Difficult Decisions - the Carmarthenshire Pensions Scandal

Update 4 December

In an interview with the South Wales Guardian (here), Kevin Madge acknowledges that the row over the pension and libel payments to the chief executive has damaged the council's reputation, before going on to maintain that the council is convinced that it was right to do what it did. He suggests that the imminent publication by the Wales Audit Office will allow the council to come out fighting and put across its side of the story.

The interesting question now is the purpose of today's meeting of the Executive Board, which is understood to be set to approve changes to the council's policy on pension arrangements for senior officers.

If the council is convinced that it was right to do what it did, logic suggests that the Board will today be battening down the hatches and telling the WAO to get lost. Common sense, on the other hand, suggests that they should back down.

Time will tell.

In the meantime, Kev says that there is "no question of the police becoming involved". How does he know? Have words been had with the top brass in Dyfed Powys Police, or does the WAO see a fundamental difference between what happened in Carmarthen and Caerphilly?

It is interesting to note that when the Caerphilly case was referred to the police, the investigation was handed to a force from across the Severn Bridge rather than the local boys in blue.

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This blog speculated last week that a meeting of the county council's ruling Executive Board scheduled for 4 December would be tackling the tax efficient pension arrangements of the council's chief executive. The agenda contains a single, highly misleading sentence stating merely that the board will be reviewing supplementary pay policy for senior officers, and the meeting will be held behind closed doors.

This speculation seems to have been borne out by a story in this week's South Wales Guardian, which reports that the meeting is being held just a couple of weeks before the expected publication by the Wales Audit Office of public interest reports on the pensions and libel indemnity scandals.

In theory at least the Board will first have to decide whether public and press should be excluded from the meeting, but we can take it for granted that they will opt for secrecy.

Whether that is justified is quite another matter because the main facts of the case are known. We know that the chief executive has been receiving employer pension contributions as part of his salary, and we know that these payments run to a little over £16,000 a year.

Other questions about the pension arrangements remain to be answered. Who commissioned the report recommending that the pension contributions should be paid as a part of the officer's salary? How was the arrangement approved, and what has all the specialist financial and legal advice cost the council's beleaguered taxpayers? It is unlikely that any of that will come up for discussion at the Board meeting.

Not only is the public interest exemption test a hollow sham, but we can be sure that the meeting itself will be a mere formality without any debate or questioning of what has happened. When the minutes are finally published - probably after the New Year - the likelihood is that they will show that the meeting ran for considerably less than 30 minutes, and that the decision was reached unanimously.

In reality, any discussion and the decision itself will have taken place already, and the Board meeting will be held only to give the outcome a legal seal of approval.

Having got that out of the way, we can now speculate what this latest difficult decision facing council leader Kevin Madge might be, and the likelihood is that it will come down to whether to continue this arrangement and so throw down another gauntlet to the Audit Office, or whether to reverse the decision and presumably put arrangements in place to claw back the money already paid.

From the point of view of the public, we lose either way.

If the Board backs down and reverses the arrangements, a five figure sum will have been wasted on independent financial advice and legal bills.

If the Board decides to plough grimly on and stick to its guns, the money wasted so far will be just a foretaste of costs to come, because as the Board knows, the Wales Audit Office is likely to take the matter to court.

Common sense would suggest that the Board will back down rather than risk protracted and very expensive litigation, and possibly even criminal proceedings as in the case of Caerphilly. The fairest outcome, and almost certainly the one we won't get, is a decision to claw back the payments and the cost of all the financial and legal advice from the chief executive.