A damning report into Wales’ largest health board has found that senior members of the finance team deliberately misrepresented the organisation's accounts.
The report, carried out by accountancy firm Ernst Young (EY), found there was systemic cultural failings in the finance team at Betsi Cadwaladr Health Board and that the poor practices were widely known within senior leaders of the health board.
The report outlines several issues, including paying suppliers before they had received goods, but the thrust of the report was that senior management were deliberately misallocating spending to a single financial year when, in fact, it was spread over many years. You can get more health news and other story updates straight to your inbox by subscribing to our newsletters here.
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The health board has been recently put back into special measures by the Welsh Government after being taken out of them just before the 2021 election.
“There are consistent pieces of evidence we have received in the course of our work that suggest that members of the finance team were aware of issues at the time and that the decision to recognise expenses as financial year 2021/22 were intentional,” read the report. Despite interviews with senior leaders attempting to justify actions, the reported added that “we note phraseology that is consistent with covering up wrong doings”.
The report added: “The executive director of finance and some other members of the BCUHB (Betsi Cadwaldr University Health Board) finance team told EY that they were not aware of the entries being posted to the incorrect year…. but this is inconsistent with the documentary evidence and other accounts.”
The report was commissioned by Betsi Cadwaladr Health Board, which covers Anglesey, Gwynedd, Conwy, Denbighshire, Flintshire and Wrexham, and followed the Auditor General’s audit of the Health Board’s 2021-22 accounts which identified a number of significant errors.
NHS Counter Fraud Wales also carried out an investigation following the Auditor General's findings, but this concluded that no further action needed to be taken.
The EY report includes examples of where senior managers encouraged members of the finance team to list expenditures in years where it did not apply as well as asking them to treat capital spending as revenue spending (as this would make it easier for them to manage their budgets).
For example, a senior accountant raised an issue of counting some new bladder scanners as revenue spending (it really should have been counted as capital expenditure). She said “I am not sure how we will argue the purchase is revenue” to which the chief finance officer at Wrexham Maelor hospital replied: “The more we can find a way to charge to revenue right now, the better for everyone, so I hope you’ll support the party line that these should be treated as revenue.”
Other conversations include an email from a corporate accountant in February, 2022, saying: “Just so we’re clear, you want me to accrue the £200k this year though the spend relates to next year?
The finance officer - central area, Nigel McCann, forwarded the email to the acting executive director of finance, Rob Nollan, where they seemed to mock the accountant for not making the misleading changes.
The report particularly focuses on a £1.8 million contract with a consultancy firm called Lightfoot Solutions. The health board invoiced it to 2021/22, despite the fact that it actually covered services “for the following financial year and beyond”.
The report said that the day before the end of the financial year a member of the separate NHS procurement service deliberately produced a purchase with incorrect details so it would not be sent to Lightfoot, but would reflect in a paper trail that the costs were just for a single financial year.
Evidence also suggests that the health board liaised with the company to edit documents before they were sent to Audit Wales for auditing. The report's authors said: “We have examined the alterations made to the documents. The date of the document was removed in two places, explanation paragraphs were added and language referring to “continue” or “continuation” of the Lightfoot contract were added in nine places”.
When Tim Woodhead, the health board's finance director, was asked about this he said he had spoken to Lightfoot and they altered the document to “clarify”. He added that he didn't send the original document because it was for a different purpose and that the dates were removed “probably because they weren’t particularly accurate”. The report authors said: “We have seen no evidence that the date of the original document was not accurate", suggesting that the alterations were there to produce ambiguity.
At another point in EY’s report, the health board's executive director of finance, Sue Hill, attended a meeting where plans to account for a £500,000 contract in the wrong time period were discussed. She was asked subsequently by EY why she failed to challenge this decision. According to the report she didn’t say anything for 40 seconds before saying “I guess I should have done but I didn’t.”
Plaid Cymru has previously repeatedly called for the health board to be broken up as well as a public inquiry into the organisation's failings. The party spokesman for health and care, Rhun ap Iorwerth MS said: “Plaid Cymru has made it clear that we believe there are very, very serious questions to be answered here, and it is fundamental that the Welsh Government is able to ensure that those concerns are answered satisfactorily. After all, health is devolved to Wales, and responsibility for organisational control of the health service lies with the Welsh Government.
“We need clarity over why, on the one hand, we have a report by EY that provides evidence of deliberate falsification of accounts, and deliberate alterations of financial documents, including by a member of the separate NHS procurement services team. Yet on the other hand, a decision was reached by NHS Counter Fraud Service Wales that no further action would be needed.
“At the same time, we also need clarity on how apparent conflicts of interest were managed between the NHS procurement services team and NHS Counter Fraud Service Wales, both of which are divisions of NHS Wales Shared Services Partnership.
“This is a gravely serious matter, and Welsh Government must provide reassurance that they are dealing with this in an open and transparent manner. When it comes to the handling of public money, particularly with regards to a health board that has recently fallen back into special measures, full accountability and transparency in process is of paramount importance.
Former police chief Mark Polin, who was forced to resign as health board chair, has said a police probe or a public inquiry is now needed. In a letter to Mark Drakeford he said the First Minister had "dismissed out of hand" the serious concerns he had raised.
He told North Wales Live: "I think the whole matter should be subject to independent review, I indicated this to the First Minister in correspondence and he has repeatedly declined. It should either be a public inquiry or a police one."
A Welsh Government spokesperson said: “The Ernst and Young report was commissioned by the health board. As work is ongoing by the health board to address issues raised within the report it would not be appropriate to publish at this time. Once this is complete then we would expect the health board to make a decision on the publication of this report.”
A spokesperson for Betsi Cadwaladr University Health Board said: “The NHS Counter Fraud Wales investigation connected to the Auditor General’s qualified opinion of the Health Board’s 2021-22 financial accounts has concluded and no further action is being taken. The Health Board will now undertake an internal review of the matter, in line with existing procedures and policies.”
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