Reclaiming unlawful payments made to senior staff at Caerphilly County Borough Council could be costly, the authority’s temporary chief executive has warned.
In a report considered by councillors this week, interim boss Stuart Rosser said that expert legal advice was needed if councillors wanted to claim back £270,000 worth of pay rises awarded to staff.
The local authority’s chief executive Anthony O’Sullivan and his deputy Nigel Barnett are currently on police bail after being arrested on suspicion of fraud and misconduct in a public office.
The controversial pay rises were voted for last year by a secret committee meeting of five councillors. That vote was based on a report penned by Mr O’Sullivan himself, whose wage rose from £132,000 to £158,000.
In January this year, the pay deal was partially reversed in a compromise deal which saw Mr O’Sullivan’s pay go up by £5,000 and not £26,000.
In a subsequent report by the Wales Audit Office earlier this year, the original pay rises were deemed unlawful.
In his report, Mr Rosser said: “The result of this negotiated agreement was that the new grading structure was retained but with all Chief officers moving to the lowest increment level. There was no revision to the grading structure and it was confirmed that the incremental steps would not progress until April 2014. There was no provision in the agreement for payments to be returned.
“The revised salaries were not implemented until April 2013 and therefore the staff involved benefited from the original (September 2012) decision from August 2012 – March 2013. From April 2013 the payments accord to the January 2013 decision and are therefore lawful.
“The WAO have determined that the payments made for the period August to March were unlawful. Notwithstanding the auditor determination the decision of Members in January 2013 (that a negotiated agreement should be made with staff) was made without consideration of staff being required to repay the sums paid prior to this date.
“If Members wish to pursue a repayment of any or all of that “unlawful” payment then there would be a need to reopen the negotiated agreement reached with staff in January 2013 which provided the basis for the revised arrangement being implemented. Given the nature of the agreement the Council would need to take specialist advice as to whether that would be possible (and if so the potential costs and risks).”
On a separate issue, Mr Rosser said reclaiming money paid to staff to replace car allowances would also be costly to the council.
The annual accounts for 2012/13 state the council spent £102,709 on a buy-out of essential car use allowances and £115,854 on a buy-out of additional annual leave.
The payments, according to the accounts themselves, were considered unlawful because they were decided by people without the appropriate authority.
Mr Rosser said: “As with senior pay it should be noted that the determination of “unlawful” by the auditors does not automatically mean that the Council could unilaterally recover the payments from individuals.
“A decision of the Council can be procedurally flawed but this does not necessarily invalidate the variation of an employees’ contracts of employment. All the individuals signed settlement agreements with the Council which agreed to the Council buying out these elements of terms and conditions for a lump sum. The Council would again need to take expert legal advice to determine whether or not the contracts of employment were validly varied and if the agreements can be withdrawn. If it is determined that the contracts have been validly varied it is unlikely that the agreements can be withdrawn and therefore it is unlikely that the payments can be recovered.
“In addition, any decision to recover the payments is likely to place the Council in a worse financial position than if it endorsed the original “decision” because it is inevitable that if the unlawful payments are recovered then there would be a need to reinstate the previous terms and conditions and pay the car allowances (and agree previous leave entitlements) accordingly.
“If the Council then wished to harmonise arrangements with the staff (and save costs in the longer term) then there would be a need to renegotiate. In all probability that would be more costly then ratifying the original decision and honouring the previous agreements.”
I wonder what price Caerphilly council, and, those currently charged with resolving the issues of illegal payments to officers puts on fairness, transparency of civic governance, and, fiscal prudence?.
The Caerphilly Council, its statutory Officers, i.e. those who are given legal responsibility to run the Council, on our behalf, within the law and in accordance with ALL the rules and regulations set by central government for doing so will be required to explain fully why individual officers appear to be able to `walk away` with our money, and to which normal and legal fiscal management rules have not applied.
There are officers, charged with the legal responsibility to ensure these decisions are taken correctly, and there are Solicitors still working `in house` in the council who have responsibility to ensure that their colleagues do everything legally and within the law, where that has NOT been done, and, if elected Councillors were also involved in that flawed decision making process, then the Auditor General for Wales should look, seriously, at the possibility of `Surcharging` the ` Responsible Legal Officers` and the Elected Councillors who may have been party to the original decision making process that allowed public money of considerable amounts to be lost to the public purse.
It does not matter how much the exercise costs to recover the money, much the same as it does not matter how much it cost the council to recover debts owed to it by citizens of the borough, they do not consider this aspect of debt collection because they are always able to recover the costs of that recovery, in fact, in some cases totally disproportionate fees and costs for doing so, its what they do.
In this case of officers who appear to have erred, and may have filled thier very deep pockets with our money, it is not beyond the imagination of all Councillors to realise that the ratepayers are not going to accept anything less than full recovery, ensuring in the process, that the debtor pays the costs of that recovery, unless they pay it back promptly, on demand, and to continue to pay them whilst on suspension, and potentially increasing the debt to the Council is perverse, the money should be stopped now, and if they are found to have acted with professionalism and honesty, within the law, and not acted ` unlawfully` in taking our money then they could look forward to another `hefty` pay day with interest.
In my view these current news items are preparing us for an eventual `no action` vote whatever the finding of the police and Auditor General and anyone else who may be undertaking objective inquiries, if that happens, after these people are found to erred in these matters then Councillors WILL suffer at the next election. So the more clarity, the more openness and the more transparency now in these matters the best all round.
Trefor Bond sums up the real issue here in his first paragraph,
"I wonder what price Caerphilly council, and, those currently charged with resolving the issues of illegal payments to officers puts on fairness, transparency of civic governance, and, fiscal prudence?."
It will be interesting to see whether this administration does the right thing, i.e. put the council back onto a visibly lawful footing, or takes the cowardly and despicable route and allows sharp practises by those who we entrust with public money to succeed in enriching themselves and other senior officers.
I hope that councillors will take the view that the restoration of clarity, honesty and reputatation to CCBC is worth the risk of some extra expense. In my view a vigorous pursuit of any individuals who may have broken the law or have been shown as incompetant when advising on the legality of the new pay structure will not cost more than doing nothing. If it does this has to be balanced with the restoration of public confidence in the council which, to borrow a Biblical phrase 'is worth more than rubies.'
The employees who have "trousered" almost half a million pounds of the Caerphilly Public's money unlawfully are now giving the usual threatening "advice" that to recover this money stolen from the public will cost more than it raises.
That may well be so, so the answer is to dismiss from public service all those who have taken public money unlawfully and to prosequte them for dinf so.
In addition, there thieves should be deprived of an "pension" – contributions to which have been paid by the "public" untill all of the stolen money and the "costs of recovery" are paid by these fraudsters.