Edinburgh, Fife & East Scotland

Edinburgh council officials bribed with lap dances, drinks and hospitality

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Media captionJames Costello (left) and Charles Owenson admitted taking bribes

Edinburgh council officials accepted lap dances, free drinks and hospitality at football matches in return for awarding lucrative building contracts, a court has heard.

Charles Owenson and James Costello had been working for the council's property care services division.

They took bribes from Kevin Balmer, 52, and Brendan Cantwell, 44, directors at Edinburgh firm ABC Limited.

All four men admitted charges at the city's sheriff court earlier this week.

Owenson, 62, and Costello, 44, pleaded guilty to breaching the 1889 Public Bodies Corrupt Practices Act.

The men also admitted committing fraud and breaching proceeds of crime charges at a hearing before Sheriff Michael O'Grady.

They will return for sentencing next month.

Expensive cars

On Friday, the court heard further details about the scam, which involved falsely inflating invoices and money laundering. It was uncovered in 2011 after a whistleblower raised concerns.

The charges related to the maintenance of Edinburgh Council buildings between 2006 and 2010.

The contractors even submitted inflated invoices to the local authority for work carried out to cover the costs of the bribes they were paying council officials.

Fiscal Keith O'Mahony told Edinburgh Sheriff Court: "In essence, the council was being charged for the cost of bribing its own officials."

Invoices were found that were falsely inflated to the value of more than £67,000.

The prosecutor said the hospitality the firm provided was "extensive" and added: "Drinks and lap dances were purchased for Owenson and Costello."

The pair also had expensive cars including an Audi TT Quattro and a Mercedes ML320.

The court heard that Owenson and Costello both worked as property care services officers with the council in a department that looked after schools, care homes, community centres and cemeteries.

They were responsible, with others, for logging reports of properties that needed repairs and taking on contractors to carry out the work.

ABC was an approved contractor and carried out the "vast majority" of the work at the time of the offences.

'Whistleblower letter'

Mr O'Mahony said that at the height of its success ABC was turning over more than £4m a year and employed more than 70 staff.

Police began carrying out enquiries in 2010 as a result of complaints about the statutory notices system and officer were later informed that senior management at the council had received "a whistleblower letter" alleging that Owenson was showing favouritism when allocating work to contractors.

In 2011 officers attended the offices of ABC in New Mart Road, in Edinburgh, and seized documentation. A total of 175 suspicious work orders were identified.

Mr O'Mahony said witnesses saw Balmer regularly putting cash in the top drawer of his desk in envelopes.

When the council officials came to the offices to meet Balmer they would go into a meeting room, which was all glass, and the blinds would be drawn.

The prosecutor said: "No witnesses actually observed any money or envelopes being passed to Owenson or Costello."

Alongside the bribes that were paid was the hospitality doled out to the council officials. More than £30,000 was spent by the firm at hospitality events attended by Owenson and Costello, although others were also present.

"One witness states that Costello bragged about the money being spent by ABC and on one occasion claimed a night out he had attended must have cost ABC £5,000," said the fiscal.

The court heard that between December 2006 and November 2010 Balmer received £141,541 in dividends and Cantwell £135,071.

The Crown has raised proceedings to recover crime profits in the case.

Sheriff Michael O'Grady QC ordered the preparation of background reports on the offenders ahead of sentencing and said he was prepared to continue bail until that was done.

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