Ministerial statement - fraud against the States of Guernsey
Wednesday 25 July 2012
Media statement by the Minister, Treasury and Resources, Deputy Gavin St Pier, concerning the fraudulent theft of £2.6m from the States of Guernsey.
"This morning, in the States Assembly, I confirmed that a fraudulent theft of £2.6m of taxpayers' money from the States of Guernsey had taken place. This fraud is the subject of an ongoing police investigation. On Monday, I asked the Policy Council to commission an independent, external review; this will follow on from a preliminary internal report, which I commissioned from the States' Chief Accountant as soon as I was informed of the fraud, and which was presented to the Treasury and Resources Board yesterday.
"Given that police investigations are ongoing, I cannot provide information on the details of the incident beyond that set out in my statement this morning; however, I can confirm that on 10 July 2012, the Treasury and Resources Department was notified that a legitimate payment of £2.6m - which was contractually due to Lagan Construction in respect of the Guernsey Airport runway refurbishment contract - was paid to a third party and not Lagan Construction. This resulted from the Department receiving a fraudulent letter that appeared to be from Lagan Construction that advised a change in their bank account. These instructions appeared to be genuine. The Department made the change to its systems and when due the monthly payment was fraudulently paid to the third party's account and not Lagan Construction.
"Members of the Guernsey public will, like me, quite rightly be angry, and will have many questions about the incident, not least relating to how it could be allowed to happen. As this is now a criminal investigation, I am limited in what I can say, but I will take this opportunity to assure taxpayers and the people of Guernsey that my Department is cooperating fully with both the police inquiries and the external review. I also understand that an arrest has been made in the UK in relation to this incident and that a small percentage of funds have been recovered. I am not at this stage able to comment on the recovery of the remainder of the funds.
"My political colleagues and I on the Board of Treasury and Resources, together with the staff of the Department, take this matter extremely seriously. As soon as the incident came to light, the Department changed its internal controls to prevent a recurrence. At this stage I can give no indication of the prospects for recovering the money, but the Department will do everything it practically can to do so."
Further information: The Treasury Minister's statement to the States of Deliberation, delivered this morning, is available at: http://www.gov.gg/article/101651/Treasury-Ministers-statement-to-the-July-2012-States-Meeting
Philip Henderson, for the Treasury and Resources Department
Tel: 01481 717131