CROYDON IN CRISIS: The £224m in loans and unpaid interest owed to the council by Brick by Brick may have broken EU and British state aid and competition laws. But after nearly six months in her job, Hamida Ali claims she has no idea who authorised the payments.
By WALTER CRONXITE, political editor
Despite being a trusted member of Tony Newman’s cabinet for nearly five years, Hamida Ali, the new leader of Croydon Council, claims she has no idea who authorised making massive loans to the failed house-builder, Brick by Brick.
“If anyone wanted an example of the ‘corporate blindness’ the council was accused of having by its auditors, then this was it,” a Katharine Street source said after seeing Ali’s non-answer answer at Thursday’s cabinet meeting.
“The leader of the council can’t seriously expect people to believe she doesn’t know. Because if that is true, then she’s not fit to be in that position.”
Ali took over from Newman as council leader last October, voted in to that position by her fellow Labour councillors (who included Newman and members of his must-criticised “inner circle”) barely a day before the council was rocked by the bombshell of the Report In The Public Interest from auditors Grant Thornton, who highlighted the many failings of the council under Newman.
Close to the top of that list of blunders was the hundreds of millions of pounds lent to Brick by Brick by the council, without ever receiving a single penny back in loan repayments, interest or profits.
Yet despite being in charge of the council for almost six months, and Croydon’s financial collapse being at the forefront of Town Hall business since last May, Ali told the cabinet meeting that she was “not involved in those discussions” around Brick by Brick.
Management consultants PwC have found that the council is owed £224million by Brick by Brick in loans and unpaid interest repayments.
It was the “risk” that £36million-worth of loan and interest repayments from Brick by Brick would not materialise that was given as a primary reason when the council issued a Section114 notice in November, admitting it could not balance its budget for this year and was effectively broke.
Both auditors Grant Thornton and now the council scrutiny committee have raised the possibility that the amount of loans provided to Brick by Brick may have been unlawful, breaking EU rules over state aid, and what is now in British competition laws. They also increased the risk to the council significantly.
As explained in the Report In The Public Interest, “The original business case [for Brick by Brick] approved by cabinet in March 2015 included the recommendation that the key legal and structural components of the company will not be more than 50 per cent financed by the Council.
“By the 2017-2018 business plan, the funding mechanism was 75 per cent borrowing and 25 per cent equity.”
But as Tory councillor Robert Ward made the point in his question to Ali at Thursday’s cabinet, “The 25 per cent equity, 75 per cent loan was in every piece of documentation agreed by the council.
“Yet it was always ignored.
“On every occasion it was 100 per cent loan funded. Who took the decision and under what authority?” Ward asked Ali.
Ali didn’t want to answer. She gave a hospital pass to Chris Buss, the external consultant who has been working with PwC to try to unravel the Brick by Brick mess.
Buss wasn’t going to answer the question, either. “The mission I had was to resolve the issues going forward, not to undertake a post mortem,” said Buss, who has a well-practised method of deflecting awkward questions.
“I was not asked to look into it and I have not looked at it.”
Ward thanked Buss for his non-answer answer. “I was really asking the leader,” said Ward, the deputy chair of the scrutiny committee. “She was a member of the cabinet. Surely the leader must have known something about it and done something about it?”
With Newman and his former cabinet member for finance having been suspended by the Labour Party in the past week, Ward made the point of his question quite clear for Ali: “I suspect those responsible are on her backbenches.”
Hamida Ali was first elected to the council in 2014, as a councillor in Woodside ward alongside Newman, who fast-tracked her into his cabinet. Ali, it seemed, was destined for greatness – or at least what passes for greatness on Croydon Council, as she was groomed by her Blairite boss as a possible future Labour MP.
Anyone who witnessed her hapless, blundering performance on Thursday will wonder whether Ali even has much of a future as a Croydon councillor.
Her face belied her anger that Ward was pressing for any answer. She did her best to avoid giving one.
“I am not able to give you an answer to that question,” Ali told Ward.
“I was not involved in those discussions. I am conscious it was a recommendation in the Report In The Public Interest and I think given where we are now and what we know now, I think the 100 per cent debt model is much preferable given all of our concerns… errr… about… ummm… how the investment of… ummm… errr… the public’s investment…”.
Ali trailed off, and sought to hide from any supplementaries by calling a question from another Conservative councillor.
Tony McArdle, the chair of the improvement board appointed by the government to oversee Croydon’s “recovery”, and who Ali had welcomed to the meeting earlier as an observer, won’t have been impressed.
Certainly, Croydon Tories’ deputy leader Jason Cummings was not satisfied with the non-answer provided by the council leader.
“It is disappointing but not surprising that Councillor Ali continues to protect her colleagues who caused Croydon’s financial crisis,” said Cummings, clearly exasperated by Ali’s obfuscation.
“Labours failure to adhere to even their own policies can not be excused and Councillor Ali needs to keep her promises to openness and transparency.”
- In case you had not heard it before, and wanted to get a first-hand feel for Hamida Ali’s performance in answering questions, this is a recording of her appearance on BBC Radio London’s Vanessa Feltz show from last November
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