Scottish Water, the nation’s publicly-owned water provider, has been defrauded out of up to £500,000 after some of its employees used its vehicles to make cash on the side.
Four drivers hired by the company, which provides drinking water to 2.5m households across the country, took advantage of lax monitoring to use its waste tankers for their own personal gain.
The scam was only discovered when a member of the public called a Scottish Water call centre to express his concerns about the employees’ unauthorised activities.
The four staff members left the company after the claims were substantiated by a whistle-blower, but it has so far not managed to recover any of its lost revenue.
An internal investigation later concluded that the drivers had been given “too much flexibility” in scheduling their work and that their activities had not been properly monitored.
The incident emerged in a report by Audit Scotland, the nation’s public spending watchdog, which detailed cases of fraud and financial irregularity in the public sector in 2018-19.
It said there had been 17 cases of fraud during the year amounting to a total loss of almost £674,000 for the public sector, with examples including misuse of assets and theft.
Another case saw Historic Environment Scotland (HES), which is responsible for famous buildings including Edinburgh Castle, lose £12,000 to credit card fraud.
Scottish Conservative local government spokesman Alexander Stewart said it was “staggering” that it had taken Scottish Water so long to discover the scam.
“A handful of employees have managed to carry out a significant level of fraudulent activity and go undetected for some time,” he added.
“Given the sums involved there needs to be far closer monitoring of the activity of their drivers to ensure that this cannot happen again.”
A spokesman for Scottish Water said: “As an organisation we take any allegation of fraudulent activity extremely seriously. This matter remains ongoing and as such it would not be appropriate to make any further comment.”
Fiona Kordiak, director of audit services at Audit Scotland, said: “The level of fraud and irregularity we’ve outlined in this report is very small compared to the £44bn that’s spent across Scotland’s public sector each year.
“That shows that systems to avoid fraud are generally working well.
“However, there were avoidable weaknesses in all the cases we’ve highlighted, and it’s important that all public bodies ensure that similar vulnerabilities don’t exist within their own organisations.”
A HES spokesman said: “Fraudulent card data was used on the HES ticketing web store. This did not relate to a security breach and subsequent loss of card data from any HES system.
“This data was then used to purchase tickets to our attractions. Since this came to light, we have introduced additional security and screening measures to prevent this happening again in future.”