Libel and Pension scandals - Auditor issues damning reports

Updates 07.35; Dyfed-Powys Police said: “We can confirm that we are aware of the reports issued by the Wales Audit Office, and while the matter hasn’t been referred to us, we are in discussions with the Auditor and will be making an assessment in relation to any appropriate action by the police.” Western Mail

This morning' articles; The Times (£), BBC Wales, South Wales Guardian, Carmarthen Journal and interviews with Rhodri Glyn Thomas AM, Janet Finch Saunders AM and Cllr Peter Hughes Griffiths on BBC Wales news and radio. All calling for heads to roll.

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The Appointed Auditor (Wales Audit Office), Anthony Barrett, has today published two damning Public Interest Reports relating to Carmarthenshire County Council. One concerns the libel indemnity and the other, the pension payment. They both relate to the Chief Executive, Mark James CBE.

The full press release can be found at the end of this post. There is also a very strongly worded press release from Jonathan Edwards MP and Rhodri Glyn Thomas AM (Plaid Cymru) above it.

A similar report has also been published today concerning the pension arrangements in Pembrokeshire County Council.

The reports have found all the issues to be unlawful.

For reasons that I'm sure you'll understand, given my personal involvement, I will concentrate on the libel indemnity for now.

The auditor has found that it was unlawful in principle and also because of the circumstances of the Executive Board meeting where it was granted. The main findings were that;

"The decision taken by the Executive Board was unlawful as, in view of the specific publications in Articles 6(3) of the 2006 order, the Council is not authorised by statute to grant an indemnity in respect of bringing a claim or counterclaim for defamation. The Council may not rely on section 111 of the 1972 Act to avoid that limitation on its powers 

There were failings in governance arrangements and processes adopted by the Council 
The decision was unlawful as the Chief Executive participated in the decision-making process whilst having a disqualifying personal and pecuniary interest in the decision

The decision failed to take into account relevant material considerations (Wednesbury unreasonable)

Recommendation;

The Council should rescind the decision and withdraw the indemnity granted to the Chief Executive."

Back in 2008 the council's constitution was changed to include the 'Libel cost amendment' This gave Carmarthenshire council the unique power to bring and fund claims and counterclaims for libel on behalf of it's officers.

The council said at the time that it had received expert legal advice recommending the amendment despite the move being contrary to a government Order, the auditor refers to the Orders in his report.

Today's report states that this advice (which has never been disclosed by the council) actually urged extreme caution, and the question whether powers such as the Local Government Act 1972 overrode the government Order were "merely arguable".

Today's report goes on to say; "The cautious and reserved terms in which Counsel expressed his opinion to the Council are not reflected in the report to the Executive Board. Instead, the report represents his advice in unequivocal terms – that the indemnity can be granted but only in exceptional circumstances, although these were not defined." 

It seems that this was also how the legal advice was presented to councillors back in 2008.

I feel that today's report fully justifies the concerns which I have raised over this issue for a number of years.

It is my view that the 'Libel cost amendment' should be withdrawn from the Council's Constitution forthwith.

With regards to the meeting and Mr James' failure to declare an interest, the auditor was critical of the council's submission that prior to the official meeting, the Executive Board held an hour-long 'pre-meeting'. As I have mentioned before, this occurs before every Executive Board meeting.
The auditor said;

"There is no formal record of this pre-meeting which does raise concerns over the openness and transparency of the decision-making process. The minutes of the Executive Board meeting on 23 January identify that the actual formal meeting took only 15 minutes (to consider three items of business). This suggests limited discussion of the matter in the formal meeting but the minutes disclose that the decision was taken at the formal meeting.

I have considered the views of the Council and based on the evidence provided, I am satisfied that the Chief Executive was present at the Executive Board meeting, did not declare an interest in the item on the agenda, and therefore in my view took part in the decision-making process whilst having a disqualifying financial interest in the outcome of the decision. In my opinion, the decision of the Executive Board is unlawful for this further reason."

The Chief Executive, Mr James still appears to be fighting the appeal on the counterclaim. It is also reasonable to assume that the counterclaim would never have gone ahead without the public funding. As the report states, as the matter is ongoing the final costs are unknown.

The report is also contrary to the views expressed on the public funding of  by Justice Tugendhat's in his judgment on the case as to whether or not the counterclaim was an abuse of process.

The PIR concerning the pension payment is equally damning and is summed up in the press release below.

Readers may draw similarities from these reports to those relating to recent events at Caerphilly Council.

We will have to wait and see what unfolds over the next few days in relation to all those involved, and I will update this post and provide further comment as and when. I will link to all the reports as soon they appear online.

Plaid MP Jonathan Edwards and AM Rhodri Glyn Thomas have issued the following statement and have called for instant dismissals;

Politicians respond to damning Wales Audit Office reports into Carmarthenshire County Council

Senior officers and elected leadership must go, say Plaid Cymru MP and AM 

Following the publication of two damaging Wales Audit Office reports into the indemnity and pension arrangements of Carmarthenshire County Council’s Chief Executive, Mark James, Plaid Cymru politicians Rhodri Glyn Thomas AM and Jonathan Edwards MP have issued the following statement.

Assembly Member Rhodri Glyn Thomas said:

“There is no way in which the council can gloss over what are two significantly damaging reports.  This is a very dark day for Carmarthenshire, a dark day for democracy in Carmarthenshire, and is an example of what happens when you have a very weak executive and a council controlled by powerful unelected officers. 

“The decision taken by the political leadership of the council to approve an indemnity for the Chief Executive was based on a sexed-up dossier that did not reflect the legal advice provided.  The gross misconduct of the council officers involved in drawing up the report has brought the council into disrepute and should be countered by instant dismissal. 

“Councillors were misled into spending taxpayers’ money doing something the Council was to all intents and purposes cautioned against.  Members of the Executive Board have been exposed as incompetent in safeguarding public money and inept in holding highly-paid officers to account.  They further approved unlawful expenditure to suit the tax arrangements of the Chief Executive.

“The reports reaffirm our grave concerns that Carmarthenshire council has been gutted of all democracy as pre-meetings of the ruling Labour-Independent Executive Board take place behind the scenes before tokenistic rubbing stamping exercises follow in public, if at all. 

“To restore public confidence there must be political accountability.  The Leader of the Council and former leader of the council should accept responsibility and do the honourable thing to enable a political reboot. 

“Plaid Cymru has worked hard over the last year to introduce greater accountability into the remuneration packages of local authority chief executives, and has been successful in seeing changes to salaries being scrutinised by the independent remuneration board. 

“We’ve done what we can to bring greater transparency on payments to senior council officers.  The Welsh government must now get a grip of the situation.”

Member of Parliament Jonathan Edwards added:

“For almost four years we have raised concerns with both Welsh & UK governments about the legality of the council’s indemnity for the Chief Executive’s counterclaim.  The Welsh government’s refusal to intervene in a council run by its Labour colleagues has seen Carmarthenshire taxpayers’ subjected to these unlawful expenditures when this could have been stopped.

“The unlawful indemnity and unlawful pension arrangements have seen over £55,000 of public money spent for the benefit of the Chief Executive who, on the basis of these reports, can no longer continue in his role.

“We agree with the Auditor that the indemnity should be withdrawn and we believe the almost £30,000 spent on this indemnity should be paid back in full.

“The Executive Board has acted wrongly in both instances – approving decisions worth tens of thousands of pounds without raising any formal questions or concerns.

“We pay tribute to the Appointed Auditor for his thorough report and his determination in bringing these issues into the public domain when Carmarthenshire Council had the audacity to tell him to keep his nose out. 

“The Welsh government should immediately put the council into special measures to enable a new cross-party coalition to be set up to bring an end to this dark chapter in the history of local governance in Carmarthenshire. 

“We call upon all Labour and Independent councillors whose parties run this council to look seriously at these reports and join us in restoring democracy to the county.  Carmarthenshire needs a complete reboot and new political leadership which it has so desperately lacked.   (Link here) 

Here is the full press release issued today, 30th January by the Wales Audit Office;

CARMARTHENSHIRE COUNCIL’S PENSION AND LIBEL PAYMENTS ‘UNLAWFUL’  

Appointed Auditor publishes two separate reports in the public interest 

PRESS RELEASE  

Carmarthenshire County Council acted 'contrary to law' by making a decision that allows senior officers to opt out of the Local Government Pension Scheme (LGPS) – to avoid potential tax liabilities – and be paid a „supplement‟, equivalent to their pension contributions, to enable them to make their own arrangements for retirement. It also acted unlawfully when it decided to grant an indemnity to the Chief Executive to bring a libel counterclaim against an individual. 

The Appointed Auditor, Anthony Barrett, today publishes two reports in the public interest to highlight his concerns on both matters. 

The Appointed Auditor's report on senior officers' pay and pensions concludes that the decisions were unlawful on a number of grounds: 

· The Council does not have the power to remunerate staff to mitigate the effect of pension‟s legislation

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· In making the decision, relevant considerations were not taken into account (in breach of Wednesbury principles). 

· The Council failed to have due regard to the public sector equality duty. 

· The decision amounted to indirect discrimination. 

A senior officer who had a disqualifying personal and pecuniary interest in the decision, participated in the decision making process.

Last month, the Council rescinded its decision to offer a pay supplement in lieu of pension contributions and announced that no further payments will be made to the Chief Executive from January 2014. 

Over £27,000 was paid to the Chief Executive under the Scheme since 2012.While the Council‟s Executive Board does not agree that the decision was intrinsically unlawful, it did accept that there may have been shortcomings in the procedures adopted. 

In his report on the indemnity for the libel counterclaim, the Appointed Auditor concludes that the Council does not have the legal powers to make such payments and there were inadequacies in the processes adopted by the Council when making the decision. 

The Council has paid out over £26,000 in external legal costs since 2012 under the decision to indemnify the Chief Executive. The libel counterclaim is still on-going and it is unclear what the final external legal costs to the Council will be. 

Appointed Auditor and Assistant Auditor General, Anthony Barrett, said today: 

“Carmarthenshire Council has acted unlawfully on two fundamental issues, both of which the public need to be fully aware of. The authority has taken decisions and used taxpayers money in areas that they do not have the legal powers to do so. I welcome the fact that the Council has rescinded its decision over the pensions issue, it now needs to do the same in relation to the libel indemnity granted to the Chief Executive. 

It is also of vital importance that the Council addresses procedural weaknesses in its decision making, as highlighted in my two reports today, so that it exercises its discretion and authority properly on such important matters.”

ENDS 

Note; After a report in the public interest is issued, the Council is required to consider the report at a full meeting of the Council within one month of the date of issue. At the meeting, the Council must decide whether the report requires it to take any action; whether the recommendations in the report are to be accepted; and what action (if any) to take in response to the report and recommendations.