but there was no scrutiny to ensure the effective operation of these controls”.
Paterson stole the money from balances held by the council on behalf of taxpayers who had made overpayments on their council tax accounts.
The regulator’s report stated: “Since February 2024, there has been ongoing work to identify all accounts affected by the embezzlement.
“So far, around 1,400 accounts (25%) have been identified from the estimated 5,700 accounts affected.
“At this stage, no attempt has been made to contact taxpayers and no refunds have been made.
“There are practical challenges of providing a refund to taxpayers often years after the event, who had not already been located at the time.
“The council intends to try to establish contact with the relevant taxpayers and where this is not possible, revised procedures for managing accounts in credit will be applied.
“When there is no response to follow up correspondence, a credit balance will be cleared by writing the amount back in the council tax system.
“Should a taxpayer ever identify themselves to the council in the future however, the money remains available for repayment.
Court hears of fraudster’s ‘unsupervised authority’
The High Court in Edinburgh heard how the disgraced council tax and recovery team leader abused his “unsupervised authority” to issue council tax refunds to himself instead of those eligible to request them.
Paterson shamelessly took advantage of his “unrestricted and unmonitored access” to computer systems, enabling the £35,000-a-year public servant to live a lavish jet-setting lifestyle before he was finally caught.
The fraudster processed 655 payments to himself and brazenly boasted of his life of luxury in a string of sun-soaked social media posts as he drained the public purse.
The former Torry Academy pupil’s skulduggery started in 2006 as he attempted to pay off £20,000 of debts racked up while living well above his means.
However, he continued to funnel cash to feed his hunger for an excessive lifestyle that included exotic holidays, five-star hotel stays and star-studded music concerts.
Paterson enjoyed exotic holidays, five-star hotel stays and star-studded music concerts
In the summer of 2022, he gloated about scoffing the “best ice cream ever” on a holiday to Rhodes in Greece, where he stayed at the “finest of five-star hotels”.
The trip followed a jaunt to Dubai earlier that year after staying at the picturesque – and five-star – Balmoral Hotel in Edinburgh.
On his Facebook, Paterson also shared memories of attending concerts featuring Will Young, Years and Years, Beyoncé, Shawn Mendes and Michael Bublé.
He also posted about a trip to a champagne bar in Barcelona and holidays to Manchester, Spain and New York.
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