Ex Laser energy procurement head found guilty of fraud

Ross Knowles, the ex Head of Energy Buying at Laser – the Kent County Council run energy buying consortium – was found guilty last week  of a £2 million fraud. He was convicted of one charge of fraud involving British Gas and cleared of a second involving NPower by direction of the judge.

He denied the offences, but a jury found him guilty and he will be sentenced - probably to a prison sentence - later this month.

It was a pretty simple but clever fraud. He asked suppliers to slightly inflate their bills during the year, then pay a rebate at year end. You might argue that is how most group buying type organisations work – so suppliers to the Government Procurement Service for instance pay them a year end rebate based on volume. The same applies in many public sector and some private sector consortia or even with procurement outsourcing operations.

But in this case, Knowles issued invoices for the rebate then managed to divert the payments into his own bank account rather than to Laser’s account. Not sure how he did that although I suppose the invoice might have included his account numbers and then maybe an account name that was ambiguous in some way?

Anyway, what lessons are there for procurement people – and folk who manage procurement people? Here are a few that immediately come to mind.

- Just because someone is senior, a Cambridge graduate (bringing shame on the alma mater – terrible) and apparently doing a great job doesn’t mean they’re not corrupt (or incompetent, or lazy…)

- There should always be more than one person who knows the precise terms and conditions contained within any major contract.

- Expected rebates, end of year payments and discounts should be estimated when first negotiated, included in financial forecasts and any actual variances explained and analysed.

- Special rebates, discounts etc. – anything outside the normal process of invoices and payments – need to have some specific safeguards in place.

- The users and customers of group procurement schemes should always insist on full transparency of the arrangements between themselves, the group buying organization and the suppliers.

It’s hard to stop a determined fraudster, but there are measures that can make it much more difficult. And of course, Knowles was found out, so it would be good to know how that happened, for future reference… anyone enlighten us?

First Voice

  1. Richard Anstis:

    Anyone know if he was a CIPS Member ?!

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