Audit reveals serious problems with council sales

Police investigate sale of Aberdeen properties for much less than market value

News, 29 April 2008

The police are investigating property sales by Aberdeen City Council after an Audit Scotland report found that some of its assets were sold to developers for much less than their market value.

The report, into 26 transactions between April 2003 and January 2007, concluded that only seven had been adequately handled, and six caused serious concern. The public spending watchdog says that taxpayers have lost out on £5.5 million because the council sold on property worth £9.3 million at only 40% of its market value.

In one sale a sports club with a potential value of £2.9 million was sold for just £685,000, while the city's College Street car park went for half of its assessed £3.6 million value.

Caroline Gardner, the controller of Audit Scotland, said Grampian Police were looking into five of the 26 transactions, and that some former council staff had been reticent in helping auditors.

Councillors not informed

The Audit Scotland report says inadequate processes and improper compliance with procedures lie behind the situation, although it did not find evidence of fraud by council staff. The report states that councillors were not told of officials' actions, and that their instructions were not followed.

Douglas Paterson, the council's chief executive, said the report had drawn attention to serious deficiencies in the former City Development Service and that it was a very serious matter to withhold information from councillors. The council had responded quickly when concerns were raised.

Aberdeen Council is also facing a public hearing by the Accounts Commission on 13 and 14 May, on concerns raised in a report by the Controller of Audit into the way the council is organised and managed.