CROYDON IN CRISIS: For nearly two years, the council has withheld a detailed report into ‘possible wrong-doing’ at the Town Hall, together with recommendations for a Met Police investigation and the seeking of a refund on the £437,000 pay-off to Jo Negrini.
Now Inside Croydon can reveal all.
EXCLUSIVE by STEVEN DOWNES
A report into the financial collapse of Croydon Council includes the recommendation that councillors should consider calling in the Metropolitan Police to investigate possible misconduct in public office, and a further suggestion that Jo Negrini, the former CEO, may have broken the terms of her contract and could therefore be pursued to refund her £437,000 pay-off.
Katherine Kerswell, the council’s current CEO, has had a copy of the Penn Report under lock and key in her office in Fisher’s Folly since February 2021.
But Kerswell has blocked elected councillors from acting on the report’s shocking findings and very serious recommendations.
Inside Croydon has obtained a copy of the Penn Report, a full 160-page version without a single one of its 84,000 words redacted.
The wide-ranging report repeatedly refers to Croydon Council as “dysfunctional”, it contains multiple allegations of bullying by the shouty former CEO, and it even contains the suggestion that senior figures were “paranoid” about news getting out to… Inside Croydon.
The manner in which the council has conducted itself today, since Inside Croydon approached them with questions arising from the report, suggests that nothing much has changed.
Richard Penn is the Local Government Association official who was called in by Kerswell in November 2020, soon after Croydon had become only the second English local authority this century to declare itself effectively bankrupt.
All is revealed: Page 1 of the 160-page Penn Report
Negrini had scarpered in August 2020, helped on her way with nearly half a million pounds of tax-payers’ cash to ease her way out the door of Fisher’s Folly.
Newman, and his cabinet member for finance, Simon Hall, had resigned their positions in October 2020, just before auditors Grant Thornton delivered their Report In The Public Interest with the damning finding that the council suffered “collective corporate blindness”.
Kerswell, at a scrutiny committee meeting in November 2020, announced that she was going to commission another report from the experts at the Local Government Association. She told councillors, “We know what happened, that’s in the auditors’ Report in the Public Interest.
“This independent investigation by the LGA will look at how it happened. If the investigation finds that formal questions arise, then that will take place,” Kerswell promised then.
Kerswell has had her hefty copy of the resulting Penn Report since February 9, 2021.
In the days after the report was received, Kerswell suspended four of the council’s most senior staff – Shifa Mustafa, the exec director of place; Lisa Taylor, the finance director; Hazel Simmonds, exec director of localities; and Guy van Dichele (exec director of health, well-being and adults). A fifth executive, Jacqueline Harris-Baker, in charge of resources and the council’s most senior lawyer, went on sick leave, never to return to work.
‘Shambles’: ex-council leader Tony Newman
Early in March 2021, Newman and Hall both resigned as councillors, grumbling about a witch-hunt, and complaining that the draft of the Penn Report which they had seen was inaccurate and contained “baseless allegations”.
The man who had led Croydon to the brink of bankruptcy through a series of questionable property deals said the Penn Report was “a shambles”. Newman hasn’t been heard from since…
Only a handful of councillors on the appointments committee were given access to the report, in mid-March last year – more than 18 months ago.
The committee members – Hamida Ali and Joy Prince (neither of whom are still councillors), and Callton Young and Stuart King from Labour; Jason Cummings and Lynne Hale from the Tories – having been deemed trustworthy enough to be allowed to have sight of the report, had to do so in a room at Fisher’s Folly, while being carefully watched by a member of council staff. There were to be no notes taken and definitely no photographs of the pages. It’s the kind of security more normally associated with the nuclear weapons codes…
The vast majority of the council’s elected representatives have meanwhile been kept firmly in the dark about the report’s contents, and its recommendations.
Senior councillors from both sides of the Town Hall maintain that they have asked the council’s chief executive to publish the report. All requests have been rebuffed. The latest excuse from Kerswell is that “council is fully committed to publishing the Penn Report when current investigations and other processes are completed”.
The council says that the last time the appointments committee discussed the Penn Report was in April this year – so before the May local elections and the change of administration.
Now, 19 months after receiving the report, the council says it is still going through a “Maxwellisation” process, allowing persons who are to be criticised in the report to respond prior to publication.
Yet Inside Croydon is able to reveal that there are only six people specifically identified in the Penn Report for possible disciplinary action: ex-councillors Newman and Hall, and former execs Harris-Baker, Taylor and Mustafa. Plus, of course, Negrini, who had, by the time of the report being written, already left the council.
Now, for the first time, Inside Croydon is able to publish the damning findings of the report that Kerswell and former council leader Ali and new Mayor Jason Perry have so far failed to do. Over the coming days we will be reporting on Penn’s findings about Jo Negrini, the mismanagement of Brick by Brick, attempts to falsify Council Tax figures, and the organisation’s toxic culture that led to its downfall.
Sitting pretty: Jo Negrini quit Croydon with a £437,000 pay-off
There is one line from a not-very-well-anonymised interviewee (Penn never names names, but some of the reported comments are a bit of a giveaway) which perhaps sums up the council, and also its handling of the Penn Report itself.
According to a most perceptive “Interviewee No40”, “In Croydon, nobody seems to be responsible for anything.
“And no one seems very concerned about that.”
Among Penn’s recommendations, he says that Croydon should consider “a review of the settlement agreement that was signed by the council with the former chief executive”.
This refers to the £437,000 golden handshake that was secretly agreed in August 2020 to be paid to Negrini immediately before her departure.
On the matter of Negrini, Penn further recommends that councillors should consider “whether the concerns raised in this initial investigation constitute a repudiatory breach of her contract and thus a breach of the terms of the settlement”.
Council sources say that Kerswell has had external legal advice to the effect that the chances of successfully retrieving any of the Negrini pay-off are exceedingly slim. That legal advice is probably right.
But Penn never recommended that the chief executive should seek legal advice.
Penn’s recommendation, on page 150 of his 160-page report, specifically states that “members”, meaning elected councillors, should consider a review.
“The investigation has raised concerns about the actions and the inactions of the former chief executive,” Penn says.
Inside Croydon invited some senior Town Hall sources to have sight of the report, and its recommendation. They suggest that by not giving a meeting of the full council a chance to discuss this recommendation – even in a “Part B”, behind-closed-doors session in the Town Hall Chamber – Kerswell may have been acting ultra vires – that is, beyond her powers.
They take a similar view of the failure to consult councillors over the matter of misconduct in public office.
Key recommendations: the Penn Report has been gathering dust for more than 18 months, with none of its recommendations implemented
Para 14.15 of the Penn Report which has been obtained by Inside Croydon states, “It is also recommended that when this report is presented to the relevant council body…” which, of course, has never happened, “… that consideration should be given to possible breaches of the Member Code of Conduct and the Protocol on Staff-Councillor Relations and whether formal action is in regard to any potential breaches.”
Penn goes on to identify “the former leader of the council”, meaning Newman, and “the former cabinet member for finance and resources”, meaning Hall.
Separately, in para 14.18, the report also recommends that councillors “consider referring this initial investigatory report to the Metropolitan Police for assessment of any further action being warranted in regard to the handling of public money and conduct in public office”.
But again, the borough’s elected councillors have never had the opportunity to discuss this course of action. Most of them were probably unaware of this recommendation. Until now.
Some might consider that they have been badly let down by the chief executive.
On the record: Richard Penn interviewed 64 people before drafting his report, including leading figures such as Jo Negrini and Tony Newman
The Crown Prosecution Service states that, “Misconduct in public office is an offence at common law triable only on indictment. It carries a maximum sentence of life imprisonment.” Those are our italics, just to make sure you’re paying attention.
“It is an offence confined to those who are public office holders and is committed when the office holder acts (or fails to act) in a way that constitutes a breach of the duties of that office.”
Other sources define misconduct in public office thus: “a public officer acting as such; wilfully neglects to perform his or her duty and/or wilfully misconducts him or herself; to such a degree as to amount to an abuse of the public’s trust in the office holder; without reasonable excuse or justification”.
Of those former council employees identified in the Penn Report as potentially warranting “further formal proceedings”, all three – Taylor, Mustafa and Harris-Baker – resigned from their jobs last year. None are believed to have received any compensation on their departure. Their resignations placed them beyond any reproach from the council’s disciplinary processes. Conveniently so for Kerswell.
Of the three, only Lisa Taylor is known to be working in local government since leaving Croydon, having been appointed as interim finance director at Birmingham City Council in April 2021.
In Negrini’s case, she set up Total Place Ltd, and has been hired as a consultant by Arup.
Since October 2020, Croydon Council, has been subject to two Reports In The Public Interest from external auditors Grant Thornton, a “rapid review” of its finances conducted by the Department for Levelling Up, Housing and Communities, as well as a review by PwC of the council-owned housing developers, Brick by Brick, who after receiving £200m in loans from the council failed to generate a single penny in profit and defaulted on all its loans.
Some of it quite complicated, detailed stuff. Most of it involving the people mentioned in the Penn Report. Indeed, much of the Penn Report has been copied and pasted from some of those previous works. And all those other reports and reviews were made public promptly upon completion.
But unlike the Penn Report, none of these other reports were under the control of council chief executive Katherine Kerswell.
- Read more: How Croydon Council tried to gag Inside Croydon from revealing details of the Penn Report
- Coming soon: Jo Negrini’s part in Croydon’s downfall
- If you have a news story about life in or around Croydon, or want to publicise your residents’ association or business, or if you have a local event to promote, please email us with full details at inside.croydon@btinternet.com
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I want Jo Negrini to be investigated for breach of contract and if its upheld, action should be taken against her to recover her pay-off.
I want Perry to undertake to do this.
I hear some of the RA’s are talking about taking a civil action against Negrini for failures in public office. Some might say they have more money than sense but Negrini took a lot of people for fools.
The cover of the report says ‘Interim’ Chief Executive. Why is Kerswell still here? Who exactly agreed to her being given a full time position? What are their names?
No doubt Kerswell will now be organising a witch hunt to find out who leaked a copy of the report to IC
With help from the Labour party hacking department……
Well done insidecroydon…….
Name & shame the bunch of low life crooks……..
Perhaps it is time the report is published. It’s about time. We want to know exactly what on earth has been going on here. It’s been too long for Croydon to have this hanging over it. We want a new start with new people
Perhaps Croydon residents can request a judicial review of Ms Kerswells actions payable from the Council budget?
If a High Court Judge finds her actions appropriate, then that is fine.
We can then require a new piece of legislation to prevent that happening ever again.
Another brilliant scoop by Inside Croydon – this one tops the lot!
As you say Misconduct in Public Office is a common law offence and not precisely defined. Normally it requires evidence of a pecuniary advantage gained by the defendant dishonestly. The problem in Croydon is that wholesale ineptitude and incompetence was the modus operandi of councillors and senior officers. Who in the right mind would have hired Negreedy as Chief Executive of a Local Authority, when her limited experience was in Property Development. The astonishing incompetence of Tony Newman and his sidekick in signing off on a massive redundancy payment to Negreedy is just beyond belief. It was such a bad decision that it would almost quality as an act of diminished responsibilities due to some long standing illness. Perhaps they are using this defence to stay outside any legal proceedings.
It is exactly that which Richard Penn suggested might be worthy of police investigation.
After all, exactly why did Newman and Hall push through the council, without proper constitutional checks and balances, the £30million purchase of the Croydon Park Hotel – paying between £3million and £5million of council money over the asking price?
What is the kickback though? At this stage everyone (except the Scrutiny Committee) could see these actions were just desperate lunges to try and keep their failing schemes in business. The people involved were all totally inadequate for the jobs they were undertaking. If inadequacy is a criminal offence, would you find anyone at work in Croydon Town Hall?
In answer to your second question, probably not.
The answer to your first question would require a police investigation, as implied in Penn’s recommendations.
It is grimly fascinating to read your analysis of this report, in several articles. Then we all need to see the full report.
What the Council needed was a highly experienced group of executive directors with years of experience under their belt. Croydon is huge and complicated. Look at the CVs – they were learning on the job!!!
The other massive problem is that this lack of experience meant that dealing with an appalling set of politicians was the perfect storm.
I have to say where were the auditors on this? They only really made noises towards the end – BxB was around since 2017(?). This is a failure of central government who binned the audit commission who would know governance matters inside out and could have picked it up sooner.
So the failures are at many many levels. All this does is create a circle of finger pointing as no one wants to take their share of responsibility.
And all the while croydon residents are let down.
Agree almost entirely, especially about the removal of the district auditors – another great gift to the nation by “Big” Eric Pickles and the Tory Party.
The auditors had given Croydon at least two warnings about lack of financial reserves, going back to 2017-2018, all of which were brushed off as inconsequential by the Audit Committee and Sean Fitzsimons on Scrutiny.
The warning about lack of reserves was just standard wording. They didn’t scratch the surface about the property companies etc until it started to blow up. That was what I meant.
But nor would they: Brick by Brick was registered in 2015. The loans started to go out in 2017. It wasn’t until 2019-2020 that any repayments or returns were expected. And there, in the middle of covid, was a £35million Brick by Brick shaped hole.
It was discovered too late that there were a raft of meetings that were deliberately not being minuted, and loan agreements which were missing any contracts.
This should have been the job of scrutiny.
Was all this kept from the auditos, like Hall and Newman kept the over-priced purchase of the Croydon Park Hotel from the council?
Auditors should have noticed that there was a lack of loan agreements etc if payments started in 2017 – as they should be looking for supporting evidence for these sorts of things.
The auditors often found their investigations were obstructed by senior council staff.
They have refused to sign off two sets of council annual accounts as a consequence.
The auditors can only do so much. The District Auditor used to have broader powers to intervene.
Excellent journalism, Inside Croydon. Add to this, the debacle over the Fairfield, and its a complete mess. Regardless of whether the legal advice says ‘you will waste money pursuing Negreedy, or others’ there needs to be proper scrutiny of payments that Cllrs or Staff decide to make.