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A decision by Caerphilly County Borough Council to pay its former chief executive a severance package of £209,000 was “the right thing” to do, according to Senedd Member Hefin David.

Christina Harrhy left her chief executive role at Caerphilly County Borough Council following a secret meeting of councillors on Monday October 7, when the six-figure settlement deal was agreed.

It is understood a majority of councillors present voted in favour of the settlement rather than pursue a lengthy, costlier formal investigation or arbitration process.

It is understood that Ms Harrhy fell out with council leader Sean Morgan – amid tensions with a senior council officer – and that accusations of bullying were made against the Labour leader. An investigation later cleared Cllr Morgan of the allegations.

Ms Harrhy has been on ‘special leave’ – on full pay – since November last year.

Speaking in the Senedd on Tuesday October 15, Dr David said allegations against Cllr Morgan were “proven to be spurious and vexatious”.

He added: “The working relationships then would be very difficult to repair and, in fact, a disciplinary investigation might have been appropriate. But the problem in this case is that a disciplinary investigation, involving the appointment of a designated independent person to investigate, the disciplinary investigation itself, and then the risk, in any employment situation, of a tribunal, would have added increasing costs to the council that go way beyond the £209,000 it cost to pay her off.

“This is a problem in the system. It is not a problem for the leadership of the council. They have acted in the public interest by gaining a dismissal in this way, and they’ve done the right thing.”

Dr David then went on to call for action regarding a review that was carried out in 2020 which looked at the role of the designated independent person when investigating disciplinary matters against council chief executives and other senior council officials.

He said: “The Oldham review came up with some recommendations that the Welsh Government then consulted on. But, following that, nothing else has happened.”

Responding, government business minister Jane Hutt said it would not be appropriate for her to comment.

Audit Wales looking into decision to pay-off chief executive

Meanwhile, the public spending watchdog Audit Wales has confirmed it is looking into the pay-off.

In a statement, Adrian Crompton, Auditor General for Wales said: “The exit payment made to the chief executive of Caerphilly County Borough Council will form part of the 2024/25 financial statements.

“My audit team, as part of their audit of those accounts, will consider this transaction and determine the extent of any audit work considered necessary.

“Prior to that, we will be speaking to the council to understand the rationale supporting the payment and whether there is a need for any further work at this stage.”

A Caerphilly Council spokesperson said it “would welcome further dialogue on any aspect of our accounts to ensure compliance and transparency”.

Blackwood councillor Nigel Dix has also welcomed the statement by Audit Wales.

He said: “People need to be made fully aware of how their money is being spent.

“The public have no faith in this council. It’s in desperate need of oversight.”

Asked if the closed meeting to determine Ms Harrhy’s future should have been made public, Cllr Dix said: “We had a vote on whether or not to keep the meeting private, and I personally voted against that.

“This money could have been better spent keeping services such as Llancaiach Fawr open, and with the possibility of Blackwood Miners and libraries going, I think the taxpayer should be part of these discussions.

“The small decisions all add up.”

A council spokesman confirmed Mr Street will now “act as interim chief executive while the council considers the next steps” in terms of appointing a permanent replacement for Ms Harrhy.

In the financial year to April 2023, the chief executive’s salary was £148,773 with pension contributions of £28,640 – a total cost of £177,413 to local taxpayers. The current salary is £153,111.

Ms Harrhy had been on long-term special leave for 11 months – on full pay – prompting questions from councillors about the capacity of the authority’s management team and the cost to taxpayers. It was originally believed Ms Harrhy was on sick leave.

During that time Ms Harrhy was on a shortlist of two for the role of chief fire officer at South Wales Fire and Rescue, but was beaten to the top job by Fin Monahan, an RAF Air Vice-Marshal.

At the behind-closed-doors meeting, councillors were warned not to speak to the media on details of the £209,000 pay-off. If they did, they could face being reported to the Public Services Ombudsman for Wales for breaching the local government code of conduct.

Under local government rules in Wales, councils have to appoint an independent disciplinary investigator. Councillors were given a choice between the £209,000 pay-off, or the investigation route which could have cost £520,000.

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.

The second permanent chief executive to get a pay-off

Ms Harrhy is Caerphilly Council’s second permanent chief executive to get a pay-off in recent years from the authority, following Anthony O’Sullivan’s £110,700 pay-off.

Mr O’Sullivan was also paid more than £1m in salary and pension contributions after he was first suspended in March 2013 for his role in agreeing a secret pay rise for himself and other council bosses.

The Wales Audit Office ruled the pay award unlawful and Mr O’Sullivan was suspended on full pay, which was later turned into special leave.

A lengthy disciplinary process, involving a designated independent person, was also held up because of a pending criminal case against Mr O’Sullivan, which was eventually dropped by the Crown Prosecution Service.

After the 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 that year – including a claim of unfair dismissal – until the authority voted to settle the claim with a £110,700 pay-off.

While the two employment issues surrounding the two former chief executives were different, the spectre of Mr O’Sullivan’s investigation and its costs were one of the reasons Ms Harrhy’s pay-off was proposed.

Additional reporting by the Local Democracy Reporting Service.