Monday, June 1, 2009

Folk Festival: Lets keep our fingers crossed

The Cambridge Evening News has a stunning story today detailing the contents of some internal emails sent relating to the Folk Festival ticket fiasco, where over £600k of last year's ticket sales were collected by a company that subsequently went bust after failing to hand over the money.  - the information was obtained through a freedom of information request.

I have read the FOI response (in which the names of the relevant people have been blacked out), and it is jaw-dropping. The emails do nothing to reassure me we have got to the bottom so far of why this was allowed to go on. They indicate the extent to which other departments in the Council knew the risks that were being run in the 2008 online Folk Festival ticket sales contract, but failed to stop the problem.

In October 2007, whilst three bidders were being evaluated, someone in the finance department was asked for a credit check (of the company and its holding company - note that  company names may not be precise in these quotes, and there are other similar sounding companies out there not related to this issue) - they replied:

"One thing is clear – Telsecure carry a very High Risk rating and are not making profits. Secureticket was not listed"

The reply, presumably from the Folk Festival team:

"A reminder to never ask questions if you don’t want to hear the answer. The first one is the one we used last year and wished to use again!!"

"This is a bit contentious as in the money goes into an escrow (clients account) so should be safe even in cases of bankruptcy but a) we would rather not take the risk (it being circa £0.5m). At the end of the day I’ll go with what you and audit recommend.”

So both departments clearly appreciated the scale of money that could have been at risk. (in apparant contradiction of assurances given to Councillors that this contract wasn't picked up as it was only ever considered as a £30k contract for services)

Finance also uncovered the Isle of Man holding company, i.e. the unusual corporate structure, but there still didn't appear to have been a recommendation issued not to deal with the company – instead everything went quiet until a couple of days before go live.

In early May 2008, shortly before the tickets were due to go on sale, it was realised there weren’t proper contracts in place, that there hadn’t been a conclusion to the credit checking and concerns were again raised about the company, one email saying:

“Every bone in my body tells me this company is a wrong’un – but I can’t put my finger on it. It would help if they were transparent… we are stuck with this lot so let’s keep our fingers crossed”

£618k of Council tax payers money protected by keeping fingers crossed - incredible.

Its clear that several departments were fully aware of what was going on and the risks being run, alarm bells should have been ringing in senior management, but still the contract wasn’t stopped.

The City council has agreed to setup a member-led enquiry to look at some aspects of the Folk Festival ticket sales fiasco. Conservatives are calling for this enquiry to look at how finance and legal failed to stop this disastrous contract, and consider wider risk management.

We have a long way to go before we have got to the bottom of how and why the Council let a company go bankrupt owing the Council such a large sum of money...


Richard Taylor said...

I think Cambridge City Council ought publish the information it releases as a result of FOI requests on its website.

If it did this we could all read what has been released for ourselves.

Currently there is only an out of date list of requests; information released is not published:

NickW said...

Any member of staff with the backbone and nounce to point out the risks associated with this company would have been lambasted as a reactionary and not having a can do attitude as is the fashion at Calamity Council.

Notwithstanding this point the risk factor could have been easily mitigated by a factor of 90% by insisting the company directly transfer ticket sales proceeds into a council controlled account. Quite simple and straight forward and at worst would have left the council at risk of the Company in question skimming perhaps 5-10% not taking every penny.

What's that saying - like taking candy from a baby!