Southwark Council has been forced to write off nearly £70,000 in funding it erroneously awarded to a defunct drug and alcohol charity.
The local authority in south London gave the Federation of Black and Asian Drug and Alcohol Workers, which was set up to support people with drug and alcohol problems, a total of £69,721 in funding during the 2004/05 financial year.
When the error was identified in April 2005 the council began the recovery process with its debt collection contractor Liberata.
But attempts to recover the money were unsuccessful because of "changes of address and the failure of the organisation to respond to communications and invitations to meetings", according to a council report.
The council contacted the Charity Commission about the charity in August 2009, but it said that it had no current contact details for the charity or its trustees. The last accounts the charity filed with the commission related to 2002.
It is unclear when the charity, which registered in January 2001, stopped operating but it was not removed from the register of charities until May 2010.
A subsequent review conducted by a police detective seconded to the council concluded that the case should be closed.
"Investigating officers identified that it would require a substantial amount of police time," said the report, which was presented at a council cabinet meeting yesterday.
"The total cost of investigation and prosecution could exceed the value of the debt, with little prospect of recovering the monies. It is also considered that the Crown Prosecution Service would not view this case as meeting their prosecution criteria."
The report added that "all reasonable efforts" had been made to recover the debt, but it was now deemed irrecoverable.
The debt is more than six years old and therefore cannot be recovered because of rules in the Limitation Act 1980, according to the council.
Dora Dixon-Fyle, Southwark’s cabinet member for health and adult social care, said: "Lessons have been learnt by the department and a new method of payment has been implemented to ensure the risk of this happening again is minimal."