CORRUPT council officers knocked back drinks and enjoyed lapdances as rewards for handing out building contracts.
Kevin Balmer and Brendan Cantwell, from Edinburgh-based ABC Ltd, even splashed out £5000 on one night out for Charles Owenson and James Costello in a bid to secure work.
And they brazenly charged the council for the bribes by inflating invoices for completed repairs to properties, including libraries, community centres, schools and cemeteries.
Procurator fiscal Keith O’Mahony told Edinburgh Sheriff Court yesterday: “In essence, the council was being charged for the cost of bribing its own officials.”
Council officials Owenson and Costello quickly became accustomed to the luxury lifestyle, splashing their cash on cars.
All four men admitted the corruption earlier this week and appeared in court yesterday as the full story was revealed by prosecutors.
It also concerns a fraudulent scheme whereby contractors have falsely inflated the invoices they submitted to the council following completion of work in order to cover the costs of the bribes they were paying to council officials.”Keith O’Mahony
Mr O’Mahony told how £67,000 was added to ABC’s invoices to cover the cost of keeping Owenson and Costello sweet. And more than £30,000 was spent by the firm at hospitality events attended by the council duo, although others were also present.
Witnesses reported that during one night out, Costello placed his empty glass on his head as a signal it was time that one of the contractors bought him another drink.
Mr O’Mahony said the duo benefited from “extensive” hospitality, including tickets to Hibs and Hearts matches.
He said: “There were corporate seats at football matches with free drinks during and after the game, meals and nights out at bars with drinks paid for and visits to lapdance bars. Drinks and lapdances were provided.
“Costello particularly took advantage of this, and he used to brag. It was said a night out must have cost ABC £5000. It’s impossible to quantify how much was spent on each
Costello – who admitted pocketing £14,134 in cash and rewards – splashed out on three cars: an Audi TT Quattro, Toyota Corolla and a Jeep Cherokee.
The court heard yesterday that Costello, 44, of Crosswood Crescent, Balerno, would “not have been able to sustain that lifestyle” on a modest council salary while raising a family.
Owenson, who admitted receiving £28,387 as a reward for influencing council contracts at an earlier court hearing, attempted to conceal the cash by buying a Mercedes LL320 and a Peugeot 207.
The 62-year-old, of Drum Brae Neuk, was also found to have put “unexplained funds” into bank accounts in both his and his wife’s names.
Costello, who had worked at the city council since 1991, also made “large cash deposits” to his bank account which could not be explained by any income.
The pair, who were both first offenders, were officers within the council’s Property Care Services section.
They were responsible with others for logging reports of properties that needed repairs and taking on contractors to carry out the work. ABC was an approved contractor and carried out the “vast majority” of the work. Mr O’Mahony said the “level of trust and responsibility” held by Owenson and Costello was so great that between 2005 and 2011, they handled more than 1000 contracts worth almost £1.5 million.
At the height of its success, ABC was turning over more than £4m a year and employed more than 70 staff. From 2006 to 2010, 93 per cent of all contracts secured by the firm were for work carried out for the city council.
Police seized files from the offices of ABC in New Mart Road, finding itemised breakdowns for council contracts, including materials and labour.
At the bottom of the page, there was an additional figure noted down – ranging from £20 to £2000 – alongside the initials of either Owenson or Costello, representing the amount needed to secure the contract.
Officers found 175 of these suspicious work orders – Owenson was linked to 102 of them, while Costello was connected to the remaining 73.
Witnesses told police that they saw Balmer regularly putting cash in the top drawer of his desk in envelopes.
Owenson and Costello were regular visitors to the ABC offices, while the contractors went to see the Property Care Services team once a week.
Mr O’Mahony said: “Several colleagues had concerns about favouritism. Witnesses confirmed that on occasions, Owenson would walk round from his desk and go to Costello’s computer, to input something into his computer. Work orders would be created at Costello’s computer, and authorised by Owenson.”
During meetings with 52-year-old Balmer at the ABC offices, the men would be seen going into a glass-fronted room, and the blinds would be drawn.
“One colleague was asked to withdraw cash for Balmer. Some time later she saw Owenson at the ABC premises and she saw that he had two white envelopes under his arm,” said Mr O’Mahony.
An examination of Balmer’s laptop saw references to Cantwell paying for “extras”.
The pair also kept an Excel spreadsheet – named “Jacco” after Costello and Owenson – which kept a running tally of council projects and the bribes.
In 2009, Balmer, who had co-founded the company with scaffolder Cantwell, told a member of staff at the firm that he was “fed up” of Owenson and Costello and stopped giving them payments for a short period.
But Balmer, who was also company secretary, later revealed he came under pressure because ABC was losing business and jobs were being allocated to other contractors – and the bribes resumed.
The court heard that between December 2006 and November 2010, Balmer, of Tantallon Gardens, Livingston, received £141,541 in dividends and Cantwell, 44, of Bankton Gardens, Livingston, £135,071.
A Proceeds of Crime hearing to recover the profits will be held later this year.
Owenson and Costello admitted breaching the 1889 Public Bodies Corrupt Practices Act and Proceeds of Crime charges earlier this week.
Cantwell and Balmer admitted giving £42,521 in cash and hospitality to the value of £30,249.21 to Owenson and Costello as inducements to secure contracts for the repair and maintenance of publicly-owned buildings.
Balmer admitted causing the city council to pay £67,923 to ABC Ltd between April 2007 and May 2010 and obtaining £22,641 by fraud.
He also pleaded guilty to adding £986.51 to a council invoice for materials and labour given to Costello for free – the cost was put on a bill for works carried out at Duddingston and North Leith churchyards.
Sheriff Michael O’Grady QC ordered background reports ahead of sentencing next month.