A potential fraud racket involving police officers collecting fines has been exposed in a damning report that revealed almost £20 million of penalties remain uncollected in Northern Ireland.
The NI Audit Office said it could not rule out that some cash paid by defaulters had been pocketed by officers instead of being recorded and lodged with the relevant authorities.
Auditor General Kieran Donnelly said he had been made aware that a police investigation was already ongoing into suspected fraudulent activities within the PSNI.
“My staff have not been able to obtain sufficient assurance that material fraud or error has not occurred,” he said.
The issue was one of a number of factors highlighted by Mr Donnelly in explaining why so many fines remain outstanding on the books of the Northern Ireland Courts and Tribunal Service (NICTS).
In addition to his concerns about fraud, Mr Donnelly branded the overall system for collecting fines in the region as “archaic” and not fit for purpose. He said it undermined the credibility of using financial penalties as a means to deter crime.
This is the first occasion the NICTS fine collection activities have been subjected to specific audit office scrutiny.
The probe revealed that outstanding debt stands at £19.3 million - with some penalties dating back more than 30 years.
Mr Donnelly said the amount was alarmingly high, given the annual income from fines stands at £13.8 million.
Fines included fixed penalty notices, court orders and confiscation orders. They are imposed by the judiciary, the police and the Driver and Vehicle Agency (DVA). Penalties, which are paid into the Northern Ireland Consolidated Fund, can be cleared by payment in full or installments or by serving a prison sentence.
Of the £19.3 million outstanding, more than £6 million has been effectively written off by the NICTS, with only £12.8 million estimated as realistically still collectable.
The remainder will likely not be recovered due to issues such as unwillingness of offenders to pay or weaknesses in the collection system.
Once an individual has defaulted on a fine a warrant can be issued for recovery. Almost half the £19.3 million relates to outstanding warrants. Warrants authorise police officers to recover cash payments from defaulters.
Of the £8.4 million of total outstanding warrants - involving 26,571 cases - a total of £5.4 million has been deemed as not recoverable.
This amount is the source of concern about potential fraud.
Mr Donnelly explained that he had “qualified” the accounts for 2011/12 as he had been unable to establish that fraud had not occurred in £1.3 million written off relating to outstanding warrants in that 12-month period.
He added: “If I had audited this balance in previous years, I would also have been unable to obtain sufficient evidence to substantiate that material fraud had not occurred in the cumulative balance to date of £5.4 million.”
Mr Donnelly noted that the current system allowed outstanding warrants to be collected in cash only.
“There is an inherent risk in any cash collection system, which is difficult to eliminate,” he said.
“My concern is that warrants could be collected but the cash and details of the fines not recorded. I have been notified of a suspected fraud in this area and I have been advised that an investigation is ongoing.”
Of the £1.3 million written off last year from outstanding warrants, the auditor general said: “I do not consider that there is sufficient evidence over the regularity of the amount of debt that has been impaired in the period of £1.3 million, as I am unable to substantiate how much of this impairment is as a result of fraud rather than being unrecoverable due to an inability or unwillingness to pay.
“While the requirement to collect warrant debt in cash means that it is difficult for PSNI to provide me with sufficient evidence that all cash collected has been banked, I would recommend that the current control environment is reviewed in light of the risk of potential fraud.”
The issue of outstanding warrants is currently in flux in Northern Ireland due to ongoing legal challenges on whether the system is lawful, in particular the processes involved in imprisoning defaulters.
As a consequence, action on all such warrants has effectively been put on hold pending a court judgment.
In his report, Mr Donnelly also raised concerns about missing warrants and the effectiveness of enforcement methods.
“I am pleased a reporting structure has been established that brings the significant issue of unpaid fines into the public arena,” he said.
“I welcome this increase in disclosure and accountability.”
But he added: “I am alarmed at the high level of fines that are considered irrecoverable. This undermines the credibility of the justice system in using fines as a means to deter crime. The systems for managing and collecting the debt are archaic and no longer fit for purpose.”
Mr Donnelly noted that problems with fine collection processes had previously been identified in reports by the Criminal Justice Inspection and said that while the agencies involved had taken action to improve the system, not enough progress had been made.
“I am disappointed that more progress has not been made since these issues were first brought to light,” he said.