Procurement Fraud in Surrey NHS – Another Process Failure?

Yet another procurement-related NHS fraud hit the press the other day as the perpetrators were sent to prison.  Peter Lewis, who lives in Windlesham, Surrey, just down the road from the Spend Matters Europe HQ, was jailed for three and half years for accepting bribes of £80,000. The payments came from Richard Moxon, whose firm was awarded an IT contract worth almost a £1 million in the first year in return for the bribe. He’s going to prison for 14 months.

Lewis was employed by the Royal Surrey County Hospital NHS Foundation Trust as director of informatics, and the contract was related to recording A&E data at the hospital in Guildford. As Surrey Police reported:

Each month Moxon would submit multiple invoices from different companies he controlled. The invoices were all at, or just below, £15,000 (the value that Lewis was able to sign off without oversight). In return for the arrangement, Moxon paid Lewis nine payments totalling £73,770, and made a further payment of £7,200 to a stables to whom Lewis owed money. All the payments were made between January and December 2011.

The fraud came to light in December 2011 when the Trust conducted a disciplinary investigation into his relationship with another supplier. The Trust immediately passed the case to Surrey Police.

It is amazing how long it takes for these things to come to court – this came to light 5 years ago! And it is also interesting that it was an issue with another supplier that brought this into the limelight; Lewis was first investigated for favouring an HR company that employed a woman with whom he was having an affair. And just to add to the intrigue, his wife was the Trust’s COO and deputy Chief Executive – she resigned, but there is no suggestion she was involved in the criminal activity. Indeed, we might assume this must have been a horrible experience for her.

It seems that Moxon’s firm did supply some products, but the Trust “found that 40% of the ICT product supplied by Moxon did not meet the needs of the Trust. They were able to recover some of the lost money by incorporating Moxon’s software into a new system in August 2012, but the Trust still declared losses in its financial year of 2011-12 of £433,000 in respect of the project”.

As always in these cases, you have to ask questions about the procurement process. It is not unusual for senior managers to have sign-off on invoices for “low value” amounts without oversight, but this case shows the problem with that.  Are senior executives somehow more trustworthy than junior? We have our doubts. But if an organisation believes that is appropriate – usually justified as a move to reduce senior management workload – then it should be qualified in terms of the number of invoices from any one supplier that can be approved, to stop the artificial dis-aggregation of invoices we saw in this case.

But the main procurement failure would seem to be in the choice of the supplier in the first place. How was Moxon’s firm able to win this contract when it sounds like it was unsuitable to actually deliver what was needed?

If this was a contract worth £1 million in its first year, and presumably continuing after that, surely there should have been some competitive process, and involvement of others beyond just Lewis in the selection decision and the construction of the contract? If that did not happen, that is a failure of governance, compliance or process, and the CFO – and perhaps procurement leadership - should share some blame.

Finally, it never ceases to amaze us that people will risk their career, their reputation, their whole life really, for what are really pretty small amounts of money. £80K is not going to change your life, it wouldn’t even buy you a one room hovel in Windlesham, let alone a luxurious mansion. Perhaps Lewis had financial problems – we don’t know – but while you can see why people risk everything to make millions, fraud at this sort of level appears inexplicable, to us anyway.

First Voice

  1. Sam Unkim:

    Normalisation of Risk – I guess

    Probably wouldn’t have been caught, if they just kept it, to bribes.

    But once you start submitting, dodgy invoices, your going to get porridge sooner or later.

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