Accounting Errors at CCC - Post 12/15 in a series - Evidence for Fraudulent False Accounting

12 - The evidence for fraudulent false accounting

False accounting is fraud and a criminal offence underSection 17 of the Theft Act 1968 (see Appendix 4 below). It is for the courts to decide whether the material misstatements relating to City Deal 1 grants over five years and endorsed by both BDO and EY were in fact fraudulent.  There can be no doubt however, given the evidence presented above, that they were deliberate.

In January 2023 I wrote a 25 page open letter to all CCC members, setting out the detailed evidence and arguments that the revenue frontloading treatment for City Deal 1 grants was false accounting.  The letter was copied to CCC Finance, BDO and EY.  The response has been silence.  Nobody has challenged the evidence with facts or counter-evidence. 

Last July, Cllr Boden, a member of the A&A Committee issued a statement (Minutes, page 2) decrying what he claimed were baseless allegations about City Deal fraud and the Council’s going concern position (see Section 13 below).  It contained no facts or explanation for the circumstances of September 2017. 

In that statement, the councillor seem to have taken his lead from the EY audit partner, who, in his Audit Completion Report – Addendum two months earlier, finally conceded that City Deal should be accounted for on an accruals basis (see Section 11 above).  In that same report he also wrote, in connection with City Deal:

·      Whilst, an aggressive accounting policy had been adopted for the initial accounting treatment, there was no indication of fraudulent mis-reporting or bias by Management.

It is difficult to see how Mr Hodgson can reach such a conclusion if one can believe his statement to the same committee last September:

“neither we nor management in place now could have gone back and understood what information upon which management made their decision in 2015/16 was based, as nobody was around to validate that.”

If he did not know the reasons for the original change in treatment in September 2017 (not in 2015/16), how could he know there was no indication of fraudulent mis-reporting or bias?  Mr Hodgson is disingenuous at best.   

A more plausible explanation for his expression of ignorance is his own complicity in maintaining BDO’s incorrect position on City Deal accounting for two years, until public exposure forced him into the £160m U-turn in May 2022. 

Mr Hodgson clearly lied about his ignorance of the origins of what he calls CCC’s “aggressive accounting policy”.  The public and others may draw their own conclusions about what that might imply about his awareness of alleged fraudulent mis-reporting.