Arts centre of attention: the Fairfield Halls refurbishment project cost at least £67m, but no one, not even special investigators, seems to know how all the money was used
EXCLUSIVE: Council says its specialist investigators have yet to find anything around the £67m botched refurbishment of the arts centre which needs to be reported to the police. By STEVEN DOWNES
An investigation to discover if there was any fraud committed when the £30million project to refurbish the Fairfield Halls ended up costing £67million will not be completed until October, at the earliest, and will cost the Council Tax-payers in the bankrupt borough at least £300,000.
That’s according to a long-delayed council response to an official question about the brewing scandal of the Fairfield Halls, where a two-year refurb project took nearly four years yet was never finished nor the full scope of works completed.
As an investigation by Inside Croydon revealed in 2020, the Fairfield works were conducted under the supervision of Brick by Brick, the council-owned housing developer, despite the company having no background or experience in handling complex projects with heritage buildings. Croydon Council, under the leadership of Tony Newman and Alison Butler, never put the contract for managing the project out to competitive tender, as is required of most council-funded projects.
Butler, the former deputy leader of the council and cabinet member for housing, stood down from the council in May, while Newman quit as council leader in October 2020. He was suspended from the Labour Party three months later. Newman remains under “administrative suspension” by the Labour Party.
£67m fiasco: Tony Newman (left) at the re-opening of the Halls in 2019 with London Mayor Sadiq Khan
There has never been a satisfactory explanation for the spiralling costs and poor delivery on the Fairfield Halls project. No one seems to know where much of the £67million was spent.
Nor has anyone ever been held to account for the abject mismanagement – at least – of the whole sorry saga.
The council’s auditors have suggested that the awarding of the refurbishment licence to Brick by Brick was intended to get around procurement law.
In a Report In The Public Interest into the Fairfield fiasco published earlier this year by Grant Thornton, they said, “In our view, it is likely that the licence did not reflect the underlying reality of the arrangements…
“It is our view that the licence was (at least in part) intended to circumvent procurement law and competitive tendering.”
The lead auditor, Sarah Ironmonger, said that their work was made more difficult because of the council’s failure to keep full records, documents and minutes.
The whole Fairfield Halls refurbishment was meant to be paid for by development deals involving property on a site next to the arts centre, a deal which could have been worth tens of millions of pounds. Yet according to Ironmonger, none of the agreements to transfer the College Green land or for the provision of a multi-million pound loan to Brick by Brick could be found.
“We are unsure of the legality,” Ironmonger told a council meeting in February. “This could be viewed as a breach of procurement law.”
It took an interim monitoring officer, the council’s senior legal official, John Jones, to order a fraud investigation into the Fairfield fiasco, and in March this year Kroll, an American corporate investigation and risk consulting firm, was called in to sift through the evidence to find any trace of where all that money’s gone.
Six months on, according to an official council response to a written question from Conservative councillor Robert Ward, and Kroll has yet to find anything worth notifying the police about.
The bill for Kroll’s “deep” trawl through the Fairfield fiasco evidence is likely to top £300,000, though.
In his question, just published by the council, Ward asked: “At the council meeting on 3rd February 2022, the then Monitoring Officer announced that he was initiating investigations into possible offences under the Fraud Act.
“At the council meeting on 23rd March 2022 Councillor King in response to a question stated that this contract had been awarded to Kroll and that the work was ongoing.”
Ward, one of the more dogged and perceptive of the borough’s 70 councillors, asked Jason Cummings, the cabinet member for finance, for the terms of reference of the work being undertaken by Kroll, a “summary of the current state of these investigations including any initial findings, the cost so far to the council, and an estimate of the expected total cost and the completion date”, and for a “statement on what information in relation to the work by Kroll has been shared with the police”.
Cummings’ answer suggests that, despite six months’ work by Kroll, and the testimony of the senior Grant Thornton auditors, nothing much has been uncovered.
“Kroll were commissioned to complete an initial ‘scope of investigation’ Stage 1 reporting into events around the refurbishment of Fairfield Halls (including the decision-making process) and related expenditure overruns, to identify whether there are indications of any conflict of interest or wrongdoing, to consider the need for further or wider investigation (depending on the issues arising) and to define a detailed investigation plan and methodology,” Cummings wrote in his response.
“The initial findings were that there are a number of issues and questions which warrant further investigation.
“Kroll also advised the council on how to approach such an investigation.
Dogged: Cllr Robert Ward
“This scoping analysis was designed to establish the key background facts and lay the foundations for a detailed investigation and, therefore, formed an essential part of the exercise. This has been completed at a cost of £38,000 and has set out a detailed investigation plan which the council has agreed.
“The detailed forensic investigation cost will be in the region of £250,000 plus IT costs of circa £20,000 and will set out the findings of the investigation.
“This is due to complete October 2022.
“The investigation by Kroll will aim to provide clarity over the probity and integrity of decision-making around the Fairfield Halls project, the reasons for the cost overrun and late delivery and the governance failures and whether there is evidence of potential wrongdoing by relevant individuals.
“At the conclusion of the proposed detailed investigation, Kroll will produce an evidence-based report that will conclude on these matters in line with the evidence gathered.
“The police have been made aware of Kroll’s appointment but, to date, no need has arisen to share any information with the police.”
Croydon is London’s Borough of Culture 2023…
Read more: Conflicts of interest, incomplete contracts, unlawful payments
Read more: £30m Fairfield Halls project never went to competitive tender
Read more: The grand scandal at the centre of Fairfield’s absurd saga
Read more: Kakistocracy: Butler forced into £6m bail-out of Brick by Brick
Read more: A level of ineptitude which would be tolerated nowhere else
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An early Christmas present for Croydon will be the publication of the investigation, along with plod feeling the collars of those behind this debacle.
You are an optimist at heart Arfur.
£67m for a refurbishment? Even Boxpark cost £5m to build from scratch and that was reasonable. lol. I’m pretty sure changing a lightbulb does not cost £1k so the accounts will reveal all. Hopefully some of the council peeps will get thrown in jail but it’s all too much too late as Croydon is far too gone now.
Lets give a rough playback to the information provided here and make some rough predictions on how it will play out.
1) The council’s failure to keep full records, documents and minutes.
This is a transgression of Council financial regulations. This does not seem isolated to the woeful Brick by Brick but extends to any oversight by Senior Offices responsible for Council expenditure and the political management of Councillors. Any report will have to place responsibility for the failure of management control upon a whole collection of former council employees. Have they disappeared into the sunset? If there is one point where information is being failed to be disclosed consistently if could point to a prima facie case of fraud if any pecuniary advantage can be demonstrated. Looks like the cock up explanation is going to be deployed for all this class involved to avoid any substantive penalty and exposure to process.
As pointed out in the past New Labour Blairism removed the financial responsibility of the Surcharge for such shockingly obvious mismanagement.
2) The requirement to put out council work to a competitive tendering process. Before the emergence of the Coalition Government of Clegg and Cameron such huge projects would be subject to such awful red tape to attempt to get the best value for money for the Council Taxpayers of Croydon. We know now in retrospect this was not a major concern of this Government who abolished the Audit Commission under the guise of saving money and introduced Localism legislation which blurred the old lines of financial responsible in local government to enable more innovation within the public sector. Mr Cameron’s conduct with regard to the Greensill Scandal demonstrates the essential wrong headedness of all this with regard to good financial management. This whole mess will be passed away due to the inadequate systems introduced by Central Government or in words alluding or avoiding this.
3) The council’s auditors have suggested that the awarding of the refurbishment licence to Brick by Brick was intended to get around procurement law. The problem is procurement law as pointed in (2) is now not subject to tried and tested legislation, but it wouldn’t have stopped any providing any Scrutiny to enquire what legal tests have been imposed by the council to make sure it had no requirement to comply with a tendering process. Now the sterling work of the Scrutiny & Overview Committee. All the members are supposed to receive guidance in local government financial management. This provided an opportunity to provide accountability and indeed set down in documentation the process underlying this whole sorry show. We know this Committee in the round accepted the assurances of the Senior Officers and never provided any substantive challenge to whatever the hell was going on in this fiasco.
We are told of the diligent work of Councillor Ward in pursuing this matter, but where was the diligence being demonstrated at the time of the actual decision making being undertaken. My memory of said Councillor was that he couldn’t believe that it was possible for an organisation to go belly up with all the public subsidy that had been provided to it. Indeed he has been the most vocal local member who has pursued this matter in retrospect.
He is a member of a political party who believes removing red tape is the way to improve the financial outcomes for our communities. Lets leave it there and so will any investigation of this complete fiasco from head to toe.
I worry that the investigation will put it all down to incompetence, which is not a crime.
There must be some way to make sure that those involved are never allowed near public money again.
The legal system can always engineer a transgression with an opinion, but it does not have an obvious legislative failure to apply to this fiasco anymore due to the actions of Governments all colours including the Liberal Democrats in Coalition. Doubt there will be much enthusiasm to attribute failure due to the lack of oversight of process provided by the political centre. Somewhere down the line they will all jump up and down and state that the process must be reformed. Croydon is not the only example of recent local authority failure
If you look at the history of governance at the council, it is incompetence. People were over promoted into senior positions for the first time and literally had no clue what to do. It gives them too much credit to imagine them as criminal master minds. They were children playing at being adults. Where was the background and experience in running a council let alone big refurbishment projects?? There was none.
The failures lie at the feet of these individuals and at the feet of Eric Pickles who took away the Audit Commission. Plus the external auditors were very late to the party on this.
The new council must exhibit the will to chase down the missing millions, however inconvenient this is in the managing of those who might prove to be implicated in the loss,
There must be a first time for everything, but when has this happened before in your long term relationship with Croydon Council? Just words.
Employees have been at court and tribunal re fraud.
The Council must chase down the millions forthwith. The record bankruptcy is not petty cash .
So pray let us know which Local Government Finance Law has been transgressed. We are all waiting for you and Pelling to inform the recovery teams.
There are Local Government Finance Acts but I am not aware of such a capitalised Local Government Finance Law. The attention at the Halls’ project should not be on local government finance as these matters were dealt with away from the authority at arms length. Attention needs to be given as to rapidity of contract changes and to follow the flows of money from one entity to another.
I agree . Is there any good reason for the lack of accountability and transparency? The RIPI report raised concerns, as have many residents.