The Audit Report: Council company struck-off over admin error

CROYDON IN CRISIS: One of the criticisms of councils using public money in risky business ventures is that Town Hall staff have little experience or ability operating in private business. And Croydon’s bungling council has provided a perfect illustration of that point.
By STEVEN DOWNES

Auditors found the council failed to hand in its paperwork on a company overseeing millions

Two weeks on from the publication of Grant Thornton’s Report in the Public Interest on the many and manifold financial failings at Fisher’s Folly, and the borough’s Labour councillors are still reeling from the shock of having, finally, to face up to reality.

However, in one example highlighted by the auditors, many of those at the Town Hall have had to try hard to suppress outright laughter at the multi-million-pound incompetence on display Newman and Negrini’s clusterfuck of a council.

It would indeed be hilarious were it not true: Croydon set up a limited company to oversee tens of millions of pounds-worth of “investments”, only to have the business struck off by officials at Companies House because council staff failed to do their routine  paperwork on time.

Potentially, Croydon could have lost £55million of assets down to simple, sheer incompetence.

Croydon, under council leader Tony Newman and chief exec Jo Negrini, has been far from alone among local authorities in claiming that a solution to their ever-diminishing annual grant from central government was to borrow public money for use in the casino economics of the property market, banking profits that can be used to pay for frontline services.

A major criticism of local authorities who try to rub shoulders with the billionaires of commercial property is that they don’t have a clue what they are doing.

Under CEO Jo Negrini, the compulsory strike-off of a council company was kept secret from council committees, the report says

That’s certainly the opinion formed by Grant Thornton over the crass incompetence displayed in the case of London Borough of Croydon Holdings LLP, an error which council officials have tried to keep a secret from councillors for 10 months.

The Report in the Public Interest states, “In December 2019, London Borough of Croydon Holdings LLP was dissolved by compulsory strike-off by Companies House for a failure to comply with filing financial accounts and the assets of this company were transferred to the Crown…

“Having a company dissolved by compulsory strike-off is a failure of governance and we have not identified evidence that the dissolution of London Borough of Croydon Holdings LLP has been reported to cabinet or the General Purposes and Audit Committee.” This is a clear sign of an incompetent council that has been trying to hide its failures from public gaze.

Under council leader Tony Newman, Labour councillors rarely dared to ask the hard questions

The report states that the council is taking action to recover the company and its associated assets but it “was unable to quantify the assets and liabilities of this company” until late last month.

The report’s authors state, “The council has failed to establish adequate arrangements to govern its interests in subsidiaries and there is therefore not an appropriate mechanism for members to challenge either the arrangements or the continued extension of establishing additional companies.”

Under Negrini, the council was out of control. And under Newman, and his sidekick in charge of housing, Alison Butler, too many councillors were bought-off or gagged from ever daring to ask pertinent or probing questions.

Grant Thornton has taken a very dim view of the whole shabby and poorly-run business of Croydon’s businesses.

“As part of the Revolving Investment Fund, the council has lent money to schemes designed to support the supply of housing. Two of the schemes that had £55.1million of loans outstanding at 31 March 2019 were Croydon Affordable Homes LLP and Taberner House LLP. The council has a 10 per cent holding in each company and the council’s holding is held by a company, Croydon Holdings LLP, which itself is wholly owned by the council.

“The increasing complexity of the group structures, the interaction between different subsidiaries, the longer-term financial impact for the council and how to safeguard the council’s interests is not clearly understood.” Those are our italics.

The subsidiaries are covered by Companies Act legislation and there is a knowledge and experience gap which puts the council at risk of unintended consequences.”

Read more: Leader apologises for six years of misrule
Read more: Brick by Brick has paid nothing to council
Read more: Newman won’t say sorry, even to colleagues
Read more: Council ignored five warnings on reserves


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About insidecroydon

News, views and analysis about the people of Croydon, their lives and political times in the diverse and most-populated borough in London. Based in Croydon and edited by Steven Downes. To contact us, please email inside.croydon@btinternet.com
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3 Responses to The Audit Report: Council company struck-off over admin error

  1. This is staggering news. How did they set up a company without anyone knowing???

  2. Can Croydon Council write to the RIBA recommending that revoke Negrini’s fellowship of their organisation? Seems strange she was awarded for something that she has failed to do as was sacked from her job for not doing it in such a spectacularly bad way.

    I know The Labour Party have already put Newman on every one of their internal black-lists and rightfully so.

  3. Ronald Harris says:

    In view of the failings of Newman and Negrini, can legal proceedings be contemplated?

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