CROYDON IN CRISIS: Recommendations for action made by auditors, a Local Government Association report and two sets of legal experts have not been acted on by the current CEO.
EXCLUSIVE by STEVEN DOWNES
Confidential legal advice provided to Croydon Council this year found that senior employees working on the fiasco of the Fairfield Halls refurbishment had shown “serious” failings “over a prolonged period” that had “exposed the council to significant financial and legal risk”.
Yet although the report’s authors, legal firm Browne Jacobson, joined auditors Grant Thornton and Local Government Association investigator Richard Penn in recommending that those responsible should be referred to their professional regulatory bodies, the council’s current CEO, Katherine Kerswell, has so far failed to do so.
The Fairfield Halls refurbishment project, placed in the hands of failed house-builders Brick by Brick, over-ran by more than a year and cost Croydon tax-payers at least £67.5million – £37million over-budget.
Two years on from the council being forced to admit it was effectively bankrupt, there’s still a stench that still lingers around the glass palace of civic hubris that is Fisher’s Folly.
There have been multiple reports into what went wrong at Croydon’s “dysfunctional” council, some that have been published and others – like the Penn Report – yet to be released to the public by Kerswell, who was at yet another meeting today providing more reasons why she wants to delay, prevaricate and not release the report.
Inside Croydon came into possession of two “highly confidential and exempt” documents after the council had published them on its own website.
The two pieces of legal advice also draw a conclusion that the Fairfield Halls refurbishment by Brick by Brick was a basket case of a deal long before the council’s housing development firm ran up that £37million overspend.
Both legal reports refer extensively to “RIPI2”.
Grant Thornton’s second Report In The Public Interest went a long way to pointing out the potential for fraud in the way the council handed that project to Brick by Brick, without any competitive tendering and without proper records or contracts.
Richard Penn, the Local Government Association official who was commissioned to look into possible wrong-doing, certainly took the view that there were grounds for further investigation and recommended that the council should refer some of its most senior staff, some who had been members of the “Executive Leadership Team”, to their professional bodies.
Yet nearly two years on, and Kerswell has refused to publish the Penn Report and there is no record of any (now former) Croydon executives having been referred to their professional bodies, as Penn recommended.
On Monday, Inside Croydon reported on the advice from King’s Counsel Jane Mulcahy, from April 2022, in which she focused on the role in the Fairfield Halls fiasco of former chief executive Jo “Negreedy” Negrini, and her £437,000 pay-off.
The second piece of “highly confidential” legal advice, which was written in March this year, also looks into “Potential repudiatory breach of contract by the former Chief Executive (‘JN’)”.
But this earlier report casts its net wider, in terms of looking at recommendations for other former senior council executives.
The report is from Browne Jacobson, a law firm with offices across the country and which of late has been operating as if on a permanent retainer for Croydon Council. It’s almost as if Kerswell doesn’t trust the council’s own in-house lawyers.
Like the Mulcahy report, the Browne Jacobson report was included as an appendix to the minutes of a meeting of the council’s appointments and disciplinary committee held on April 27 this year.
The meeting was chaired by Hamida Ali, the then council leader, and attended by Labour councillors Stuart King, Callton Young and Joy Prince, with Conservative councillors Jason Cummings and Lynne Hale. Kerswell and two members of council staff were also in attendance.
This particular discussion was in the “Part B” section of the meeting, when the press and public are excluded.
In Richard Penn’s report, handed to Kerswell in February 2021 but withheld from the majority of the borough’s elected councillors and the public until Inside Croydon began publishing parts of it last month, the LGA official had recommended that some of Negrini’s senior staff ought to be reported to their professional bodies – CIPFA, the Chartered Institute of Public Finance and Accountancy in respect of its former Section 151 officer, Lisa Taylor, and possibly her predecessor, Richard Simpson, and the Solicitors Regulation Authority for Jacqueline Harris-Baker, the former Monitoring Officer, the council’s most senior legal official.
The Browne Jacobson report pulls no punches.
At para 38 they state: “In the present case the failings a) are serious, b) persisted over a prolonged period [going back to 2016 they suggest elsewhere], c) involved failures to fulfil statutory as well as professional and contractual obligations, d) exposed the council to significant financial and legal risk, e) were found by an auditor exercising statutory powers, f) are contained within a published report such that they have the potential to impact on the reputation of the solicitors’ profession and CIPFA members and g) go to the public interest.”
All this, all publicly available in RIPI2 since February this year, all added up to grounds for “the council to make referrals to both CIPFA and the SRA in respect of the former Section 151 officer and the former Monitoring Officer respectively”, the expensively-hired lawyers advised in March.
It was on November 11, 2020, that Croydon became the second council this century to issue a Section 114 notice, the effective admission that it was bankrupt.
One of the major causes of the council running out of money was the constant drain on its resources by Brick by Brick.
Grant Thornton’s RIPI2 on the Fairfield Halls refurbishment by Brick by Brick provided a litany of failures that has ended up costing the people of Croydon many millions of pounds.
Like the Mulcahy report, Browne Jacobson say that previous legal advice to the council had said that there was nothing that could definitely establish that Negrini was in breach of contract. But they then suggest that RIPI2, published by the auditors after 14 months’ research, really was a game-changer.
They recommended that Mulcahy be asked to revisit the position – which is what led to her advice in April as we reported on Monday.
When interviewed by Grant Thornton and by Penn, senior members of council staff had repeatedly claimed that they had acted properly by informing the relevant cabinet members – elected councillors – of concerns about overspends on the Fairfield Halls project. But like Grant Thornton before them, Browne Jacobson found a worrying lack of documentary evidence to support such claims.
In para 13 of their report, Browne Jacobson say, “Given the magnitude and significance of the project and the fact that the council had taken legal advice on the various risks arising, it would be difficult for in particular the statutory officers, well aware of their particular, individual legal obligations to now argue that they were not aware of material events and risks and that a failure to discharge those obligations would not amount to neglect or misconduct.”
Among those who scrambled from the wreckage of the council’s bankruptcy, Harris-Baker appears to have retired and is listed by the Law Society as no longer practising as a solicitor. Jo Negrini, an “Hon FRIBA”, a fellow of the Royal Institute of British Architects, continues to work as a development consultant.
And CIPFA members Lisa Taylor (Birmingham City Council) and her predecessor as Croydon’s Section 151 officer, Richard Simpson (Sutton Council), continue to work in very senior positions for local authorities.
Neither CIPFA nor SRA were prepared to state categorically that they had not received any referrals from Croydon Council regarding the conduct of past executives.
CIPFA has a web page listing all the disciplinary hearings it has held over recent months. There’s no sign on there of anyone who worked at Croydon.
“CIPFA does not comment on our disciplinary process for members or students, until if and when it has been made public,” a spokesperson said.
“Up to that point it is a private matter between the Institute and the member or student. If the disciplinary process moves to a hearing, it will be listed on this page and they are open to the public to join.”
Over at the Solicitors’ Regulation Authority, Rule 7.7 of their Code of Conduct obliges solicitors to “report promptly to the SRA or another approved regulator, as appropriate, any facts or matters that you reasonably believe are capable of amounting to a serious breach of their regulatory arrangements by any person regulated by them (including you).” So if a qualified solicitor has information that should be investigated, they have a duty to self-report.
Today, a spokesperson for the SRA told Inside Croydon: “We do not usually confirm or deny if we have received a complaint about a solicitor. It is only if disciplinary or regulatory action is necessary that it becomes a matter of public record.
“If we do receive a complaint, then we will look at the evidence given to us before deciding on next steps.”
Read more: Brazen Butler at centre of new storm over Fairfield Halls fiasco
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