The recording and storage of goods
4. When Customs' officers seize goods they are
required to enter the details and quantities involved on the computerised
stock control system in the Queen's Warehouses. In certain circumstances,
because of the risks involved or the limited space available,
the Officers estimate the quantity of goods confiscated. After
receipt into store the quantity is checked and compared with the
seizing Officer's estimate. In the event of a discrepancy the
computer record is amended. The system is not secure and staff
could amend volumes and values of seized goods inappropriately.
Customs acknowledged that there was a risk of theft or fraud at
the point of seizure, but believed that once the goods were in
store the risks were reduced because physical security was high.[3]
5. Customs' computer system replaced manual records
in the Queen's Warehouses in 1998. Customs saw the introduction
of a common, computerised, stock management system as a big advance.
But it was not a full stock management system, and could not readily
provide information on the total volume and value of items in
the stores. Consequently, it was not well suited to the needs
of the Warehouses. Furthermore, Customs' system recorded the quantities
of cigarettes, or the volume of alcohol, whereas the Warehouse
contractor's computer system recorded seized goods by the number
of pallets. Data on the two systems could not therefore be readily
reconciled.[4]
6. National Audit Office tests identified discrepancies
between the Customs' computer records and the quantities of goods
in the warehouses. In addition, nearly half the items examined
had been held in store for over a year, well beyond the time when
they should have been disposed of, and in some cases cash was
being held which was no longer required for evidential purposes
and which should have been banked. They also found that Customs
had carried out only limited stock takes of items held.[5]
7. Customs acknowledged that the standards of
record-keeping within the Warehouses had caused concern. In restructuring
the Queen's Warehouse operation it had become overwhelmed. In
introducing the computer system four years earlier they had not
anticipated the growth in their seizures and the increased volumes
the Warehouses would have to handle. The system came under intense
strain and did not produce adequate management information prior
to June 2002, when Customs placed a new storage contract.[6]
The disposal of goods
8. Seized alcohol, tobacco and drugs are disposed
of under national agreements. Items such as counterfeit clothes,
fuel and vehicles have been disposed of locally. But the Queen's
Warehouses did not have written contracts for these disposals.
One firm which Customs used frequently was not required to submit
invoices for its work and was allowed to offset its costs against
the proceeds of sales. Customs accepted that the staff should
have known better, and that management of these arrangements had
not been sufficiently professional. They assured us that this
situation would not recur.[7]
9. In 2001 Customs' Internal Audit Division pointed
to evidence that managers had failed to prevent and detect the
possible misappropriation and unlawful selling of seized goods
and had inadequate audit trails to enable the disposal and proceeds
of sale to be verified. They also raised concerns over goods destined
for disposal re-entering the market illegally. Customs recognised
that this was a possibility, and acknowledged that there had been
a couple of cases where goods destined for disposal had found
their way back onto the market. They had found the standards
in the Queen's Warehouse organisation to be lower than they should
have been, and accepted there had been management failure. But
the reconciliation they had undertaken when transferring seized
goods from the old contractor to the new during the summer of
2002 had shown that there was no widespread loss of goods. In
addition, they were confident that goods were being disposed of
properly under new contracts with approved disposal contractors.[8]
- Customs said that they had needed time to fix
the problems through a fundamental reorganisation. They had restructured
the network to provide a centralised, fully functional system
with fewer but more professionally managed Warehouses. In turn,
the Warehouses were supported by a new contractor who could provide
better stock management information.[9]
2 C&AG's Report, paras 7.1, 7.19 Back
3
C&AG's Report, para 7.7; Q 17 Back
4
C&AG's Report, paras 7.5-7.6 Back
5
ibid, paras 7.8, 7.10-7.11 Back
6
Qq 14, 16, 80 Back
7
C&AG's Report, para 7.18; Qq 20, 137, 139 Back
8
C&AG's Report, paras 7.2, 7.17; Qq 3, 11, 14, 19 Back
9
Qq 2, 10, 16 Back
