TENANTS suffered financial losses as bosses bought £50,000 worth of cars during the “deeply disturbing” mismanagement of a housing association.

The Scottish Housing Regulator said there was “bad practice, bad governance and inappropriate behaviour” at Wellhouse Housing Association.

In a damning report, the regulator states:

*Wellhouse charged tenants for repairs that should have been covered by their rent. When they fell into arrears over these charges, tenants were suspended from the housing list.

*Wellhouse operated a housing allocations quota system that disadvantaged homeless people and gave preference to local residents involved in community groups.

*Wellhouse used funds drawn from rent paid by tenants to provide staff with payments and benefits to which they were not entitled.

*Wellhouse made payments to individuals and contractors providing services with whom it had no contracts.

*a senior manager repeatedly used Wellhouse’s corporate credit card to make personal purchases without agreement from Wellhouse and without making any repayments.

*Wellhouse paid a senior manager overtime in personal goods on its Amazon Account rather than through payroll.

*A senior manager paid the deposit for a £19,400 car using the corporate credit card and without registering the car to Wellhouse.

*This was also done for a £28,925 car.

*Certain senior staff had work carried out on their private properties using Wellhouse staff and materials.

*Some staff received payments and benefits which were not in their employment contracts.

Christine Macleod, Director of Governance and Performance at the Regulator, said: “We intervened at Wellhouse as the serious failures presented an immediate risk to tenants’ interests.

“There was bad practice, bad governance and inappropriate behaviour at Wellhouse.

“Those in leadership in the organisation let down tenants and they lost sight of its purpose to be a good landlord.

“Wellhouse presented itself as an organisation that performed well but it misled its tenants and others.

“We needed to intervene to prevent further financial losses and further risk to the interests of the association’s tenants.

“With the support of independent co-optees on the management committee and our appointed manager, Wellhouse recognised the scale of its failures, addressed its weaknesses and is now committed to becoming a good landlord.”

Wellhouse was registered as a social landlord in 1994 and has charitable status.

At the time of the crisis it owned and managed 829 houses and provided factoring services to 51 owners and has received substantial public subsidy to build homes for social rent.

Wellhouse also had an informal arrangement with Connect Community Trust (CCT) which saw it pay £850,000 for services without formal service level or grant agreements.

It failed to recover £22,000 of a payroll credit facility it extended to CCT and it had been paying a significant proportion of a member of CCT staff’s employment costs.

The member of staff in question was a member of Wellhouse’s management committee.

Five members of Wellhouse’s management committee and a senior manager were also directors of CCT.

Wellhouse paid CCT employees cash directly for certain services rather than by invoice.

The report also criticises the way staff grievances were handled. It reads: “Some senior staff had misused compromise agreements, pay offs and dismissal of staff.

“Wellhouse mishandled serious staff grievances and did not independently investigate allegations made.

“It found evidence that some senior staff used a restructure to promote the exit of aggrieved staff members.

“Some senior management made compensation payments for loss of office to staff without management committee approval and did not report these to the management committee.”

The issues came to light after a whistleblower approached the regulator in March 2014.

A new manager was parachuted in, disciplinary hearings were held and there is now a new senior management team.

Maureen Morris, chairwoman at Wellhouse, said: “The last few years have been the most trying times in our history and I am glad that the issues highlighted in the intervention report are firmly in the past.

“We have worked openly and constructively with the SHR throughout this period and, indeed, continue to do so whilst we move to a refreshed and renewed organisation.

“We have a strong management committee and a new management team who will make us fit for the future across all governance, strategic and operational areas and truly make Wellhouse the place to be. I look forward to a bright future.”

Glasgow and West of Scotland Forum of Housing Associations (GWSF) chairman Peter Howden said: “What happened at Wellhouse was deeply disturbing and we must all learn from it.”

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