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.
£67m and only partly completed: the Fairfield Halls refurbishment project has been subject to numerous reports – all of which have recommended that the council should take action
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.
Lock and key: Katherine Kerswell has resisted all calls to publish the Penn Report
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.
No longer practising: chief legal official Jacqueline Harris-Baker was one of Jo Negrini’s most trusted colleagues
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.”
Sutton finance chief: Richard Simpson helped set-up BxB and the Fairfield Halls project when he worked at Croydon
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
Read more: ‘Better than evens’ chance of winning Negrini legal case
Read more: #PennReport wanted police probe into possible misconduct
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So what exactly has Katherine Kerswell and her top team actually done or achieved in the last two years ? Could we have an FoI request here to detail and help us understand ?
If you haven’t yet bookmarked https://www.whatdotheyknow.com/body/croydon_borough_council already, you should now
Thanks Arfur, very informative to know Katherine has done all this herself. So what does she need the rest of the council staff for ?
Vested interests in the Town Hall would prefer it that the Penn report was buried and forgotten about. Thankfully we have Inside Croydon on hand to reveal the truth
Interesting that there is little evidence of Council officers assertions they told Councillors.
There appears to be a big record keeping problem at this Council with un-evidenced and unsubstantiated assertions made at many levels.
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I do find it difficult to believe that all that data does not exist. In my experience that occurs because of instructions not to keep any or an instruction not to release it.
The other reason is that with Organisational change people deleted it or took it with them when they left (kind of a habit in public service) or people leaving cleaned the decks with intent to ensure nothing left to help those that fired them.
Bearing in mind how many honest and hard working people were made redundant, and the manner in which this was done, to those with years of commended and loyal public service, I would surmise that was a lot of data wiped, or comms links to it broken.
One thing I am sure of is that many of those records exist. Not only because the behavior of many managers in Local Government bullying environments is to CYA and note everything. It is that Councils have process and automation and archives and newby’s do not know always ow to access that and have ”cut” those that did.
This is probably why the advice on Ms Negrini has that caveat ”until her defence response. That is when ”lost” data will become available and the real truth starts to become known
The biggest joke this decade is my favorite phrase ”perfectly legal development” received from planning.
The second is to ”be patient” received from Planning enforcement to when it all turned out to be not a perfectly legal development.
But his whole saga and lack of action is the third and longest. So congratulations to Inside Croydon for a well turned out epic as captivating as the game of thrones. May it continue
P.S One has to admire Ms Kerswells fortitude and forbearance in taking the heat and pressure. Clearly she is well on the way to an Honor for services to Local Government Advisers and Ministers along with a textbook rendition of the song ”the artful appearance of doing SFA in a crisis and keeping shtum at the same time whilst dribbling a bibful.”
There is a new model of local democracy installed at Croydon. Democ. Mayor Perry has far more control in this model and the agenda of localism installed by the Austerity Regimes of 2010 onwards provides greater authority for the elected Councillor to exert control over professional staff.
What has happened though appears to be the continuation of before and nothing new has happened. The Chief Executive like Negrini takes important decisions without any apparent democratic oversight. You would think it is in his own political self interest that Perry vigorously pursues the wrong doing that took place under the Labour Party of Newman, but it is clear that only inaction and the effluxion of time are on the agenda of our part-time Overlord.
This is again a reminder that the issues of this local authority go beyond the party political and is due to a problematic culture at the heart of how decisions are reached in Croydon. It is clear they all would rather that wrong doing is forgotten, since it is far more convenient to all involved than the hard work of substantively dealing with long term problems.
Meet the new boss. Same as the old boss…