After almost five years, not a single person in Croydon has ever been held responsible for their parts in the council’s financial collapse, the scandal of Brick by Brick or the Fairfield Halls refurbishment fiasco. But in Surrey, two former senior council officials are to face an investigation by the national accountancy watchdog.
Woebegone Woking: the small borough council in Surrey has debts of more than £2bn
Most of Croydon’s “investigations” were kicked into the long grass by the council CEO, Katherine Kerswell, with report recommendations delayed for years and a fraud investigation commissioned from contractors who conducted few interviews with the prime suspects, and who in any case never had the necessary powers to prove fraud.
But in Woking, which racked up more than £2billion in debt through speculative property developments, The Guardian has reported that former chief executive Ray Morgan and ex-finance director Leigh Clarke are both to face probes by the Financial Reporting Council, which oversees the accountancy profession.
The previously Conservative-led council issued its Section 114 notice, effectively declaring itself bankrupt, three years after Croydon, in 2023, after ploughing vast sums of borrowed money into skyscrapers, a luxury hotel and other commercial investments.
The Guardian calls it “one of the biggest financial failures in local government history”.
The FRC investigation into Woking is expected to be announced within weeks.
Much like Croydon, Woking has been under the control of a government-appointed team of commissioners since its S114 notice was issued.
Woking, along with local authorities across the country, had been encouraged to borrow millions of pounds for investment schemes by the Conservative-LibDem coalition government, in which Chancellor Gideon Osborne applied austerity measures, shifting tax burdens from central to local government.
“More English councils declared effective bankruptcy in the past three years than in the preceding three decades,” The Guardian reports. Croydon, Woking, Birmingham City Council, Nottingham (where Kerswell had a spell as an interim CEO in 2020), Thurrock and Slough have all suffered the consequences of seeking to replace central government grants with commercial income.
Tory basket case: Thurrock’s multi-million-pound dalliance in solar farms crshed its finances
The Financial Reporting Council is already conducting an investigation into Sean Clark, Thurrock’s former finance chief, over his role in his employers’ failed “investment” policy, involving £500million of public money and some very didgy-looking solar farms. Thurrock, like Woking, was under Conservative control when this all happened.
These more pointed investigations at two local authorities which suffered financial collapses after Croydon’s might prompt some in south London to ask just why the FRC has never started similar investigatory action in respect of former senior council staff or councillors.
The Woking situation is also relevant to Croydon in other ways, too.
Surrey County Council is reported to have approached the government to write off about £1billion-worth of Woking’s debt, to help smooth a merger between the area’s district and county councils.
A write-off of part of Croydon’s £1.4billion debt has been the council’s preferred option to reduce its steepling liabilities. But despite lobbying first the Conservative government and more recently Labour ministers, Tory Mayor Perry has so far been unsuccessful.
As the Grauniad put it: “Writing off Woking’s debt would result in taxpayers from across the country being asked to shoulder the burden of a failed investment spree in the affluent Home Counties after years of austerity for many councils in poorer English regions.”
Fraud focus: no one can explain how Brick by Brick spent £73m on the ‘Fairfield fiasco’
The 260-page Kroll Report, looking at how the refurb of the Croydon Council-owned arts venue could have ever cost £73million, was finally released to the public last month, after gathering dust on the desk of Katherine Kerswell, the council chief executive, since April 2023.
The Kroll Report followed the findings of the 2022 Report In The Public Interest on the Fairfield Halls project by auditors Grant Thornton, and the 2021 Penn Report, which was also withheld and delayed by Kerswell.
Grant Thornton, in RIPI2, had indicated four instances of suspected fraud or wrong-doing over the Fairfield Halls refurbishment, 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 no one at Fisher’s Folly, nor Mayor Jason Perry, despite his election promises, ever took these findings forward in an effective manner.
Read more: Kroll Report provides no answers to £73m Fairfield fiasco
Read more: Simpson and the Sutton similarities over £100m property loan
Read more: Police drop all investigations into council’s financial collapse
Read more: CEO Negrini’s long campaign to shut down Inside Croydon
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