Alleged fraudsters were able to siphon off funds from Leeds Grand Theatre’s accounts because safeguards were “circumvented” or broke down, a report says.
As revealed by the Yorkshire Evening Post in January, three people have been arrested as part of a six-figure fraud inquiry into the theatre.
The allegations relate to claims bogus invoices were used to make payments to nonexistent private companies.
Leeds City Council, which uncovered suspicious activity during an internal audit, is still refusing to provide further details about its own investigation or say whether any of its staff have been suspended.
But a report to the council’s own governance and audit committee has suggested those alleged to have been involved bypassed security procedures designed to prevent fraud. It said: “The fraud was able to occur as several of the key controls in place in this area had either been circumvented or had not operated as intended.”
The report said controls has been improved and an action plan had been put in place at the theatre to prevent a repeat.
It added: “A strong control environment ... operates to mitigate the risk of this type of fraud occurring elsewhere across the organisation.”
Councillors who sit on the governance and audit committee said it was “embarrassing” that they only found out that the Grand was being investigated from the YEP report. Members had been told at a previous meeting the matter could not be discussed while investigations were ongoing.
Speaking at the latest meeting on Wednesday, Coun Neil Taggart said: “A day or two after we were told nothing could be said, the full story appeared in the Evening Post. We could have avoided that embarrassment.”
A council spokeswoman said there would be no further comment until the outcome of the criminal and disciplinary inquiries. The three people arrested are still on bail.