CROYDON IN CRISIS: It now emerges that the Met decided to take no further action over allegations of possible fraud or false accounting as long ago as June 2023. EXCLUSIVE by STEVEN DOWNES
No charges: the Met says there is insufficient evidence to pursue a misconduct in public office case against former council leader Tony Newman
There will be no prosecutions brought against any of the senior figures who were implicated in Croydon Council’s financial collapse in 2020.
That’s the conclusion of an official report to be discussed at a council committee next week, after the Metropolitan Police decided to take no further action against the likes of Tony Newman, the former leader of the council, and Jo Negrini, the chief executive who walked away from the wreckage with a pay-off of £437,207 from the cash-strapped council.
The no further action decision will come as a bitter blow to Mayor Jason Perry, and marks his latest failure to deliver on his manifesto promises.
But sources close to some former council figures who were subject to police scrutiny have told Inside Croydon that they regard the decision as “vindication”, after having a criminal investigation hanging over them for almost four years.
Others have questioned current CEO Katherine Kerswell’s decisions to commission a series of reports into the conduct of her predecessors, at massive public cost, when there was little likelihood of any prosecutions.
No charges: the Met says there is insufficient evidence to pursue a misconduct case against former council CEO Jo Negrini
Katharine Street sources say that the decision to drop the matter was “always inevitable” and “long overdue”.
They said: “There was only ever the remotest possibility of any prosecution ever happening. We all knew that when council chief exec Katherine Kerswell decided to seek charges of ‘misconduct in public office’: it is an offence that has an impossibly high bar of evidence to achieve, which is why you hardly ever hear of any cases being brought.
“In fact, it seems very likely that that is exactly the reason that Kerswell opted to go down that route – it always was going to be a legal dead end.”
Having delayed submitting a complaint to the police for more than two years, documents released by the council over the weekend show that Kerswell has been sitting on the police’s written decision for two months before getting around to sharing it with councillors and the public.
In her official council report, drafted for next Monday’s appointments and disciplinary committee, Kerswell says: “Having undertaken a forensic and extensive review of the information provided, and requested pre-investigative advice from the CPS [Crown Prosecution Service], the Metropolitan Police have decided to take no further action at this stage.
“The police have concluded that the actions and/or inactions of elected members [meaning councillors] and former officers [meaning council staff] did not meet the high evidence threshold set out in legal guidance for wilful neglect or misconduct, or abuse of the public’s trust to such a degree that the offence of misconduct in public office was capable of being made out.”
Waste of time and money: council CEO Katherine Kerswell
In early 2021, Kerswell was summoned to appear before a Commons Select Committee of MPs, where she was questioned about what had led to Croydon’s financial collapse. At the hearing, Kerswell expressed the view that the law was inadequate for bringing to justice those who may have abused their positions in local government.
The abandonment of the police case against all of the “Croydon Seven” only strengthens that argument, with Kerswell recommending that Mayor Perry should write to the government encouraging it “to take appropriate action to improve accountability arrangements in local government”.
The seven who faced possible police investigation were Newman and Negrini, plus Newman’s Labour side-kick, Simon Hall, the former council cabinet member for finance, and council directors Lisa Taylor, Jacqueline Harris-Baker and Shifa Mustafa, plus Hazel Simmonds and Guy van Dichele. All the directors were suspended from their jobs by Kerswell because they had been part of what was then called the “Executive Leadership Team”.
The 2021 Penn Report, commissioned by Kerswell to look into what led to the council’s financial collapse, had recommended calling in the police to investigate after it found what it described as “an almost reckless disregard” of potential consequences of the council’s casino economics approach to “investments” in the Croydon Park Hotel and Colonnades leisure complex.
Page-turner: Inside Croydon published the Penn Report long before Croydon Council did
Having commissioned Richard Penn, a senior Local Government Association figure, to conduct his investigation, Kerswell opted to sit on his findings for more than two years, claiming that she was unable to act for fear of prejudicing other cases and courses of action – which is now shown to be the spectacularly poor legal advice as was suspected all along.
Kerswell’s report to the committee of councillors follows a letter from Detective Chief Inspector Laura Riddell, of the Met’s specialist crime unit. Kereswell’s report is dated December 9. DCI Riddell’s letter was written on October 2.
DCI Riddell’s letter reveals that the Met’s detectives had “concluded that there was no evidence of false accounting or fraud” as long ago as June 2023, just a matter of weeks after being handed documentary evidence by Kerswell.
The council paperwork included the Kroll Report, another costly investigation commissioned by Kerswell, in this case into the botched £70million refurbishment of the Fairfield Halls, what the Met’s letter describes as “a particularly egregious project”.
The DCI also laid out the problems of trying to bring a prosecution for the offence of misconduct in public office. “As you may know Misconduct in a Public Office (MiPO) is a Common Law offence; it is not defined in statute. It carries a maximum sentence of life imprisonment.”
The police reckon that they sifted through 2,609 pages of documents, including two Reports In The Public Interest from auditors Grant Thornton, a rapid review from the Ministry of Housing, Communities and Local Government, a strategic review from PWC, the Penn Report and the Kroll Report, as well as other council papers.
“We also undertook other independent investigatory actions, which I am unable to expand upon here,” DCI Riddell noted, intriguingly.
Slow progress: it has taken Katherine Kerswell two months to share the Met’s letter with elected councillors
The CPS had already advised that misconduct in public office is almost impossible to prove and secure a conviction. And when the Met went back to them with the Croydon paperwork, the government lawyers “reaffirmed that negligence or incompetence are not sufficient of themselves to amount to [Misconduct in Public Office]”.
So according to this, Croydon Council was staffed and overseen by incompetents and buffoons, but not anyone who could be proven to be a crook.
“As a public servant, I have a duty to utilise resources in a responsible and proportinate manner,” the detective wrote in her brush-off letter. “Given the volume of material in this case exceeds millions of different documents including emails, any resulting police investigation would have the potential to last several years… I have decided that police will take no further action at this stage.
“I cannot initiate an investigation of this scale and nature in the knowledge that it is highly unlikely to result in a positive outcome.”
DCI Riddell added that “if further evidence comes to light, it will be duly considered by the police”. Which is nice.
In her report to councillors on the disciplinary committee, Kerswell emphasises, “It is of note that the assessment conducted by the police revealed potential wrongdoing, breaches of statutory duty and incompetence. That, of course, is a matter of public record already.” Although no real thanks to Kerswell.
“The police, however, consider these to be ‘collective failings as opposed to individual instances of MiPO’.”
So four years, thousands of pages of reports and hundreds of thousands of pounds (at least) of public money later, and despite all the firm words of determination to seek action and justice, the people of Croydon are no further forward.
Read more: Negrini’s £437,000 pay-off: who is going to pay it back?
Read more: Newman breaks his silence to tell Mail: I did no wrong
Read more: The ins and outs of quietly getting rid of a council CEO
Read more: CEO Negrini’s long campaign to shut down Inside Croydon
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ROTTEN BOROUGH AWARDS: In January 2024, Croydon was named among the country’s rottenest boroughs for a SEVENTH successive year in the annual round-up of civic cock-ups in Private Eye magazine
They’ve got away with it!
The sanction remaining is at the ballot box as it was in 2022.
Labour needs replacing as the progressive choice in Croydon politics.
Labour have not even apologised for what they did.
Labour’s dismissive view on the bankruptcy and Labour’s role in it is seen in the Croydon East Labour MPs comment that that concern is “a load of nothing.”
https://insidecroydon.com/2024/06/21/two-weeks-early-and-most-candidates-are-conceding-defeat/
Presumably Tony Newman and Simon Hall will now have their “administrative suspension” dropped. Trebles all round!
Please don’t pre-empt our follow-ups…
‘The law is inadequate to bring to justice those who may have abused their positions in local government’. Something good come from what’s happened in Croydon if we can change the law. Not sure how us Croydonians do that. Might have to Google it.
Just been reading on BBC News about Truong My Lan, the Vietnamese banker who has been sentenced to death for fraud and embezzlement. If she can raise $9bn, she’ll stand a chance of serving life imprisonment instead.
If she’d pulled the same stunt here, she’d be sitting in the House of Lords, as if nothing had happened.
The trouble with capitalism is that you eventually run out of other people’s money, but don’t suffer any consequences
So Kerswell is “recommending that Mayor Perry should write to the government encouraging it ‘to take appropriate action to improve accountability arrangements in local government’”.
This is another waste of time. There is nothing useful the government is likely to do.
On the contrary they might take steps which further erode local democracy without in any way providing an answer to the problem of apportioning blame where matters are highly complex and involve many actors.
Meanwhile Government is avoiding scrutiny of its own role in Croydon’s financial problems. Cuts in Government funding for local councils were a factor in the debacle. Not only did this make it very hard for Croydon and other councils to function, but it also led to councils dabbling in speculative property purchases , something that was actively encouraged by the Government at the time.
I was in communication with the Serious Fraud Office regarding this last year:
“I hope you are well. Thank you for your recent referral concerning Croydon Council and apologies for the delayed response. I was awaiting the result of the recent council meeting as to whether to refer the matter to the Police.
We have previously reviewed this matter and have concluded that at this point in time it is not a matter for the SFO to investigate. The SFO investigates and, where appropriate, prosecutes cases of serious or complex fraud, including bribery and corruption. These are cases which, in the opinion of the Director of the SFO, call for the multi-disciplinary approach and legislative powers available to the SFO. The Director in considering whether to authorise an investigation will take into account the actual or intended harm that may be caused to:
the public, or
the reputation and integrity of the UK as an international financial centre, or
the economy and prosperity of the UK
and whether the complexity and nature of the suspected offence warrants the application of the SFO’s specialist skills, powers and capabilities to investigate and prosecute.
At present it has been assessed that there are no clear allegations of fraud/bribery to assess, but rather allegations that council members have not performed their roles as perhaps they should. If information/evidence is received by the SFO that indicates that fraud/bribery/corruption has occurred in relation to the borough and any associated entity, this referral could be re-opened.
I note that the matter has now been formally referred to the Metropolitan Police Service (MPS) for further assessment. They seem the organisation best placed at this time to assess the offences alleged.”
I received that in April last year. It didn’t take long for the Met to stop investigating then. I hate that these characters all seem to have gotten away with the abuse and destruction of Croydon. This injustice doesn’t sit well with me at all as because of them hundreds of thousands of people are having to pay more to get less in return. I’m going to have to stop typing because it’s hard not to feel angry about this…
”So four years, thousands of pages of reports and hundreds of thousands of pounds (at least) of public money later, and despite all the firm words of determination to seek action and justice, the people of Croydon are no further forward.”
I tend to disagree.
We are a lot further forward.
We now know that Pickles left Local Governement in a Pickle.
We knew and forsaw the folly of Perry and Fisher
We know that successive Governments ”loaned” huge sums at unsustainable rates to Councils across the Country and basically allowed the coffers to be plundered at will and without any financial safeguards or sureties it the sums could reasonably be repaid without incurring hardship to the people of England and Wales.
We know they did this knowing, that we the taxpayer were without our knowledge being saddled with huge debts that would blight the Country for generations.
We know there is not one single law that is fit for purpose to prevent this. Nor are there any to act as a deterrance for future similar acts.
We know that within 6 years of the changes no effective oversight took place and those bodies tasked with preventing this kind of acts are toothless and not fit for purpose.
We know that this borough and its people have not and are not served by employed officers worthy of the title Public Servant.
We know exactly how much value to place on promises from elected officers and exactly how powerless they are when faced with the behemoth of Public body self interest.
We know that acting DCI Riddel is an effective user of public resource and hope she is no longer acting. and now confirmed in post. I am sure that Diplomacy, Tact and Spelling will feature in the competence areas and not as a developmental need (unlike someone I look at in the mirror if the mirror catches me by surprise)
We know that there will never be a Public enquiry
And finally we know that on present footings this will be repeated ad infinitum.
Crucially important though is the surreal reality that
We now also know how accurate the comedy series, yes minister is (in relation to the Ministry of local Government, and Council oversight), albeit mixed and thoroughly shaken with a large dose of Fawlty towers, topped with a smidgen of Broooklyn nine nine.
(present incumbant excused on the grounds of not getting his feet under the table as yet)
So one large Negroni sprayed through the sewers and jetted over 397,741 people. £2.5bn + gone up in smokeless air with SFA to show for it – That is roughly £6250 per person.
not even Viridor managed to burn and pollute that much.!
I am amused and bemused – that national papers are full of the fact Louise Haigh did a dodgy, 11 years ago with a few hundred quid phone (vague estimate) and an insurer. So despite serving the penalty for the petty crime and that the act fell under the Rehabilitation of offenders act quite a few years ago – she resigned and National journalism is now badgering the Prime Minister as to what he knew. Really?
Yet this ongoing saga for which all involved escaped being called to account is only reported on Inside Croydon – ?
Where exactly are Newspapers and broadcastors priorities in behaving like this?
I do believe this was predicted at the time by a few and the correct course of action in matters of complete incompetence is to pursue those who have demonstrated incompetence with their professional bodies is to bar them from future roles of financial responsibility and the direction of resources where possible. Ever since the Blair administration abolished the surcharge for financial maladministration in Local Government there is no direct action to be taken against the reckless and downright stupid wasting millions of valuable resources. All these fine words about improving scrutiny is noise to mask effective action. Funny how much money is provided to the Legal Process to acheive absolutely nothing. All Perry has acheived (to distort the proverb) is to waste good money after good in the name of politics during his time as DEMOC, which apparently was to improve the governance of our beloved Local Authority.
But we did get a little less shit. Just a lot less of everything else also.
If you genuinely think that the shower running the show now is less shit, then heaven help us…
I would like to write a long comment on this, but all I can think to say is “Crap”.
A cynic might say this was a true masterclass in crisis management by Kerswell, bravo! Not one individual censured for recklessly crashing the borough’s finances, everything swept neatly under the carpet. Nothing to see here, move along.
Gregg Wallace must be kicking himself he didn’t seek her advice.
Special “Star Comment” award for squeezing in a Gregg Wallace line there, Brian.
This wasn’t Kerswell’s decision, Brian, but DCI Riddell’s.
There’s also the fact that some part-time short-sleeved pillock called Perry has been in charge of the council and Kerswell since May 2022. In February 2023 he said “the residents of Croydon and council staff quite rightly want and deserve to see justice done as they continue to pay the price for those who recklessly destroyed this council’s finances and the reputation of our borough – and I am determined to make sure that this happens for them and for Croydon.”
What’s he going to do now?
Breathe out air a lot warmer than the ambient temperature, sometimes accompanied with strange squawking noises above and below – with a smidgeon of aroma that may for some cause symptoms of mild euphroia to mild nausea in many cases. Some others coming into contact, may experience projectile vomiting!
Also dependent on location – say London road – on taking in the said air whilst exhaling personal air one may experience smiling rictus, glassy eyes, and a bad case of the munchies after.
Lost the will to live in Croydon. Its a filthy dump, run by criminals who happily steal from their residents. What have we got to show for all the Council Tax they have stolen from us? I do believe in karma and they will all get their comeuppance.
Meanwhile I’m living in decrepit sheltered housing where we have repeated call outs just to keep the lights and the heating on. This is housing for disabled people, owned by the council. There is no warden. Everything in here is from the 1980s or early 90s.
With all due respect to your readers Inside Croydon, I think everyone has failed to understand the evidential burden necessary to bring successful proceedings in the English courts for misconduct in public office.
Which is why misconduct in public office proceedings are almost always never brought and rarely successful when they are instigated.
The statement in your article from the crown prosecution service that negligence and incompetence in and of themselves are never sufficient to amount to misconduct in public office is a correct statement of the current law.
Making poor business decisions because one lacks business nous and are incapable of seeing where the economy is heading isn’t actionable under our legal system.
On a day to day practical level under our legal system, real life is rarely like a legal novel or a film, where there is a blatant “smoking gun” that points a jury ineluctably to the guilt of the defendant. “Smoking gun” evidence happens rarely in practice.
I have said this before and I say it again. I would like the repealed legislation that allowed councillors and other council officials to be liable to be surcharged to be reinstated. The surcharge regulations were not perfect. However, they acted as a mechanism to make councillors and other officials “think twice” before authorising and embarking on a course of action that subsequently proved to be ill-advised.
However, as we have seen both in the UK and the US, the makeup of our political class is such that they are reluctant to be accountable properly for anything.
Reading about the history of the surcharge and its abolition. It looks to me that it is unlikely the losses our borough has incurred would be recovered if the surcharge was still in place as councillors would be liable to cover the losses, hundreds of millions in Croydon’s case, which they’re unlikely to have. It would be a deterrent though as disqualification from being a councillor would come into play. From what I’ve read the surcharge only applies to councillors and not council employees appointed by councillors.
It does seem that there is no accountability for plunging councils into bankruptcy except at the ballot box. Any senior council worker worth their salt would be expected to want to see where failings were made and how things could have been done better, and the fact that they all just stayed quiet and didn’t explain their actions speaks volumes.
We need new ways to manage incompetence and corruption by people working in public office. A good start would be to encourage council staff whistleblowers, as less senior staff will always spot incompetence and corruption being enacted by their superiors but will very often feel unable to act on their concerns through fear of losing their jobs/ruining their careers.
Yet when whistleblowers blow the whistle, they get ostracised or sacked, or both.
And when they go to an Employment Tribunal, they have to fund their own case while the council defends the indefensible by using the deep pockets provided by Council Tax payers…
Very true.
In a situation where there is potentially organised crime involved with the misuse of public funds, many people would be too afraid to report it because of the fear of repercussions outside of work to them or their family. Sounds a bit far fetched I know, or is it?