Dave Armer, the Barrow-in-Furness-based firm's managing director and principal shareholder, was jailed for 15 months, banned from being a company director for four years, and made to pay £60,000 costs.
Donald Kershaw, CAW's general manager, was jailed for eight months and its transport manager, Peter Newton, was sent to prison for six months.
They all pleaded guilty at Carlisle crown court to conspiring together dishonestly to obtain £100,000 worth of money transfers for CAW Ltd from Cumbria county council by misrepresenting the quantities of household waste collected from civic amenity sites between August 31 and December 6 2006.
Prosecuting counsel Kevin Donnelly told the court the firm had originally been paid a set fee for processing the waste. But in 2002 the council introduced a new scheme, in which the firm was paid according to how much waste it handled.
This allowed the three to oversee a scam in which the amount of waste processed was exaggerated, with false paperwork being drawn up to back up the bogus figures, so they could claim more money than they should have.
In many cases records showed that lorries had contained much more waste than they really had; loads were given “multiple tickets” (making it look as if several lorries had arrived, not just one) and in some cases records were submitted for loads that hadn't existed at all.
Sentencing the trio, Judge Peter Hughes QC said that the men had taken advantage of the system and criticised the county council officials who regularly inspected the firm's weighbridge and transfer station in Walney Road, Barrow.
He said: “They were taking advantage of a lax system – they realised they could get away with it, so they did it.
They were taking advantage of a lax system – they realised they could get away with it, so they did it
Judge Peter Hughes QC
“It is difficult to avoid the conclusion that the county council's system of inspection and audit was woefully inadequate.”
Carlisle crown court found in June (see letsrecycle.com story) that the three men were guilty of submitting invoices based on falsely high amounts of waste, in order to generate more income for the business.
When the defendants first appeared in court in 2008, they faced charges alleging that they had charged the council £3.5 million more than they were entitled to over four years (see letsrecycle.com story).
The offence they later admitted involved invoicing the county council for around £100,000 more than they should have done, and covered three months rather than the original four years.
Civil courts
Following the sentencing Cumbria county council's acting chief executive, Jill Stannard, said that the council would be pursuing the men for the £3.5 million they were originally charged with in the civil courts in order to “claw back” lost monies.
She added: “We are pleased that the serious nature of the fraud against us has been recognised by the judge and he has handed down custodial sentences to all three defendants. This has been a complicated investigation from the outset, but now the work of county council officers, trading standards and the police has brought these individuals to justice.
“First and foremost we should remember that a criminal offence has been committed against the county council – and indeed against the taxpayers of Cumbria. The criminal activity was identified and investigated by council officers before being referred to the police.”
However, she criticised council officers for not taking action quickly enough and said there were important lessons to be learned from the case.
Ms Stannard said that working practices at the council had been reviewed and changed in light of the case a fraud strategy and auditing and monitoring arrangements had been altered. She also said that a 'whistleblowing policy' was now being promoted alongside new fraud detection technology.
Although the majority of council staff who worked on the case have now left an investigation by the council to determine if any disciplinary proceeding need to take place within the organisation will be resumed – this is possible now the criminal proceeding are over.
Ms Stannard added: “There is no suggestion that any council officers were involved in corruption or criminal activity. But it is absolutely right that the public should expect the highest standards from public servants.”
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