CROYDON IN CRISIS: Jo Negrini refused to be interviewed, all Colm Lacey’s emails got wiped and former cabinet members Newman, Scott, Butler and Hall were never spoken to in person as part of the £310,000 investigation. By STEVEN DOWNES
Late legal threats from one of the figures at the centre of the scandal of Brick by Brick and the botched refurbishment of the Fairfield Halls almost blocked the belated publication of a key report yesterday.
Right to the very last, the Kroll Report, commissioned from external investigators to look into the lack of competence, transparency and accountability at Croydon Council, was plagued by a lack of competence, transparency and accountability.
The 260-page report, looking specifically at how the refurb of the council-owned arts venue could have ever cost £73million, has been gathering dust on the (virtual) desk of Katherine Kerswell, the council chief executive, since April 2023.
But after the Met Police dismissed any chance of an investigation into the council’s financial collapse (“very disappointing”, according to Kerswell), on Monday the CEO finally allowed a committee of elected councillors to agree to release the Kroll Report.
Bricking it: all Colm Lacey’s emails at Brick by Brick got wiped
That was set to go ahead yesterday.
But it was not until just before 6.30pm last night that Kerswell sent council staff a notification that the report was, at last, in the public domain. “It makes for uncomfortable reading,” Kerswell warned.
It had been delayed because Kerswell and the council’s legal department crapped themselves when they got a long letter from lawyers representing one of the authority’s former directors, unhappy over what the report says about their client. Poor lamb.
In fact, all the major players in the affair should be unhappy about how they are characterised by the Kroll Report, as it details the blundering and mismanagement that dogged the project, which was given a £30million budget which was out of date and known to be inadequate five years before work ever began on updating the arts venue.
On Kerswell’s say-so, the cash-strapped council paid Kroll £310,000 for their “investigation”, which followed up on the findings of the 2022 Report In The Public Interest on the Fairfield Halls project by auditors Grant Thornton.
Yet Inside Croydon has discovered that even council cabinet members who were directly involved in the Fairfield Halls project were never even approached for interview by Kroll. Several others refused to collaborate with the inquiry.
In one notable case, Kroll discovered that all email records and the work laptop of Colm Lacey, the managing director of Brick by Brick, had been wiped or could not be found. The lost emails were all because of “employee error on their side”, according to Brick by Brick’s IT provider. Nothing suspicious about that, whatsoever
Lacey was among several key figures who refused or withdrew from being interviewed by Kroll’s investigators.
Refused to be interviewed: Jo Negrini has not always been shy
Others who were not questioned in person by Kroll included Jo Negrini, the former council CEO who had appointed Lacey to the Brick by Brick role; Alison Butler and Paul Scott, the husband and wife Labour councillors in charge of housing and planning at the council from 2014 to 2020 (Butler did not even bother to respond to Kroll’s approach); Tony Newman and Simon Hall, the former council leader and cabinet member for finance; Shifa Mustafa, the council director in charge of development and a member of the boards of both the Fairfield Halls and Brick by Brick; Richard Simpson and Lisa Taylor, the directors of finance at the council; nor Jacqueline Harris-Baker and Shaun Murphy, the council’s two most senior lawyers during the period.
According to Kroll themselves, they didn’t even bother to interview anyone from Gleeds, who were hired by BxB as project managers, nor building contractors Vinci.
Which all seems to leave a gaping hole in the evidence accrued, and credibility of, the Kroll Report, which carries the title “Project Dillon” (named, perhaps, after the very dozy rabbit in The Magic Roundabout?).
Kroll began their work in early 2022. Almost six months later, they had yet to get round to conducting interviews with some of the most important figures in the investigation.
According to Kroll, three of their potential interviewees pulled out in October 2022 “citing a lack of confidence in the process”, just because Inside Croydon had published the leaked Penn Report. The Penn Report was a previous investigation, another which Kerswell had sat on for almost three years, stalling on all of its recommendations.
Any excuse: former cabinet member Paul Scott withdrew from being interviewed by Kroll
Kroll says that the three who used that excuse were Jo Negrini, Colm Lacey and Paul Scott.
Grant Thornton, in RIPI2, had indicated four instances of suspected fraud or wrong-doing, and they highlighted how Croydon Council had ducked European rules requiring competitive tendering for public works by handing a licence to Brick by Brick to carry out the Fairfield Halls refurbishment.
But in their report, Kroll states, “While we have not found evidence of any fraud or direct personal gain, our review has identified a number of instances where information was seemingly deliberately withheld from, or mischaracterised to, cabinet and a number of conflicts of interest and issues around [Brick by Brick] independence in relation to [Croydon Council].
“These findings reflect the concerns raised by the external auditor in RIPI2, who stated that, as a result of there being no properly executed contractual or loan documents in place, stated view of [Brick by Brick] as an independent company was open to challenge, and that the lawfulness of payments made to [Brick by Brick] in relation to the project were called into question.” Just not enough for the Met Police or the Serious Fraud Office to investigate.
Sutton view: Richard Simpson is due to be subject to a complaint to his professional body
The authors of Project Dillon soon make the case that this was all a case of cock-up, rather than conspiracy.
Referring in their report to Brick by Brick as “BBB” and the council as “LBC”, Kroll states: “At the time of the decision to grant BBB this project, the company had only just become operational (in January 2016) and had not yet built a single property.
“It had no track record of delivering any projects, and did not have any experience delivering any projects with the specialist nature of refurbishment of an entertainment venue.
“Due to the nature of the company structure between LBC and BBB, it was decided to offer the wholly Council-owned property to BBB under a license [sic] to deliver the refurbishment and therefore no competitive procurement was carried out to assess suitability of the delivery body.”
They add, onerously: “The risks of not going through a formal procurement process and allocating such a complex project to an untested company were never drawn out for elected members in the June 2016 cabinet report.”
Which sort of suggests that”elected members”, meaning councillors, were unaware of the risky nature of arrangement or didn’t ask questions about it. Katharine Street sources – and people not on Kroll’s interview list – have told Inside Croydon that they did indeed try to raise questions about the project but were blocked from doing so in Town Hall meetings and at Labour group meetings.
Kroll, however, suggests that council staff did raise red flags around the deal, and that they were over-ruled by Negrini.
Fraud focus: no one can explain how Brick by Brick spent £73m on the ‘Fairfield fiasco’
“From interviews with LBC staff outlining the decision-making processes… it appears that Ms Negrini had ultimate responsibility for the decision to recommend BBB to the project.
“We have not identified any formal documented decision detailing the rationale for this decision…”, a common theme to Kroll’s investigation work, “… or the basis on which it was made and we were unable to confirm this with Ms Negrini…
“We understand, however, from review of later BBB board minutes, that BBB was seen as the only option for delivery of the project.”
The council’s position – led by Scott, Hall and Butler – was to subsidise the work on Fairfield Halls from the profits Brick by Brick was expected to make on a large housing scheme on neighbouring College Green.
According to Kroll, at least some of Brick by Brick’s external directors saw the risks inherent in this arrangement as far back as 2016. “Jeremy Titchen, a former non-executive director of BBB, raised concerns as to the viability of BBB going forward with the project… Mr Titchen advised Mr Lacey that the project was high-risk and susceptible to overruns, which would have impacted the profit element of the College Green scheme.
“Mr Lacey responded to Mr Titchen’s concerns by effectively confirming them, saying the profit element was ‘marginal at best’.”
Brick by Brick, of course, never built a single home on College Green.
Conflicts of interest: former council director Shifa Mustafa was not interviewed for the Kroll Report
In a statement issued last night, the council maintained Kerswell’s line that the only possible recourse against those responsible for crashing the borough’s finances was through the Common Law offence of misconduct in public office.
Monday’s appointments and disciplinary committee, the council said, “… agreed that the Kroll report should be published – in the same way that all previous reports have been”. By which they must mean years late.
With the Met not interested in investigating, and Mayor Jason Perry abandoning his stubborn pursuit of Negrini for her “golden handshake” pay-off (“The committee agreed that it was not cost-effective to continue”, the council said, almost two years after they had been advised as such by external legal counsel), it appears that four years after the council’s financial crash was discovered, no one will ever be held to account.
“The committee was unanimous that the real frustration was with the majority of members on the council’s former appointments committee who should never have agreed to the settlement payment in the first place,” the council noted – without mentioning that one of the members of that committee at the time was none other than Mayor Perry himself.
Written response: former council leader Tony Newman was another not interviewed in person by Kroll
On the committee that day before the 2020 August bank holiday were Newman, Butler, Hall and Alisa Flemming, who remains a Labour councillor. It is understood that Conservative councillor Tim Pollard and his group deputy, Perry, voted against the Negrini payment.
That is a matter which is clearly a bit awkward for Perry, who was on the Croydon appointments committee that first hired Negrini.
As Inside Croydon first reported nearly three years ago, the decision to hand the £437,000 pay-off to Negrini was made because of the complete breakdown of her working relationship with council leader Newman.
Yet it was Newman who chaired the meeting which proposed giving Negrini the pay-off, a meeting that has been declared “unlawful”.
In her email to staff last night, Kerswell described the August 2020 committee meeting as “a total failure of governance”.
Kerswell wrote: “The way in which the former chief executive’s payment was agreed can never happen again…” Although we only have Kerswell’s word for that.
“There was no committee report given to members for that meeting, a refusal to allow the two members (one of whom is the current executive mayor) who voted against, having that recorded in the minutes and the meeting was chaired by a councillor who had a direct conflict of interest with agreeing to the payment.”
And while those implicated in the whole, multi-million-pound mess may deny any wrong-doing or grumble about the contents of the various reports, some, such as Richard Simpson, now the head of finance at Sutton Council, may come under further scrutiny from their professional bodies.
As the authors of the Kroll report highlight, “For both [Brick by Brick] and [Croydon Council] to have undertaken significant transfers of cash without any executed agreements in place indicates a lack of independence, weak financial controls and a significant degree of commercial risk…
“Mr Simpson and Ms Taylor, in their capacity as Section 151 officers and stewards of LBC’s finances ought to have been aware that no executed facility agreement was in place for the project.”
Simpson was in post until January 2019. “During this time, [Croydon councillors] were not informed about the projected overspend of the project, final audited accounts were not presented to [councillors]… and no changes to the expected dividend and interest payments from [Brick by Brick] were made until the February 2019 budget…”
And despite £200million of loans from the council to Brick by Brick, the house-building company never made a penny profit. Or as Kroll puts it: “It should be noted that ultimately no dividend payments were ever made.”
Read more: After four-year delay, council to submit complaint reports
Read more: Simpson and the Sutton similarities over £100m property loan
Read more: Police drop all investigations into council’s financial collapse
Read more: More bad news for Perry over the Negrini ‘golden handshake’
Read more: CEO Negrini’s long campaign to shut down Inside Croydon
Read more: Watchdog suggests Negrini’s pay-off may have been unlawful
Read more: Newman’s ‘sickening’ defence of Negrini’s £400,000+ pay-off
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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
Surely by following the money trail of where the £200 million was spent would shed light on who benefitted from the arrangement between Brick by Brick and our council.
You might think that, and hope that would be the case in a properly managed organisation, Moya.
But, as the council is fond of saying, This Is Croydon.
From the very first RIPI by Grant Thornton in October 2020, through to this Kroll Report, it is noted repeatedly how there are no proper records, minutes or accounts.
All of an MD’s emails vanishing into thin air? Yep.
A council CEO deliberately changing reports to councillors to disguise cost overruns? Yep.
No reports before doling out £437,000 golden handshake? Abso-bloody-lutely.
What emerges from Kroll is that Vinci were appointed as contractors with a £25m contract. So just what happened to the other £50m – Kerswell and Perry have never been able to tell us, despite all their various reports.
Oh, so our council handed money to Brick by Brick to spend but the people running Brick by Brick didn’t keep any accounting records. Payments must have been made through bank accounts so the banks should have a record. I guess you need a police investigation to get hold of that kind of information.
But the police have decided that there’s nothing to investigate…
Just because the Police won’t prosecute for crime offenses, does not prevent civil proceedings by LBC against those individuals / companies who have breached their contracts.
This is a complete joke and whitewash. I suspect it was allowed so as not to embarrass people and people still in post. We the chargepayers are the ones who pay the Pipers, all of them. I am an outsider who has eyes within the Councll to a degree. No one in the Council, their lawyers etc comes out of this smelling of roses.,
Re “the Kroll Report, which carries the title “Project Dillon” (named, perhaps, after the very dozy rabbit in The Magic Roundabout?).” Oop north, calling someone a “dillon” implies that they are something of a winker (misprint) or duckhead (ditto). Very apt when investigating the goings on at Croydon council.
I don’t suppose we’ll ever find out what happened to the Steinways (‘to lose one piano is unfortunate, to lose both looks like carelessness’) or the Peter Youngman artwork, or that anyone culpable will face any negative consequences for their role in flushing our money down the pan
Arfur, if you take a small stepladder, and peek over the hoarding, you will see that the Peter Youngman artwork is laying in pieces on the abandoned wasteland area that was once a well kept College Green (there is no Steinways though, I have checked!). Interesting to also note that Kroll never bothered to even have at least a cordial chat with anyone from Vinci, seeing as they would have been the end recipient of the bulk of the £73 million? Maybe Vinci are using some of that nice profit to help fund their current takeover of FM Conway, Croydon Council’s term highways maintenance contractor? Small world isn’t it!!
the sculpture is still there but broken? 🙁 pictures of it in its glory here in IC article.
https://insidecroydon.com/2021/08/29/council-has-no-answers-over-missing-fairfield-halls-sculpture/
I don’t know what’s worse, the original corruption or the current whitewashing of it.
Hundreds more thousands spend on a report and not one single person held accountable. Kerswell, who got a 420k pay off after 16 months saying “The way in which the former chief executive’s payment was agreed can never happen again…” beggars belief. It was never in her interest for that money to be paid back as her former Council might have done the same.
The bank accounts of many of the people involved here should have been checked. That money went somewhere.
Thank you to Inside Croydon for your amazing and conscientious hard work in documenting these failures. It is because of the LBC’s incompetence and worse that we pay excessive local taxes for dismal services. The depressing thing is that I see no end to it.
Cental government, Whitehall, has oversight of councils. Clearly those civil servants (servants??!!) Have been sitting on their hands for years. The public sector is a ruinously expensive fiasco.