Payments totalling almost £220,000 made to senior council bosses to ‘buy out’ car and annual leave allowances have been deemed unlawful by the Wales Audit Office.
In a special public interest report published today, Assistant Auditor General Anthony Barrett said the council’s governance arrangements had failed.
The council’s interim chief executive Stuart Rosser has said the report will now allow it to launch an internal investigation.
The payments, made early last year, were part of a compromise agreement to compensate senior bosses who were giving up car and annual leave allowances to bring them in line with other staff members.
Today’s report said the decision to make the one-off payments, or ‘buy outs’, was done without proper authority by council bosses or clear recording of how the decision was made and that the decision was not published – contrary to the Council’s Constitution in respect of delegated decisions.
The report also states the change in the allowances affected the council’s chief executive Anthony O’Sullivan and as such should have been taken by councillors instead of the chief executive and other senior bosses.
Mr Barrett said: “There are clear lessons to be learned by the council around the processes that were followed when deciding to buy out the Chief Officers from their entitlement to car and annual leave allowances.
“The informality of meetings and decisions, the conflicts of interest, the lack of record keeping, the failure to follow advice and publish decisions – these are all of significant concern and the public needs to be aware of what has happened.
“The council now have one month to respond to my report and to highlight the steps it is taking to ensure this never happens again.”
The council’s chief executive Anthony O’Sullivan and deputy chief executive Nigel Barnett are currently on police bail after being arrested on suspicion of fraud and misconduct in a public office following the scandal where senior bosses were awarded huge pay rises.
Plaid Cymru were in charge of the council at the time of the car and leave allowance payments and the Wales Audit Office report states that neither the leader, deputy leader or the councillor responsible for human resources at the time were consulted.
Councillor Colin Mann, who is the current leader of the Plaid Cymru Group, said: “It is clear from the damning report from the WAO that there was an attempt by some of the council’s most senior officers to thwart the democratic process by deliberately not making elected members aware of these payments. That is utterly unacceptable.”
He added: “The public will no doubt ask whether the people who were primarily responsible for this unlawful decision and breach of trust should ever again be allowed to hold public office. Anyone who holds public office has a duty to ensure public money is spent properly for the benefit of the public.
“The council now has to consider the issue of money paid unlawfully being repaid to the council. Surely, it is not acceptable for anyone to keep money that has been obtained in this manner.
“The public will expect the council to recover, by legal means if necessary, money that was unlawfully paid to officers.
“I want to make it perfectly clear that I am not saying that everyone who received these payments was aware of the true circumstances surrounding this. Quite possibly very few officers knew how this had been done. At the same time all the fall-out from this matter now has to be resolved.
“As a Cabinet member at the time, my working relationship with officers was based on one of trust. I feel councillors have been let down badly and the trust that existed has been severely strained, if not broken altogether.
“We now need a special audit of the affairs of Caerphilly County Borough Council to find out whether any other payments have been made that ignored standing orders and financial regulations.”
The council’s interim boss Stuart Rosser has previously said that trying to claim the money back from staff could prove costly.
Mr Rosser said: “This issue dates back to early 2012 and it should be noted that the Council voluntarily referred the matter to the auditors for investigation in April 2013.
“Residents can be assured that the council has already taken steps to address the areas of concern identified in the report.
“In addition, the council has been working very closely with the Wales Audit Office over recent months to address concerns about its governance arrangements and has introduced a number of improvements to ensure processes are much more robust.
“These actions are currently being assessed as part of a corporate Governance Inspection being undertaken by the Auditor General for Wales with a further report on this anticipated early in the New Year.
“The council will now carefully consider the content of the report and a meeting of council will take place in January where Members will consider what further actions are appropriate.”
Labour council leader Harry Andrews, said: “I welcome this WAO report, which highlights senior council officers’ decision-making on these controversial issues.
“The report provides an opportunity to draw a line under the issues that have affected the council and move forward to rebuild trust and confidence in the organisation.
“I’m pleased that our Labour leadership called several months ago for a review of our council’s ‘delegated powers’, under which council officers may act without councillors’ direct authority, so that we can amend our council’s constitution and improve our governance arrangements still further.”
The council has a (highly paid) legal department. This legal department presumably is tasked with checking all special payments, such as received by some senior managers, to make sure they comply with the law.
Coupled with the pay scandal, where disproportionate and illegal rises were discussed and voted on in secret with senior members of this same legal department being present at the meeting(s) it makes me wonder how deep the corruption runs. There are questions to be answered by the legal department and I fully expect the authorities to ask those questions on behalf of the tax payer.
I think you're missing something, Richard. The council are using their tax payer funded legal department to fight allegations of illegal actions taking place. We are paying for a legal department to fight against the general view of the taxpayers.
I want to have the full facts and finding revealed. Too much is going on behind closed doors.
I agree totally with Dean and Richard, but, Dean, has got one very important fact wrong, the Legal Department of the Caerphilly council do not have the experience or qualification, and, certainly no consistent record, of undertaking anything much more complicated than calling a meeting, ( and not keeping records), fielding complaints against Councillors, making Road Traffic parking orders, ( and getting them wrong).
The legal Department have been dealing with a very straight forward Land Lease Preparation for six years, on behalf of all the Pensioners of St Martins Ward in Caerphilly, on a hall, which sits on land, held in trust by the council for charitable purposes, and still the pensioners are told there is no end in sight.
So how on earth anyone can think they are collectively capable of defending the indefensible by finding a legal way through the quagmire the council now finds itself in is as likely as assuming the sun melts rock. Another point of course is that we have already been told that the Caerphilly Council commissioned a large Private firm of Solicitors to advise them on these matters, so they appear NOT to be relying on the many in House Solicitors we employ.
Richard mentions the involvement of staff from the Council`s legal department in the original secret and unrecorded meetings, and of course, we all know from recent reports that at least one of those was a recipient of the huge pay hike decision taken at those meetings, and only two of those officers in those private `divvy` meetings have found themselves on the wrong side of that secret process.
I think the total mystery in this entire affair is why only TWO senior officers have been suspended when others were culpable in making these `incestuous` decisions on both the pay hike and the car allowance, and, annual leave, `buy back` arrangements, both, designed to cost the Caerphilly Tax Payer a pretty penny. And now there is an internal recommendation before the Caerphilly Council, to the effect that the Council DO NOT claim back the money which was unlawfully taken from the public purse in the first place, how on earth does that work??????
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I accept Dean's point that the legal department's advice is probably being sought in relation to the growing scandal but I emphasise that there is not just an "allegation" of wrong doing here. The Auditor General has ivestigated and found that there has been unlawful activity within the council. This is an official pronouncement and not just my view or that of the general public.
Trefor points out, correctly I believe, that the expensive legal department is not relied upon for anything complicated. We are told that in these cases legal opinion is sought from private law firms. The tax payer funds these private legal fees on top of the costs of running an in-house department. This situation would barely be credible in a time when money is plentiful but in the current financial climate it is unbelievable.
The way Caerphilly Council Senior Staff and Senior Councillors deal with spending our money is breathtaking in it`s arrogance and unbelievable in it`s magnitude.
And, now, the current acting Chief Executive has recommended that it would be too costly to recover the money these people ( ALL THOSE WHO BENEFITED) unlawfully `took`.
In my book, if the money was obtained by those officers, unlawfully, it was taken without authority, they clearly designed their activity and action to `permanently deprive the owner of the money, from it`, and that, in my book, is theft?. For those who have always been responsible for the public funds these people took, to now say they wont take actions to get it back, is inexplicable, but I demand they explain it!!!!
The Welsh Assembly also have a role in this state of affairs, and, should have appointed Government Commissioners to ENSURE` that this money is reclaimed, and do everything possible to bring ALL those who failed to walk a straight line on these issues to the attention of the Courts, to be judged by a group of their `Great and Good Peers`, and an Honourable Judge, the Caerphilly Council have proved time and again they are `collectively` incapable of doing so in the interest of the Caerphilly Ratepayers.
I agree with Trefor and find it strange that only 2 officers have been suspended. The spotlight should also turn on the legal, finance and HR departments and their competence / role in these scandals. Why the finance manager delayed reporting the payments to the auditor for a full year (and then only after the cat had been let loose from the bag!)is mystifying especially as she had received a payment herself.
As the purpose of the buyouts has been undermined by 5 officers not taking their payment, does this mean that the Council now lays itself open to equal pay claims?
Trefor, the council are obviously using a legal time for advice but also to try and defend themselves against the allegations being made. Whether this legal team consists of in-house staff or is a contract to a legal company, either way, the tax payer pick ups the bill.
The only real winners here are the solicitors involved.
Dean Your reasoning is not correct, the in-house legal team are there, in service, budgeted and paid for, day in day out, that does not change regardless of how they occupy their collective brain power or whatever `problems` they give legal consideration too.
Whereas, Private Legal consultation, even with the smallest least experienced firms cost a fortune by any measure, Caerphilly council do not engage and instruct SMALL LOCAL FIRMS on such matters, in this case they have assured considerable additional costs by instructing one of largest legal firms in the Country. To suggest that action is COST NEGATIVE to the ratepayers of Caerphilly is obviously wrong Dean, you have not thought this one through. however, You are absolutely correct when you say we, the ratepayers will pick up the bill, in this case thought the fee to the outside company is an wholly additional burden on the Council budget.
Trefor, the legal bill will be picked up by the taxpayer no matter the legal company involved. By the way, did you know some 60% of all legal work done by the in-house legal department is outsourced at additional cost to the taxpayer?
Dean, indeed I am aware of the fact that the legal section of the Chief Executives department regularly outsources the simplest of jobs, I have recently been engaged in a dispute with the council in respect to damage caused to my home by the Council`s work on the footpath around it, I instigated a simple Small Claims actions against them in the Cardiff County Court in respect that damage after they denied any responsibility for neglect and due diligence, the council did not defend the action with what should have been experienced in house solicitors but instead engaged the services of a large legal firm to defend my action.
The case was settled by the council two days before the final hearing date in Cardiff County Court, they paid all my surveyors fees and charges, all the court costs, and, engaged on work to my home costing them at least £10,000, they also paid their own fees to this private legal outfit who tried to defend the indefensible. Who picked up the bill for all this????, the Caerphilly Ratepayers, and that is a deplorable state of affairs.
Yes we need to know why people such as gareth hardacre haven't been suspended?