Thursday 4 January 2024 – A Further Study of the Nature of the Rhino
In the 1996 film, Fargo, Jerry Lundegaard is the manager of a car dealership but, envious of his father-in-law, a successful businessman, he wants to earn more money. Looking for investment opportunities, he has crunched the numbers and intends to buy a plot of land and turn it into a carpark. But he needs investment money before someone snaps up the deal under him, money he doesn’t have. He devises a scam where he borrows money using cars that don’t exist, supposedly owned by the dealership he works for, as collateral. The dealership is a legitimate business so the bank is happy to make the loan subject to receiving a list of the VIN serial numbers of the cars. This is simple due diligence and the loan manager thinks little of the minimal evidence requirement of the collateral.
If Lundegaard can just get the loan, when money starts coming in from the carpark, he can pay back the car dealership and, in turn, the bank, and no harm will be done. He will have his own successful business and income stream. But he doesn’t have the VIN numbers because the cars don’t exist. That doesn’t stop him faxing the evidence of the VINs to the bank; he just has to fudge the numbers, literally: he writes the numbers in using a blunted pencil and then allows the poor quality of historic faxes to do the rest to fudge the numbers so that the loan manager can’t read them properly to verify that the cars exist. It’s basic. And of course it doesn’t work. And he (SPOILER ALERT) ends up being arrested for grisly crimes committed by doubling down on what was initially a bad plan.
Jerry
Lundegaard on the phone to the loan manager trying to charm his way out of
having to provide legible evidence of the collateral that he doesn’t have:
Fargo, 1996.
Fargo is a great film because of its believable
script and performances. The problem is that,
sometimes one has to question whether reality is believable. “It’s not that clearcut”, the rhino from supplier
AJS told me in a meeting on 28 November about reporting evidence of their
social value contributions made. Huh? Yes it is.
AJS is a business that supplies councils with housing management and maintenance services and therefore spends public money. As a corporation delivering public services, they keep records of public money, resources and staff time spent on the delivery of these public services, or, at least, one would expect them to. We council officers then have to account for that money we give them. It is that clearcut. The Ancient Mesopotamians, Egyptians and Greeks accounted for public finance and we’ve (nominally?) been doing it since. Is she being serious? Her assertion took me by surprise and, logically, I didn’t know how to react. To understand how I did react, we have to go back further.
On 4 October, I met this rhino for the first time. She had introduced herself to me by email as the new manager at AJS responsible for social value. Their new contract manager at the council had been chasing them up for a report on social value commitments delivered as part of the contract and, as the Social Value Monitoring Officer, she wanted to discuss their progress with me and ask how to report it. It was a straightforward and convivial meeting; she seemed genuine like she wanted to understand how to report the social value AJS had delivered. I gave her the reporting spreadsheet and explained that she could provide simple evidence to back up financial expenditure and staff time such as account records and timesheets. It doesn’t get more complicated than that and, so, there was no reason for this meeting to go off the rails. We agreed she would fill out the spreadsheet and send it back to me by November, I would verify the evidence and report to their contract manager in the council what social value AJS had delivered on their contract. She sent me an email the following day saying, “…it was great to link in with you and I am confident that between the both of us, we will have all in order soon.” I was confident too but I should have known then this wasn’t in keeping with my learned understanding of the profile of a rhino.
I reported back to the contract manager in the council’s Housing team that AJS would provide an evidenced report of their social value contributions by November and, on 31 October, still not knowing what his contractor’s social value delivery was that he asked for at the start of the month, chased up both me and the Rhino asking, “Do you have a date in mind when we can catch up…”
She replied,
“Good Afternoon both,
“Hope you are both keeping well.
“Regarding the update on the SV, we did agree Paul, that I would look to provide an update in mid November.
“…
“I have looked at my diary and Wednesday the 22nd or Thursday 23rd [November] are free to book a meeting. Please let me know if either of these dates are suitable so we can update where we are with our Social Value.
“I look forward to hearing from you.
“Kind regards,
“[Rhino]”
No, we didn’t agree that. We agreed she would send me evidence of social value delivered by November. Mid-November wasn’t mentioned and I don’t want a meeting to update me; just the written report of evidence. Nonetheless, seemingly patient, the contract manager replied to her asking her to send a meeting invite for Wednesday 22 November.
Postponed again until the following Tuesday 28th, the Rhino started the meeting with a rambling preamble about AJS’s commitment to its “corporate social responsibility”. Losing patience, unerring to this point since we first met at the start of October when she said she would report social value delivered and still hasn’t and here she is again babbling out corporate niceties, I interrupted her asking after her report and whether she had found the evidence of the contributions made that she said she would look for in our meeting on 4 October. This is when she announced, “It’s not that clearcut Paul. What we have to consider is…”
“No, it is that clearcut…”, I interrupted her mid-sentence, not allowing her to get away with that one, “…You make a social value contribution, report it on the spreadsheet and attach evidence of it. We won’t consider anything else. We’ve been waiting over seven weeks and you still haven’t sent us anything and, prior to you introducing yourself to me, we’ve been waiting since 2021 when your contracts started.”
She acted taken aback by my reaction and interruption. “I don’t appreciate the tone of this meeting” she said. If this was a performance to fudge, obfuscate, be obtuse, knock social value further into the long grass and feign insult at my lack of professional conduct, it felt unreal. I think her hamminess stemmed from the context; her plotline felt unreal, and therefore her performance, although good in its own right, felt out of place. The Coen Brothers write plotlines and interactions in a more believable way such as in Fargo. When Mr Deifenbach from the bank calls Jerry about reporting evidence of the collateral, the script goes:
Jerry: Yah, real good. How you doin’?
Mr Deifenbach:
Pretty good Mr Lundegaard. You’re damned
hard to get on the phone.
J: Yah, it’s pretty darned busy here, but that’s the way we like it.
D: That’s for sure. Now, I just need, on these
last, these financing documents you sent us, I can’t read the serial numbers of
the vehicles on here, so I –
J: But I already got the, it’s okay, the loans are in place, I already got the, the what, the –
D: Yeah, the $320,000, you got the money last month.
J: Yah, so we’re all set.
D: Yeah, but the vehicles you were borrowing on, I just can’t read the serial numbers on your
application. Maybe if you could just read them to me -
J: But the deal’s already done, I already got the money –
D: Yeah, but we have an audit here, I just have to know that these vehicles you’re financing
with this money, that they really exist.
J: Yah, well they exist alright.
D: I’m sure they do – ha ha! But I can’t read their serial numbers here. So if you could read
me –
J: Well, but see, I don’t have ‘em in front of me – why don’t I just fax you over a copy –
D: No, fax is no good, that’s what I have and I can’t read the darn thing –
J: Yah, okay, I’ll have my girl send you over a copy, then.
D: Okay, because if I can’t correlate this note with the specific vehicles, then I gotta call back
that money –
J: Yah, how much money was that?
D: $320,000. See, I gotta correlate that money with the cars it’s being lent on.
J: Yah, no problem, I’ll just fax that over to ya, then.
D: No, no, fax is –
J: I mean send it over. I’ll shoot it right over to ya.
D: Okay.
J: Okay, real good, then.
When nothing gets shot over by, let’s say
November, Mr Deifenbach chases up Jerry again.
Jerry answers the phone:
D: This is Reilly Deifenbach at GMAC. Sir, I have not yet received those vehicle IDs you promised me.
J: Yah! I… those are in the mail.
D: Mr Lundegaard, that very well may be. I must inform you however, that absent the receipt of those numbers by tomorrow afternoon, I will have to refer this matter to our legal department.
J: Yah.
D: My patience is at an end.
J: Yah.
D: Good
day, sir.
Jerry didn’t feign insult at Mr Diefenbach’s
tone. He fudged, avoided contact, and
confused and knocked the matter into the long grass albeit with a long-term
plan to recover the money elsewhere and remedy the financial default. I don’t know what the Rhino’s long-term plan
is here, but feigning insult doesn’t fit the plotline. She’s not speaking to Vodafone customer
service, here, she’s speaking to council officers who have given her £3,541,229.55
of public money and are repeatedly having to chase her for evidence of the
services she has delivered with it of which £861,954.61 must be social value
delivered because, stupidly and without any business acumen, AJS bid 24.34% of
the contract value to be social value contributions so as to outbid any
competitors. These promises include training and employing local residents on the contract,
staff volunteering time, and resources and money spent on local community
projects. Of course, like Jerry’s
interdependencies of income, this plan was never going to work. No building supplier’s margins are 24%;
industry norms are 14-20%. They didn’t mean
it when they bid 24.34% and the council should have known it was ridiculous
just like Mr Deifenbach should have verified the VIN serial numbers before he
deposited the loan into Jerry’s account.
Mr Deifenbach’s unease at his misplaced trust is unspoken in the script and the Coen Brothers knew not make Jerry outraged at his patience eventually inevitably being at an end because it wouldn’t be real. And the Coen Brothers wanted their script to be real. That didn’t deter the Rhino’s performance, though. I didn’t agree the contract and the social value proposal, the original contract manager did, and I wanted to know what the new contract manager in our meeting thought of her chosen approach to this interaction. “I don’t care what you think of our tone”, he told her, “we need to account for that social value so you must provide the evidence. If you don’t then we will refer this to Legal and be withholding further payments to you.”
Okay, good, well that’s clearcut. She dropped the act and said she would shoot it right over to us all.
Two days later, she emailed over the spreadsheets for the two contracts plus accompanying evidence attached. Because the reports are digital and not pencilled and faxed, there was no opportunity for the Rhino to literally fudge the evidence but, boy did she do it figuratively. In the report were names of Resident Liaison Officers who no-one in the Housing Team had heard of employed full-time on both contracts/housing estates simultaneously, training given to 90 homeless residents with evidence from the homelessness charity, BEAM, that they had “supported” 14, 40 residents trained claiming £20k with evidence that they attended one school assembly for 40 school children to talk about careers in construction, staff volunteering days on “LBHF Estate Days” which the Rhino didn’t know what they were nor could provide session plans or staff timesheets, and payments of thousands of pounds to local charities for which she said AJS didn’t keep a receipt of, including an incongruously specific description of M&S vouchers donated to a tenant bingo group of which they have no record.
You wouldn’t make it up, and the Coen Brothers didn’t bother, because it’s simply not believable, and it never occurred to the Government to include these risks in their Review into the risks of fraud and corruption in local government procurement (see For the Betterment of the People above), presumably because there is no risk here because presumably local governments would simply dismiss any such claims so ridiculously reported. So, what made the Rhino report something so fatuous?
My favourite fudge was the dreaded annual Grenfell anniversary illuminations. In For the Betterment of the People, it fell to Kier to fund the illuminations for 2022. How this came about never really became clear to me, but they claimed it as a social value contribution confirmed to me by Kier with an email they sent to the council’s Head of Property Engagement asking her to confirm in writing that she asked for the illuminations as part of their social value contributions. “Evidence” simply came down to the Head of Property and Engagement replying “yes”. For the 2021 anniversary, the honour fell to AJS. The Rhino claimed £1,755 for 1,750 LED lamps evidenced with an invoice for 1,700 LED lamps for £702. She also claimed a £12,924 payment, providing an invoice for that amount, to Yes Events, the event organiser that year for the memorial event. As with Kier, I questioned the Rhino on why AJS thinks this is a social value contribution. It’s not a community project, it’s a bizarre political gesture to recognise that tenants of these housing estates are valued enough that they won’t be left to burn like Kensington & Chelsea allowed their neighbours to. What (non-politicised-on-threat-of-being-accused-of-gross-misconduct-for-applying-their-own-politics-to-their-decisions) officer in the council asked AJS for this contribution(?), I wanted to ask her (without the misconduct bit).
I agreed with the contract manager that I would give her this feedback and ask for these clarifications and we give her “one more chance to fill the gaps in the evidence”, and, from whatever I verify from that, we draw a line under that sum and he deduct from any future invoices the shortfall of social value evidenced as contributed. “I agree”, he told me of my audit of their social value report, “it’s as clear as mud.”
Five weeks later again, today, the Rhino sent me her updated and, as far as I and the contract manager agreed, final report. In the email, she clarified her updates:
“I can confirm that the vouchers for the Bingo Group were delivered to the resident in person (by [an AJS colleague]) on Friday 15th of December, I personally spoke to the resident; to [a random name]. The resident did ring [the colleague] this week to thank him and AJS.”
No further evidence of the vouchers being given to the Bingo Group was provided. It is disputed how detailed the Ancient Mesopotamians were in their audits for lack of hard evidence surviving from thousands of years ago, and I am no auditor, but I judged this “evidence” to be, at best, anecdotal. She went on,
“I have also emailed [the council’s Community Assets Safety and Participation Officer] for a follow up on how [other] vouchers were used to support the residents. This will be updated in due course.”
From this I understand that she didn’t understand when her contract manager told her the course ends here. She went on,
“I have emailed BEAM and asked them to confirm if the residents were from H&F, they have confirmed that they were from various borough [sic]. However, I think this will need further discussion as H&F requested that we work in liaison with BEAM and BEAM have stated that two of the residents were referred by H&F.”
Which frontline officer in Hammersmith & Fulham Council is working in a statutory capacity with people who are not Hammersmith & Fulham residents, and referring them to services, she doesn’t say here, but it seems unlikely. The claim for 90 residents remains unevidenced in the report. Further,
“[Regarding staff] volunteering, historically, I know a lot of this information was provided to H&F as these events took place before my time. However, I have spoken to [her colleague] who personally took part in the three estate events. [He] is pulling together a list of activities that we participated and or hosted together with a list of the volunteers and photos to support attendance. As soon as I receive this I will forward this to you.”
Mysteriously, she didn’t say who in the council AJS sent this evidence, but it wasn’t me. Otherwise, I take it from this, she didn’t bother doing this when we first agreed she would do this back at the start of October when I was still convivial and before threats were made by her contract manager. Alas, too little too late. She goes on,
“Regarding the 3 [Resident Liaison Officers (RLOs) claimed as employed by AJS on the contracts] – I have had [a different colleague] look at the figures and dates again and we can confirm that [the RLO I queried] was working on the [two] contracts simultaneously – that is why we have put forward working hours of 25 on the Access Control contract and I have put 15 on the Lot 5 Electrical contract – which makes up a 40 hour week – I do not agree that it should be taken off the Electrical Contract and if it is, please explain why this is.”
I didn’t say it should be taken off. I queried it. She reported that the RLO was working on one contract for 45 hours a week (of a 40-hour-per-week contract) and 25 hours on the other. That her contract manager says there is no such RLO working at either, she doesn’t address. The report she attached here still has the RLO working 45 hours per week on one contract and 25 on the other.
Of diverting waste generated from the contract away from landfill detailed in AJS’s original bid, she says,
“I have reached out to your environment teams to advise on how we can report this figure (but I have received no response to date). AJS do not currently have a system in place that can quantify our waste per contract, as waste is brought back to our head office where it is sorted and sent to our approved waste suppliers. My only thoughts are to take our top 10 contracts and see if we can weight the overall tonnage of waste saved. This would give a rough estimate, please let me know your thoughts on this.”
My thoughts are that if you can’t know what waste you’re recycling, you shouldn’t have proposed you were going to do it. Recycling is a vital issue for the council and a practice that the council’s environmental strategy says we are trying to encourage in our supply chain. If suppliers don’t know what they are doing with their waste and have no interest in instigating ways of monitoring it doesn’t go to landfill, then this is a council strategy we’re going to have to chalk up to failure unless we insist our suppliers actually do it. Not that our Environment Team, who wrote the strategy, cares. The Rhino’s performance followed the plotline thus far and is entirely credible when she said that no-one from that team responded to her.
Of the LED lamps contributed to the 2021 Grenfell anniversary, she claimed,
“Of LED Lamps of £1,755, agreed, we did provide one invoice for £702.00, however following some discussions with colleagues who continue to work on the H&F contract, it has been confirmed that a large proportion of the LED Lamps would have been taken from stock and therefore one invoice will not cover this. I have asked our finance department to therefore provide an invoice or invoices that will make up the remainder of spend. I hope this makes sense!, if not please come back to me on it. I will provide this as soon as I receive it.”
I can’t tell if this makes sense. Perhaps our supply chain is this lacksadaisical with public spend and it never occurred to them to account for public money they were claiming and, instead, one supplier thinks it okay to simply take thousands of lights, enough to illuminate three tower blocks, out of a storeroom and bill the council for it for what they guess(?) it’s worth rather than based on any accounting procedures. But I’m not getting back to her because I agreed with her contract manager that we would draw a line under this last report.
But, of the contribution I am most curious, why did AJS pay Yes Events’s invoice of £12,924 to pay for the 2021 Grenfell memorial on the Edward Woods Estate? The Rhino attached an email trail to explain it all. Addressed to the family owners of AJS from the council’s original contract manager who awarded these contracts to AJS, it read,
“On the anniversary of the Grenfell fire, LBHF illuminates the Edward Woods estate as a mark of respect at the same time as [the Royal Borough of Kensington & Chelsea] illuminates the remaining Grenfell Tower structure.
“This is something we find tricky to pay for from our normal budgets as they are not structured for such events.
“I wondered if you would be interested in covering the costs for this year. It would be very well received by my Head of Service, Assistant Director and Director and we will ensure that you get full coverage internally (this would be to Chief Exec level).
“The quote is attached from the supplier. It’s £10,770 exc vat [£12,924 incl VAT]. The electrical work required to set up will be covered my team although you would be welcome to take part.
“It is a dramatic and moving event that reflects the unity that we all feel for the people who died and suffered as a result of the fire.
“It may be worth getting pictures that you may be able to use on your web site and other sales media. It will also be a big step to covering off the commitments in the social value part of your bid.”
What does “very well received” up to and including the Chief Executive mean? Is he inviting the owners of AJS to bribe the CEX of the council with her tricky budgets? If so, I think our further study of the nature of the rhino can end here: she was taken aback by mine and her new contract manager’s insistence that they actually deliver what’s in their contract. Competitvely and objectively tendering for contracts awarded to the “Most Economically Advantageous Tender” is not how it works with local government. Instead, contracts are based on patronage and budgets stretched and fudged. By asking for auditable evidence, I have surprisingly broken this omerta. The Rhino must be wondering if anyone has told me of the special arrangement AJS has with senior council officers and whether our interaction is just a performance of which she is nobly playing her part. Is it I who hasn’t read the script?
😹😹😹
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