Pandemic benefits ‘police’ unit lacked governance, report finds

The government’s pandemic fraud investigation unit was not properly overseen by ministers or the council in Essex in whose area it was based, an independent review has found.
The National Investigation Service, or Natis, a part of Thurrock council with staff working throughout Britain, lacked “appropriate governance” and councillors had “limited exposure” to its work.
Other issues uncovered in a review by Mazars, an audit group, included problems with how Natis accounted for money it seized from business owners suspected of abusing pandemic loans and grants.
Natis was contracted by what was then the Department for Business, Energy & Industrial Strategy in 2020 to investigate abuse of Covid-19 schemes. Since then, it has worked almost exclusively on pursuing fraud on the £47 billion bounce back loan scheme and on pandemic business grants.
It was presented as a national law enforcement service that issued staff with police-style ­uniforms and warrant cards. Until recently, it had a website with a “.police” email domain. Government press releases described it as making arrests of business owners and of being involved in “raids” and ­“seizures”.
However, The Times has reported previously that the unit is not a law enforcement authority and is manned by Thurrock council staff. This month it emerged that regulators had ordered Natis to stop using the .police web domain and email addresses.
The council commissioned Mazars to review Natis last autumn after “concerns and challenges” were raised “regarding the establishment and governance” of the service, a council audit committee paper shows. The “misconceived view that Natis was a separate entity to Thurrock council” was one of the reasons the review was commissioned.
The full review has not been published, but the document shows that Mazars has uncovered numerous issues. The review said that elected council members had “limited exposure to Natis, its capabilities and progress” and that improvement was required with “transparency with members”.
Mazars’ recommendations included developing “appropriate governance arrangements” between the service, the council and the government, improving how it accounts for money seized by the service and hiring a “trusted senior individual” to oversee it.
The audit committee report, issued in July, says that recommendations from the review “have either already been addressed or actions are being taken to address them, to ensure that the governance of Natis is performed as part of the council function and is robust”.
Minutes of a committee meeting last month record that the service had “previously been acting in a bubble within the council”.
Disclosures under freedom of information laws show that Natis, which had a budget of £30 million in its first two years, helped to secure only six criminal prosecutions for abuse of coronavirus support programmes. Total recoveries from January 2020 were £17 million, a tiny fraction of suspected fraud losses.
Thurrock council is suing Liam Kavanagh, one of its former business partners, and Rockfire Capital, his company, for fraud after it lost about £200 million it invested in an alleged solar farm scam. The investments were made before Natis was granted the government counter-fraud contract. The council had accused him of diverting public funds to buy a yacht, a Bombardier jet and a 232-acre country estate. Kavanagh has strenuously denied the claims.
The Natis contract with the government is due to end next March and there are talks between the council and the Department for Business and Trade over continuing its anti-fraud work. Natis has about 100 staff.
The team previously was run by David Kleinberg, a long-time council official. He is understood to have left his post. Mark Wheeler, a former police officer, was appointed assistant director after the review.
Thurrock council said: “Appropriate governance arrangements and contracts are now in place. Natis has always functioned as a council service under Thurrock council’s governance. All issues [with asset seizures] are resolved and formal governance arrangements are in place. This is now monitored on a monthly basis.”
A business case for the continuation of Natis will be presented to the council cabinet in September. Whitehall officials are reviewing the Mazars report, which they received in July. They declined to comment.