Unlawful, arrogant beyond belief and out of control

Update

According to the bush telegraph, the full council may be given gracious permission to meet to discuss the reports on 7 March, which is of course rather more than a month after publication of the auditor's reports. Not only will this delay matters rather nicely, but it also puts two fingers up to the auditor. The date is not within the one month time frame he stipulated, but annoyingly close so that he may look unreasonably pedantic if he makes a fuss.


Business as usual, it seems.

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Anthony Barrett, the auditor appointed by the Wales Audit Office to audit Carmarthenshire County Council, has finally published two Public Interest Reports on the pensions and libel indemnity scandals. His findings could not be clearer or more damning, and it seems that the police have now been made aware of what has happened and are expected to begin an investigation.

He describes these as two fundamental issues (councillors including Cllr Pam Palmer who have tried to dismiss them as irrelevant should take note), and the reports contain information which raise questions about the integrity and competence of some senior officers and councillors.

There have already been calls for the immediate dismissal of the chief executive and the resignation of senior councillors, including Kevin Madge.

Rhodri Glyn Thomas said, "The gross misconduct of the council officers involved in drawing up the report [on the libel indemnity, Ed.] has brought the council into disrepute and should be countered by instant dismissal". More on his statement below.

The full reports can be found here and here.

Readers of this blog, Carmarthenshire Planning Problems and the South Wales Guardian will be aware of the background and much of the detail, and of greater interest now is the response of the council to the reports and next steps.

The Libel Indemnity

In summary the auditor has found that:

• The award of an indemnity to the chief executive, Mark James, to fund his libel counterclaim was unlawful, and the resulting expenditure was contrary to law.
• The council does not have legal powers to indemnify officers and members to bring actions for defamation.
• There were failings in governance arrangements and processes, including the chief executive's presence at the meeting which approved the indemnity and his failure to declare an interest.
• There is a strong suggestion in the report that members of the Executive Board who approved the indemnity were misled and that key information was withheld from them before they took their decision.
• Litigation is continuing, and it is not clear what the final cost of external legal representation will be to the council.
• The Council did not consider all of the options open to it, such as a conditional fee agreement.
• The way in which the meeting was arranged and conducted was not transparent.

One of the most damning sections of the report deals with legal opinion sought by the council in 2008. The opinion received concluded that the council may on balance have powers to indemnify actions for defamation, but was couched in very cautious terms. The auditor notes:

The cautious and reserved terms in which Counsel expressed his opinion to the Council are not reflected in the report to the Executive Board. Instead, the report represents his advice in unequivocal terms – that the indemnity can be granted but only in exceptional circumstances, although these were not defined.

Further,

The report [the report recommending the indemnity, Ed.] also states that the views of the Wales Audit Office were being sought as to whether they had any concerns about the granting of an indemnity. From the minutes of the meeting there is no evidence that the Executive Board was informed of the views of the Wales Audit Office when taking their decision.

The council sought to justify the decision to treat the indemnity report as an emergency item by claiming that it had been waiting for its counsel's view on the prospects of success. In the event the advice arrived before the meeting but was not included in the report.

In other words, the Executive Board took a decision without having seen all of the information available. The senior officers involved had seen it and for whatever reason withheld it.

The council's response is to say that it sticks by its decisions and considers that it acted within its powers.

The Pensions Scandal

The auditor's findings on this affair are if anything even more shocking. Once again the matter was handled in such a way as to ensure that there was a complete lack of transparency.

The key findings are:

• The decision taken by the Executive Board is ‘ultra vires’ and cannot lawfully be implemented as the Council’s powers to set reasonable remuneration cannot be used for the avoidance or mitigation of the effects of pensions legislation.

• In making the decision, relevant considerations were not taken into account, in breach of Wednesbury reasonableness principles.

• The Council failed to have due regard to the public sector equality duty.

• The decision constituted indirect discrimination.

• The agenda item was considered by the Executive Board without appearing on the agenda and without being open to inspection by members of the public.

• The report was drafted and presented by a senior officer who had a disqualifying personal and pecuniary interest in the decision as he was eligible to benefit from the proposed ‘pay supplement’.

As with the libel indemnity, it emerges that key information was not presented to members of the Executive Board, and that they may have been misled or wrongly advised.

The Assistant Chief Executive’s report recommended the Executive Board approve the recommendations in the TRP report*. As a senior officer, the Assistant Chief Executivehad a personal and pecuniary interest in the recommendation to pay a ‘pay supplement’ to senior officers who opt out of the LGPS. The report of the Assistant Chief Executive stated that there were no equalities, legal or staffing implications. Neither report identified the impact on any individual senior officers of the restrictions on pensions tax relief enacted in the Finance Act 2011.

* The TRP report was produced by a firm of specialist financial consultants for the council at public expense.

If that is not clear enough, how about this:

Members of the Executive Board were wrongly informed and proceeded on the basis that, in consequence of the changes introduced in the Finance Act 2011, officers would be ‘forced to leave the Local Government Pension Scheme’.

The council's response to this is even more stunning than it is to the report on the libel indemnity. Although it has since rescinded the scheme, it continues to argue that it acted within its powers.

Not content with that, it emerges from the auditor's report that council officers told the auditor that these were not matters for him to investigate, and they also refused to disclose to him the legal advice sought jointly with Pembrokeshire County Council.

Next Steps

The council will now have to publish these reports and arrange a meeting of the full council to discuss the findings within a month.

The timing is very bad indeed as it will coincide with setting a budget for the next financial year, a package which contains enough explosive material of its own.

The auditor's findings raise extremely serious questions about the conduct of some senior officers, but also about the competence of senior councillors, including Kevin Madge, Meryl Gravell and Pam Palmer.

The Plaid leader on the council, Peter Hughes Griffiths, has called on the three to resign immediately (text of press release below).

In a separate, strongly worded statement, Rhodri Glyn Thomas AM and Jonathan Edwards MP voice their concerns. Jonathan makes the very good point that this should not come as a surprise to the Welsh Government which has sat on its hands for the last couple of years, refusing to intervene as Carmarthenshire sank ever deeper. The full text of the statement is below.

The likely first step will be a call for an extraordinary meeting of the full council and a motion of no confidence in the chief executive, if the Executive Board does not suspend him first.

It is also likely that there will be calls for the suspension or dismissal of several other senior officers, including the acting Head of Law, Linda Rees Jones, and Paul Thomas, one of the two assistant chief executives.

Whether the Executive Board will try to tough it out remains to be seen. The auditor's reports provide them with some scope for blaming the senior officers, but it is obvious that questions should have been asked at several stages and were not.

Kevin Madge's "dream team" of a few senior officers and a handful of Labour and Independent councillors now looks like the stuff of nightmares.

Statement by Peter Hughes Griffiths

Three senior Carmarthenshire councillors who unlawfully approved the Chief Executive’s pension and libel payments should resign immediately, say Plaid Cymru. “We hold the present Leader Cllr Kevin Madge, former Leader Cllr Meryl Gravell and Independent group Leader Cllr Pam Palmer responsible for this disgraceful situation,” said Cllr Peter Hughes Griffiths, who leads the 28-strong Plaid Cymru opposition group on the council. “They were, and still are, members of the Labour-Independent Executive Board which in 2012 made decisions about spending tens of thousands of taxpayers’ money in unminuted meetings behind closed doors; expenditure which has now been deemed unlawful.

“In displaying disregard for proper procedure and statutes, the three members named have shown themselves to be unfit to be part of the administration of this county council and should resign. The fact that the present Executive Board recently backed their stance also calls the Board’s competence as a whole into question.

Even after initially being pulled up by the WAO last year they chose to commit even more public money by mounting a legal challenge, before backing down on the pension issue.

This is what happens when a weak Labour-Independent Executive Board abdicates its responsibilities by allowing a senior officer to lead.

At a time when council services across the board are facing unprecedented cutbacks, how can the public have any confidence in such an incompetent administration? The council, as a whole, urgently needs to take control of the situation. That can only happen if the Labour and Independent groups invite Plaid Cymru to be part of the administration."

Statement by Rhodri Glyn Thomas AM and Jonathan Edwards MP

Assembly Member Rhodri Glyn Thomas said:

“There is no way in which the council can gloss over what are two significantly damaging reports.  This is a very dark day for Carmarthenshire, a dark day for democracy in Carmarthenshire, and is an example of what happens when you have a very weak executive and a council controlled by powerful unelected officers.

“The decision taken by the political leadership of the council to approve an indemnity for the Chief Executive was based on a sexed-up dossier that did not reflect the legal advice provided.  The gross misconduct of the council officers involved in drawing up the report has brought the council into disrepute and should be countered by instant dismissal.

“Councillors were misled into spending taxpayers’ money doing something the Council was to all intents and purposes cautioned against.  Members of the Executive Board have been exposed as incompetent in safeguarding public money and inept in holding highly-paid officers to account.  They further approved unlawful expenditure to suit the tax arrangements of the Chief Executive. 

“The reports reaffirm our grave concerns that Carmarthenshire council has been gutted of all democracy as pre-meetings of the ruling Labour-Independent Executive Board take place behind the scenes before tokenistic rubbing stamping exercises follow in public, if at all.

“To restore public confidence there must be political accountability.  The Leader of the Council and former leader of the council should accept responsibility and do the honourable thing to enable a political reboot.

“Plaid Cymru has worked hard over the last year to introduce greater accountability into the remuneration packages of local authority chief executives, and has been successful in seeing changes to salaries being scrutinised by the independent remuneration board.

“We’ve done what we can to bring greater transparency on payments to senior council officers.  The Welsh government must now get a grip of the situation.”

Member of Parliament Jonathan Edwards added:

“For almost four years we have raised concerns with both Welsh & UK governments about the legality of the council’s indemnity for the Chief Executive’s counterclaim.  The Welsh government’s refusal to intervene in a council run by its Labour colleagues has seen Carmarthenshire taxpayers’ subjected to these unlawful expenditures when this could have been stopped. 

“The unlawful indemnity and unlawful pension arrangements have seen over £55,000 of public money spent for the benefit of the Chief Executive who, on the basis of these reports, can no longer continue in his role.

“We agree with the Auditor that the indemnity should be withdrawn and we believe the almost £30,000 spent on this indemnity should be paid back in full.

“The Executive Board has acted wrongly in both instances – approving decisions worth tens of thousands of pounds without raising any formal questions or concerns.

“We pay tribute to the Appointed Auditor for his thorough report and his determination in bringing these issues into the public domain when Carmarthenshire Council had the audacity to tell him to keep his nose out.

“The Welsh government should immediately put the council into special measures to enable a new cross-party coalition to be set up to bring an end to this dark chapter in the history of local governance in Carmarthenshire.

“We call upon all Labour and Independent councillors whose parties run this council to look seriously at these reports and join us in restoring democracy to the county.  Carmarthenshire needs a complete reboot and new political leadership which it has so desperately lacked.