Grenfell: Hackney rehired Lakehouse for £5m contract despite fraud probe

The contract included blocks on the Frampton Park Estate. Photograph: Hackney Citizen

Hackney Council gave the firm responsible for maintaining Grenfell’s fire safety systems a contract worth millions, despite “serious concerns” over an ongoing fraud probe linked to previous work it carried out in the borough.

In 2014, the Town Hall reported allegations of fraud to the Metropolitan Police in relation to a £9 million contract managed by Lakehouse. The investigation is still ongoing.

The Town Hall also claims Lakehouse or associated subcontractors carried out “defective” fire safety work on council properties.

Despite this, Hackney Council again appointed Lakehouse to fit communal heating systems in over 700 flats in nine blocks across the borough.

Defending the decision, the Town Hall said in a statement: “The council was offered £4.6 million of funding via the Greater London Assembly (GLA) in order to install sustainable heating systems into 703 inefficiently heated flats.

“The work was put out to tender via the GLA’s framework, and Lakehouse plc was the only viable bidder for the work. Although the council had serious concerns due to the ongoing fraud investigation, there was at that stage no legal reason that Hackney could have used to exclude them from the process.

“The funding was time-limited, and had the process been started again, this, and £1.8 million in additional grant funding would have been lost. The council was therefore left with no choice but to appoint Lakehouse to manage this work.”

The 703 flats worked on by Lakehouse or its subcontractors are in the following blocks: Boscobel, Chaucer Court, Exbury, Gooch, Lincoln Court, Scotney, Welshpool, Inglethorpe and Briggeford Close.

Fire sprinklers were installed in Exbury and Scotney on the Frampton Park Estate alongside the heating programme, as they were considered “category 1 fire hazards”.

The Citizen revealed in June that these are the only two of Hackney’s 181 medium to high-rise blocks with sprinklers installed.

When asked what action was taken by the council in the wake of the fraud allegations being reported in 2014, a Town Hall spokesperson said: “When Hackney Council took its housing service back in-house from former management company Hackney Homes in 2016, it undertook a complete review and restructure of the surveyors team to ensure that checking of works would be carried out to the standard that the council would expect.

“There is now an almost entirely new team in place, and housing in Hackney has a brand new senior management team, who are working to ensure that the council and residents can have confidence in housing services.”

Earlier this month, Hackney’s mayor Philip Glanville and housing chief Kim Wright wrote to all chief executives and registered social landlords to inform them about the ongoing fraud probe, warning them to check any work done by Lakehouse or its subcontractor Polyteck.

When quizzed by the Citizen over why it had taken three years to make the investigation public, a council spokesperson said it had taken “fresh legal advice in light of the Grenfell fire”, adding: “This advice gave the council the assurances it sought that to share information regarding fire safety with other authorities would be considered to be in the public interest.”

Prior to that, the council said it had been advised to “wait until the criminal investigation and prosecution was concluded before publicising any concerns relating to our dealings with Lakehouse and their subcontractor Polyteck”.

Lakehouse plc said it did not wish to comment when approached by the Hackney Citizen.

In a previous statement, the firm said “it is important to point out that at no stage has there been any suggestion of fraud on Lakehouse’s part”, adding: “Lakehouse continues to co-operate with the Metropolitan Police in bringing the culprits to justice and the investigation extends not only to certain former rogue employees of and sub-contractors to Lakehouse, but also representatives of Hackney.

“There has never been any suggestion of wrongdoing on Lakehouse’s part, nor compromise in the interests of resident safety.  Importantly in this regard, the press reference that Hackney drew the attention of the police to alleged sub-standard works is factually incorrect.

“Further, the Group can confirm that the £540,000 exceptional gain, reported on 27 June 2017 under ‘impairment of receivables’ in our interim results to 31 March 2017, related to a series of successful adjudications by Lakehouse against Hackney for works Hackney alleged were defective and were determined to be fully due and payable.  We continue to pursue Hackney for further sums which we are due contractually and for which they have refused to make payment to date.”