Caerphilly Council agrees £110,700 settlement with sacked chief executive to avoid tribunal

Caerphilly County Borough Council's former chief executive Anthony O'Sullivan — Caerphilly County Borough Council’s former chief executive Anthony O’Sullivan

Eight years after he was first suspended by Caerphilly County Borough Council and 17 months after he was fired, the local authority’s former chief executive Anthony O’Sullivan has walked away with a final pay-off of £110,700.

The payment means the council will no longer face its former top boss at an employment tribunal and brings the complicated, eight-year saga, costing taxpayers in excess of £4million, to a final close.

In a statement, Caerphilly County Borough Council said: “Mr O’Sullivan and Caerphilly County Borough Council have agreed to resolve their historic dispute without the need for further legal proceedings and expensive litigation.

“From the council’s perspective, the agreed settlement payment of £97,500 (plus a contribution of £11,000 plus VAT towards legal costs) represents a significant cost saving compared with the potential sums involved in continuing to defend protracted legal proceedings – it also draws this matter to a conclusion. Mr O’Sullivan is similarly grateful that this lengthy dispute is now resolved so that he and his family can move on.

“This draws to a close a most difficult period for all parties.”

The decision to award the payments to Mr O’Sullivan were made at a special meeting of council on Wednesday, March 18.

The press and members of the public were not allowed to attend because the meeting dealt with the employment of a person. This is laid out by the Local Government Act 1972. Details of the payment were made public by Caerphilly County Borough Council with the agreement of Mr O’Sullivan’s solicitors.

Caerphilly Observer understands that at the virtual meeting, Mr O’Sullivan, through his representatives, warned councillors he would consider legal action against them if they were critical of him in public.

Employment tribunal

The decision to settle with Mr O’Sullivan was weighed against the potential cost to the council of £500,000 if it had lost.

After a lengthy investigation, Mr O’Sullivan was dismissed with immediate effect in October 2019. He later went on to make pay claim demands totalling around £319,000, although he later withdrew the biggest, for payment in lieu of leave since 2013, totalling nearly £160,000.

Councillors turned down the demands in October 2019 and the issue was set for an employment tribunal later this year – including the claim of unfair dismissal.

In December last year it was revealed that the costs to the council in contesting the tribunal had amounted to £42,000 up until that point.

Since his suspension in 2013 until his sacking in 2019, Mr O’Sullivan was on full pay of £137,000 a year. This meant that Mr O’Sullivan was paid almost £900,000 by Caerphilly County Borough Council in that time.

The saga in full

The seeds of the scandal were sown in June 2012 when councillors agreed to the establishment of a sub-committee to oversee the pay arrangements of the local authority’s chief executive, directors and its heads of service.

The change came about as a result of a requirement under the Localism Act 2011 for councils to publish their pay policies.

A report was drafted by chief executive Anthony O’Sullivan for the sub-committee to consider. In the document, which has never been published but has been seen by Caerphilly Observer, he argued that 20 of the council’s senior officers, including himself, were effectively being underpaid. This was because the senior management team had its responsibilities increased as a result of its downsizing from 31 to 20.

Mr O’Sullivan drew on information provided by management consultants the Hay Group to support his argument and recommended that his salary should increase to £158,360 – a rise of £35,000.

He also recommended that a chief officer on around £71,000 should have their salary increased to more than £99,000 – a rise of nearly 30%.

Presented with the report at a meeting on September 5, 2012, the sub-committee of councillors agreed to the recommended pay rises.

The secret meeting, which was not publicised beforehand, did not have any detailed minutes and there is dispute over how councillors voted.

Cllr James Fussell, who represents St Martin’s ward for Plaid Cymru, was on the committee and has previously stated he did not vote in favour of the increases, but this had been disputed by the four Labour councillors on the committee.

These were Christine Forehead, chair of the committee, and a former cabinet member, then deputy council leaders Keith Reynolds and Gerald Jones, and David Poole.

Cllr Keith Reynolds, who passed away in 2017, subsequently become council leader, while Mr Jones was elected as the Member of Parliament for Merthyr Tydfil and Rhymney in 2015. Cllr David Poole also eventually became council leader until his resignation in September 2019.

Plaid Cymru’s James Fussell was the subject of an investigation from the Public Services Ombudsman for Wales following a complaint by Head of Legal Services Daniel Perkins, who said Cllr Fussell did vote in favour.

The Ombudsman decided to take no further action against him.

Investigation and leaks to the media

News of the secret pay agreement was leaked to the Western Mail in December 2012, resulting in a huge backlash from the public and trade unions representing council staff.

Plaid Cymru called for the pay rises to be scrapped, but employment law, it was argued, prohibited this.

In January 2013 a “compromise” deal was proposed by Labour’s Hefin David, who is now Caerphilly’s Senedd Member, which meant Mr O’Sullivan’s salary rise was capped at a lower £137,000.

The new pay structure was kept, but chief council officers were moved to the lowest increment level instead of the highest.

Meanwhile, the Wales Audit Office launched its own investigation and in March 2013 published a report highly critical of the council.

In the report, Assistant Auditor General Mr Anthony Barrett said: “I have concluded that the decision by the Senior Remuneration Committee on September 5, 2012, to approve the pay structure set out in the report of the Chief Executive was unlawful on a number of grounds.

“The first is that the meeting of the Senior Remuneration Committee was not properly advertised in accordance with the Local Government Act and neither were agendas for the meeting made available for public inspection as they should have been.

“Certain officers, including the chief executive, who would have been (and indeed were) beneficiaries of the decision were present at the meeting to approve the salary increases. No declarations of interest were made and these officers did not leave the room while the decision was made. Consequently they participated in the decision making process when they had a disqualifiying financial interest.”

Suspension

After the WAO report was published, Mr O’Sullivan was suspended on full pay with deputy chief executive Nigel Barnett taking over at the top.

However, Mr Barnett was also suspended when he and Mr O’Sullivan were arrested by police, which had decided to investigate following the WAO report.

The pair were charged in February 2014 alongside Mr Perkins, who was also suspended from the local authority.

Disciplinary proceedings against them by Caerphilly County Borough Council were put to one-side while the criminal investigation was carried out by Avon and Somerset Police.

The trio faced charges of Misconduct in a Public Office and first appeared in court in April 2014.

They spent the next 18 months on bail while the prosecution prepared its case.

However, in October 2015 a judge threw out the case citing a lack of evidence against the three.
As a result of the case being thrown out, Caerphilly County Borough Council was able to begin disciplinary proceedings against the three.

Their suspensions were lifted and they were placed on ‘special leave’ at the end of 2016.

Deputy chief executive Nigel Barnett and head of legal Daniel Perkins were paid off in October 2017, but the council could not reach an agreement with Mr O’Sullivan.

As a result, a designated independent person (DIP) was appointed by the Welsh Government to look into the disciplinary allegations.

Almost two years later, her report was considered by councillors who then dismissed Mr O’Sullivan in October 2019 following a decision by the council’s disciplinary committee.

“Operated according to his own ‘higher code’”

While the DIP’s report has not been published, it found that Mr O’Sullivan “deliberately and wilfully breached his contract” as the code of conduct was incorporated in his contract.

In her report, the DIP said: “The chief executive in his oral evidence made it clear that he paid no regard to the code and its provisions as he operated according to his own ‘higher’ code.

“Also, his approach to governance issues, particularly in relation to his own pay and remuneration, appears to me to be grossly negligent (if not reckless), as was his approach to the information given to CCBC in reports.

“In light of this, the DIP recommended that the chief executive is dismissed without notice for gross misconduct.”

“Nothing to apologise for”

Immediately after the 2019 meeting which agreed his sacking, Mr O’Sullivan declared he would be taking it to a tribunal.

Speaking to BBC Wales, Mr O’Sullivan said: “I have nothing to apologise to anybody for. This is about this vicious, vilifying media campaign that has gone on for six years where I’ve had no right of reply.

“There are two sides to every story – I have had no opportunity to present mine.”

The saga comes to a close

The council’s vote on Thursday, March 18, to accept the settlement offer from Mr O’Sullivan, now brings the sorry saga to a final close.

In total, 37 councillors voted in favour of the final £110,700 pay-off, while seven abstained. Interestingly, 21 voted against which meant there was some belief that Mr O’Sullivan would have lost his claim. Caerphilly Observer does not know which way individual councillors voted.

Given how much public money had already been swallowed up on legal fees, would it have been right for the council to ‘risk’ any more? At least no further public money will now be spent.

An earlier version of this article incorrectly stated the amount of the pay-off was £112,000.

Caerphilly Media