Exclusive: Officials 'ignored warnings over £13m trading standards fraud'

OFFICIALS who failed to prevent a fraud that cost Yorkshire taxpayers £13m had been warned of problems years before the crimes were finally exposed, the Yorkshire Post can reveal.

South Yorkshire Trading Standards Unit collapsed with a deficit equivalent to 30 for every resident in the county following the death of its rogue manager, Mike Buckley, in 2005. It became apparent days after he suffered a fatal heart attack that he had been hiding a growing mountain of debt.

Now, as an official report into what went wrong is expected to be made public shortly, the Yorkshire Post has established that Sheffield City Council, which managed the unit on behalf of the county's four local authorities, Sheffield, Barnsley, Rotherham and Doncaster, had been warned of problems years earlier. Had this been acted upon it could have saved taxpayers a fortune and prevented years of hardship for rival businesses.

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A letter seen by the Yorkshire Post shows managers were contacted by a rival firm in 1999 because they believed the unit was pitching its prices so low it must be using public money to take trade from private businesses.

That suggestion was dismissed, but it appears nothing was done to discover how Mr Buckley was able to offer spectacularly cheap prices and still make a profit.

Mr Buckley also complained to a rival that he had been reported to the European Union over anti-competitive pricing and had to fill in a complex form with his managers from Sheffield Council as a result.

Months before Mr Buckley's death the situation had become so serious that the same rival company employed a worker with a specific role to bombard the unit with Freedom of Information (FoI) requests to try to establish the truth behind its finances. Sheffield City Council was aware of the content of at least some of those requests at the time.

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After the scandal emerged Sheffield City Council dismissed Mr Buckley's deputy for gross misconduct. It deemed no action was necessary against more senior officials, although action against others is still possible, depending on the content of the independent report.

During the last five years it was operating, Sheffield Council also took more than 1.2m in fees for providing management and audit services to the unit.

South Yorkshire's four councils ran the unit, set up to provide weights and measures services which local authorities must legally offer such as checking pub optics for accuracy or shop scales.

It was expanded by Mr Buckley during the 1990s into a business, offering a growing range of services to private clients.

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He financed that expansion by fiddling the unit's accounts which went undiscovered.

Three businessmen have since been convicted for their role in conspiring with Mr Buckley. The council has also tightened up some of its audit procedures.

Bosses at the rival company took the action in 1999 when the unit started to encroach on their business with seemingly impossible prices. They contacted Sheffield Council, which denied Mr Buckley was using public cash, and were also involved in a dialogue involving Euro-MPs but eventually gave up their efforts because the effort was like "banging my head against a brick wall", according to a businessman involved.

Sheffield City Council last night said it had "no record of any

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concerns raised by a competitor which we would have investigated accordingly".

It also described the number of FoI requests made concerning the unit in 2005 as "a relatively small number".

Unit claimed to have made profits

The South Yorkshire Trading Standards Unit was established to provided the weights and measures services for councils across the county.

Under the management of Mike Buckley, the unit began to attract an increasingly wide base of private clients.

Mr Buckley's motives were never challenged because it seemed the unit was running flawlessly and even generated small profits for the councils which ran it.