The Water Industry Commission for Scotland (WICS) was found to have wasted public money on high-end meals, luxury purchases and gift cards, an audit revealed.
The Scottish Parliament’s Public Audit Committee found “significant weaknesses and failings” in the Scottish government’s approach to the watchdog’s management.
The findings came from the committee’s latest report into the WICS finances on Friday (16 May).
The investigation revealed that public money was spent on a senior manager's enrolment at Harvard Business School in the US, designer sunglasses and business-class flights to New Zealand.
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This incident highlights the vital role HR plays in embedding ethical spending practices and working alongside ethics and finance teams, according to the Institute of Business Ethics’ CEO, Lauren Branston.
“The aim is to ensure that all employees – from new starters to senior leadership – receive training on what counts as acceptable business practice in line with the company’s expenses policy, and why integrity in this area is so important. This should align with the approach taken to gifts and hospitality,” Branston said.
WICS's chief executive Alan Sutherland and its chair, Donald MacRae, stood down after initial reports by the auditor general, Stephen Boyle, were released in 2023 and by consultant Ernst & Young the next year.
Those reports highlighted that Sutherland submitted expense claims for a £170 Mulberry wallet and £290 glasses, which “had no clear business purpose".
Branston explained that training can’t be a tick-box exercise, but “needs to engage staff with real-life scenarios and emphasise the organisation’s values, so that everyone, including the board, understands how to apply the expenses policy in their day-to-day decisions.
“An ethical expenses policy should be crystal clear and rooted in the company’s values. That means spelling out in plain English what is and isn’t allowed. For example, defining permissible expenses, setting fair limits on spend, explaining how claims are approved and recorded, and where employees can turn for guidance.”
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WICS also spent more than £77,000 sending a senior executive on a course at Harvard Business School, which included return flights to Boston.
The auditor general’s report found that approval for the expenses was sought afterwards, which goes against the Scottish government’s policy stating that approval is required in advance for any expenses above £20,000.
Jim Moore, who heads up employee relations at HR consultancy Hamilton Nash, emphasised that although larger employers provide in-house training on business conduct and expenses compliance, there is no legal obligation to do so.
He said: “The WICS scandal is a textbook example of what can go wrong when organisations ignore the basic principles of oversight, training and accountability.
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“The vast majority of small employers don’t go beyond written policies in handbooks, which are read by very few employees unless a problem arises.
“To avoid this, proactive messaging and training must be a core part of the culture. Any time an employee plans work-related travel or incurs expenses, that should trigger a reminder about their obligations under the expenses and ethics policies.”
Nash also described red flags that HR leaders should look for to indicate misuse of expense procedures, including duplicated claims, missing receipts, lavish spending, or personal items dressed up as business costs.
He said: “Every expense should come with a clear business justification, receipts, and if it involves hospitality, an attendee list. Having claims reviewed by an independent party and conducting random audits can significantly reduce risk.
“Ultimately, misusing expenses is defrauding your employer. It’s almost always gross misconduct and often a dismissible offence.”
