Audit reveals gross mismanagement at a Brussels social housing association

An audit carried out by Ernst & Young has reveal gross mismanagement and malpractices at one of Brussels biggest providers of social housing. Competitive tender procedures that were ignored, an arbitrary salary policy and a system of stock control that served as an open invitation to thieves, the audit carried out at Logement Molenbeekois makes depressing reading. The housing association lets more than 3,000 houses and flats to the most needy in society in one of the poorest municipalities in Belgium.        

The audit points to five areas in which Logement Molenbeekois runs “extreme risks”. These are its purchasing procedures, public tenders, stock keeping, its management of rents and its human resource policy.  

Five “extreme risks”

The audit points to five areas in which Logement Molenbeekois runs “extreme risks”. These are its purchasing procedures, public tenders, stock keeping, its management of rents and its human resource policy.

The audit gives a number of examples of inconstancies in the housing association’s salary policy. One employee with a secondary school diploma is paid a salary normally reserved for those with a university degree, while another employee with a degree is paid a salary normally given to those that do manual work.  

Ernst & Young also criticised a recent salary increase given to those working as secretarial support to the Head of Logement Molenbeekois. The increase went through despite a study having being carried out previously that said that the salaries were at the market rate. Meanwhile, manual workers were given a 1% increase despite them earning an average on 13% less than the average for the work they do.     

The auditors say in their report that the incoherent salary policy has led to tension among staff and dissatisfaction with management.  

Incompetence and negligence

The audit also lists countless examples of incompetence and negligence. Although a purchasing policy is in place it is not observed by staff. No procedure is in place for the approval of payment of invoices.  

The way in which Logement Molenbeekois deals with competitive tenders is also criticised. Not only is there no written procedure, but also those involved in the tender process have “very poor knowledge” of the procedures to be followed.    

There are also often documents missing from tenders.

One company that is paid 320,000 euro/annum by Logement Molenbeekois for work that has never been the subject of a competitive tender.  

There is also an issue of a potential conflict of interest between a subcontractor and one of the social housing association’s board members. 

Poor stock keeping

The auditors also uncovered a system of stock keeping that is described as "an invitation to thieves". For some time workers at Logement Molenbeekois split the proceeds of the sale of scrap metal from renovations and repairs in flats, providing themselves with a source of extra income. In this case management did act.    

The social housing association’s tenants have at total of more than 2 million euro in rent arrears. Meanwhile, 500,000 euro in rental deposits was put on a current account rather than a savings account, meaning that it was not gaining any interest.   

The Brussel Regional Minister responsible for housing Céline Fremault (Francophone Christian democrat) has already taken the first steps towards having Logement Molenbeekois taken over by the Brussel regional housing company BGH.