Council chiefs, auditors and lawyers are exploring the recovery of the golden handshake paid to the former chief exec, which has caused public outrage since Inside Croydon first revealed the amount.
By STEVEN DOWNES
In the money: disgraced council leader Tony Newman and Jo Negrini, the CEO to whom he handed a £437,000 pay-off
The trade magazine for local councils across the country is reporting that Croydon is considering action to recover some or all of the £437,000 golden handshake handed to former chief exec Jo Negrini in 2020.
As Inside Croydon reported last month, Grant Thornton, the council’s auditors, have raised concerns over whether the pay-off met the authority’s “value for money” standards.
According to the Local Government Chronicle, cash-strapped Croydon is now “exploring” the possibilities for recovering that cash.
Katharine Street sources confirm the LGC’s story, and suggest that the move is linked to the Penn Report, the assessment of whether there was any wrongdoing at the council which may have contributed to the council’s financial collapse in 2020.
The report, compiled by Local Government Association consultant Richard Penn, has been under lock and key in Fisher’s Folly for almost 18 months, with potentially dynamite findings about the roles played in the bankrupting of the borough by the likes of Negrini and the council’s Labour leadership at the time, including Tony Newman and Simon Hall.
It was Newman and Hall who pushed through the generous financial settlement for Negrini in August 2020, just weeks before the council was forced to issue a Section 114 notice, as an admission that they were unable to balance the books.
Lock and key: current CEO Katherine Kerswell has resisted calls to publish the Penn Report
Inside Croydon understands that since a meeting of the council’s appointments committee earlier this month, the current council chief exec, Katherine Kerswell, and external legal advisers sought agreement from councillors to publish a sanitised and heavily redacted summary of Penn’s findings. Senior councillors – from Labour as well as the Conservatives – refused and instead demanded that as much of the Penn Report as possible should now be made public.
Kerswell and the council lawyers have now gone back to those individuals most prominently featured in the Penn Report to seek ways to publish while avoiding potential litigation.
Leverage in that process may well be the possibility that some of those individuals could be held responsible for returning council money that was spent unlawfully – perhaps including in the case of Negrini.
Australian-born Negrini joined Croydon Council in early 2014 as an executive director in charge of development and planning, coming from Newham, where she had worked closely with Aussie developers Westfield on the development of their Stratford centre.
In 2016, following the departure of Nathan Elvery, Negrini was chosen “unanimously” by an appointments committee to become Croydon’s first woman CEO.
After four years of Negrini at the helm, the council’s bullish “ambitious” agenda and drive for development had soured.
Despite Negrini’s best efforts, Croydon’s Westfield failed to materialise, house-builder Brick by Brick was swallowing evermore cash without delivering the promised new homes, the Fairfield Halls redevelopment had turned into a catastrophe, and now managing the covid pandemic was proving to be beyond the CEO and her senior directors.
The Times newspaper would later describe the “culture of profligacy” at the council under Negrini that “far predates the pandemic and cannot be explained away by austerity or the area’s high demand for social care”.
Centre stage: but is the former chief exec Jo Negrini the right person to pursue for the £437,000 pay-off?
With a £60million-plus hole in the council budgets, an emergency meeting was called just before the 2020 August Bank Holiday weekend, attended by senior councillors, including Newman and Hall and Conservative opposition leader Tim Pollard. They were to determine what step to take next.
That appointments committee agreed to make the huge payment to “Negreedy” to persuade her to leave, but only by a majority decision – Newman, Hall, Newman’s deputy leader Alison Butler and Alisa Flemming all voting in favour, while the two token Tories allowed to attend the meeting, Pollard and Jason Perry – now the Mayor of Croydon – are believed to have voted against.
The LGC this week quotes a current member of the appointments committee, who was at their meeting earlier this month: “The leadership voted through a severance package without proper explanation, without properly exploring other options.
“Grant Thornton are saying if they didn’t consider other options, this does not constitute value for money and if it doesn’t, that’s unlawful.
“There is the potential the council could try to recover the money from Ms Negrini. But if they did that, there is a question over cost to the council to do so, which could be huge, and whether that would be in the public interest or not.”
The source told LGC that no decision has yet been taken on the course of action. According to a council spokesperson, the outcome is expected to be reported to the council in July.
Voted against: Jason Perry
But a Katharine Street source has told Inside Croydon that the main concern now is to ensure that any recovery action should target the correct person, or people.
“Going after Negrini now would be a waste of time and yet more money,” they said.
“It wasn’t Negrini, the recipient of the thick end of half-a-million of council money, who was at fault here, but the councillors and council officials who allowed it to happen. Much of the work being done now is to work out whether there is actually a legal mechanism to allow the council to recover that money.”
Read more: Newman and Negrini’s pay-off: no papers, no notes, no reasons
Read more: The ins and outs of quietly getting rid of a council CEO
Read more: More Town Hall secrecy as auditors question Negrini’s pay-off
Read more: CEO Negrini’s long campaign to shut down Inside Croydon
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To my mind there are a lot of unanswered questions on this matter. For example how much of the money Ms Negrini received was accrued pension entitlement (which presumably would have been payable in any event), and how much was subject to negotiation? Has anyone actually asked Ms Negrini to return some of the money? (worth a try in view of the huge public reaction) a
Regardless of whether certain councillors also bear responsibility Ms Negrini was at the helm on the officer side when things went seriously wrong. I believe the public is rightly outraged if large sums of public money are paid out to the person in charge in such situations.
There’s no unanswered questions in respect of the amounts paid to Negrini, David. They’ve all been recorded in the council accounts, and reported by Inside Croydon.
Most recently here.
And here, which also recounts in painstaking detail how the decision to hand over so much cash to Negrini was arrived at.
The amounts were as follows…
Total paid to Negrini in 2020-2021: £613,895
That was made up of salary for that year
£151,474
Plus her pension
£25,214
Plus the pay-off: £437,207
That figure was made up of “loss of office compensation” of
£144,356
and something referred to as “pension strain” of
£292,851
That latter figure, when you consider her £25,000 annual pension payment, looks like 10 years’ worth of pension payments (Negrini was then 10 years off retirement age).
You might want to refresh your memory of what we were reporting in September 2020, after breaking the news of one of the biggest pay-offs in local government history, when Tony Newman, who was still council leader at the time, refused to brief his fellow Labour councillors and defended the payment to Negrini.
Our report is here.
To date, Newman is the only person we can recall who has tried to defend the indefensible. Now why might that be?
Thank you for your detailed reporting of these issues IC.
My guess is that the legal costs of clawing back this golden farewell sum of £437,000 would be— £ 500,000
Wrong. I’m an employment lawyer. It would be under £200,000
For the sake of decency and fairness this should be pursued. If Negrini had the same terms as the hundreds of staff made redundant, she would have only received £63,333 in severance without any additions to pension pots. It would set a standard that might leave a legacy of accountability, something seriously still lacking in BWH and The Town Hall.
If this is investigated, you can bet a pound to a pinch of snuff Negrini suddenly returns to the Land Down Under before it concludes.
If you retire early in a defined benefit pension scheme your pension is reduced by an amount to cover acturarial strain. That might be something like 4% a year, so your pension would be reduced by 40% if you take it at 55 rather than 65 to pay for you drawing your pension for ten years longer
However, DB schemes often have a rule that if you leave your job at your employer’s request the employer must cover the cost of you drawing your pension for longer, thus in the above example cover the 40% reduction if you went 10 years early at your own volition.
If the above scenario applied the council would have been legally obliged to pay the strain cost to her pension scheme. Whether the golden handcuffs really cost £292k to remove is a question for pension scheme actuaries.
Sorry, why can’t the council publish the Penn Report unredacted? If they followed the Maxwellisation process as clarified in the Inquiries Act 2005 then even if the Report contained false statements the Council would have the libel defence of qualified privilege to fall back on? So I think the libel issue is a red herring here. What other excuses are there? Official Secrets? 30 year rule?