As a result, a designated independent person (DIP) was appointed by the Welsh Government in 2017 to look into the allegations. The DIP’s report was considered by the disciplinary committee
The saga has cost the authority more than £4.1 million in salaries and legal expenses.
Councillor Colin Mann, leader of the Plaid Cymru opposition group on Caerphilly Council, said: “A huge amount of public money has gone down the drain. Since September 2012, the ruling Labour administration has presided over a saga, which including pay rises for senior officers, has cost taxpayers well over £6m. The chief executive received more than £1m in wages and pension payments over this time. Each and every household in the borough has paid an estimated £85. You couldn’t make it up.
“Money has been spent on paying senior officers to stay at home, legal and audit fees when it should have been spent on frontline services, such as keeping public toilets open, keeping street lights on and securing the future of all our leisure centres. The losers have been the residents of the county borough.”
Cllr Mann said there was a clear need for the Welsh Government to review the law around disciplinary procedures for senior council officers.
Caerphilly Assembly Member Hefin David, who was a councillor when the pay scandal first erupted back in December 2012, said he will question First Minister Mark Drakeford on the matter.
He said: “Everyone will be relieved that this saga is over and that Anthony O’Sullivan has been dismissed. This is the decision expected by residents.
“The problem is that it has taken too long to get to this point. Part of that was the two years wasted by the police investigation but the rest was due to unnecessarily complex procedures.
“The First Minister has assured me that, now that the case is complete, he will review these procedures to ensure that such a delay cannot happen again. I will be raising this in the Senedd on Tuesday next week to ask for the details as to how this will be achieved.”
“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.”
In a statement issued at the end of the council meeting on Thursday, council leader Barbara Jones said: “”We regret the amount of time and money that has been spent on this matter, but we had no choice other than to follow the agreed statutory process.
“It should also be noted that during this time we had to allow criminal investigations to proceed, which added almost two and a half years to the overall timeframe.
“This decision concludes a very difficult chapter for the council and we must now move forward.
“Our focus remains on delivering high quality services to our residents and meeting the needs and aspirations of our communities in future.”
The full story
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%.
Mr O’Sullivan’s report said: “Chief officer pay has for some time been below the rates paid for comparable roles in other local authorities and public sector partners such as health. This makes retaining the best talent in this key group more difficult, particularly when set against the backdrop of having to achieve more with reduced resources as the organisation develops.”
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.
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 Assembly 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.”
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.