Brent Council and Cara Davani – The Last Post...(and, How much should the Council expect to pay for a bucket of whitewash?)

Cllr. Muhammed Butt and Cara Davani
(from a Brent Council photograph celebrating International Women’s Day, March 2015)

Guest post by Philip Grant (please note as this is a long article it has been posted with a continuation page. Click at the end of the article to read all.

On 5 December 2017, three hours before the start of an Audit Advisory Committee meeting, Brent Council’s auditor issued his decision letters on the objections against its 2015/16 accounts over the payment of £157,610 to its former HR Director, Cara Davani. I will ask Martin to attach a copy of the decision letter I received, so that it is in the public domain for anyone to read if they wish to. READ IT HERE

In summary the auditor decided that the payment was not unlawful and that he would not issue a Public Interest Report over the issues the objectors had raised. He did, however, say that ‘there are a number of governance areas that we consider that the Council should strengthen’, and made several recommendations, mainly over keeping formal written records of legal advice given and of meetings (a familiar problem at Brent!).

I am sure that the auditor believes he exercised his professional judgement properly in coming to his decision. According to his “progress report” ahead of the 5 December meeting, he had also submitted his ‘statement of reasons on the objection’ to his Regulator, PSAA (Public Sector Audit Appointments Ltd, a wholly owned subsidiary of the Local Government Association) for comment.

Maybe I am a “loser” who finds it difficult to accept that he was wrong. But I can’t help feeling that I, and the four other local people who objected to the £157k payment, have been let down by a system which is meant to ensure that local electors can challenge the potential misuse of funds by their Council through a ‘fair and impartial process’. I cannot change the auditor’s decision, but I can set out why I think it was wrong. 

At the heart of the objections were two decisions, both made by the then interim Chief Executive, Christine Gilbert. One, in May/June 2015, was to make the £157,610 leaving payment to Ms Davani. The other was not to take disciplinary action against Ms Davani in September 2014, and I will look at how the auditor dealt with that decision first.

Decision not to take disciplinary action against Cara Davani following the Rosemarie Clarke Employment Tribunal judgment in September 2014:

In the course of his “Findings”, the auditor says:

‘I conclude there is nothing to persuade me that this decision was not within the range of broadly reasonable decisions open to the Council.’

In fact, as all five objectors had pointed out to the auditor, the decision was not even ‘broadly reasonable’; it was so unreasonable that no reasonable person, or Council, in possession of the facts could have made it. The auditor had started his paragraph by saying:

‘Whether or not disciplinary procedures against Cara Davani should have been taken following the Employment Tribunal judgment was a decision for her line manager, Christine Gilbert, having regard to internal policies and guidance and taking account of the facts leading up to, and arising from, the hearing. We have been informed there is no documentation recording the decision on this.’

One of my fellow objectors, with experience of employment matters, had told the auditor that the evidence of Ms Davani’s actions in the judgment was ‘sufficient …to justify any reasonable employer to summarily dismiss Ms Davani for gross misconduct.’ The auditor had been given first hand evidence of Carolyn Downs, Brent’s current Chief Executive, admitting privately to the objectors in December 2016, that the Council should have taken disciplinary action against Ms Davani in September 2014, and that if she had been Chief Executive in those circumstances, it would have done.

The auditor had also been shown that Brent’s own Disciplinary Policy and Procedure documents made it clear that if an employee is found to have committed "gross misconduct", this will normally result in dismissal. The types of action by an employee 'which would result in disciplinary action for gross misconduct', as set out  in those documents, included four examples of actions by Ms Davani, made as findings of fact by the Tribunal in its judgment.

Because Christine Gilbert had not kept to Brent’s own policies and guidance when deciding not to take disciplinary action, it was pointed out to the auditor that she had also shown a number of the examples of actions which could have resulted in disciplinary action against her for gross misconduct. So why had she not taken the proper action against Cara Davani, and why was there ‘no documentation recording the decision’?

My submissions to the auditor in August 2017 gave the reasons why, but his decision letter dismisses these, merely saying: ‘whilst I have noted your allegations, I have not seen any supporting evidence.’ I had provided evidence, including text from a written statement made to me in 2016 by a “Civic Centre insider” who was involved at the time, alleging that Ms Gilbert and Cllr. Muhammed Butt had considered the matter in isolation, that they were actively protecting Cara Davani, and that they communicated over it through their private email accounts so that there would be no documentary evidence in the Council’s records.

I had to keep the name of the “insider” secret, as that person did not trust their allegations would be properly investigated, and feared the possible personal / career consequences of having their identity disclosed. I accepted that this meant their evidence was only “hearsay”, but in the absence of any documentary evidence from the Council, their evidence on the matter was also “hearsay”, so why was their version preferred?

Decision to pay Cara Davani £157,610 as “compensation for loss of office” in 2015:

The auditor concludes his “Findings” on this point by saying:

‘There was nothing in the documentation I have seen to indicate that any amounts paid to Cara Davani were unlawful.’ 

He had seen the original documentation held by Brent Council from May and June 2015 in relation to this payment, and received representations on it from the Council, but had not allowed me or the other objectors to see it.

I have already covered the reasons why this ‘material information’ could and should have been shared with us, so that we could comment on it fully, in a previous guest blog LINK . The information included not only legal advice, but also other correspondence and documents which would have set out what information was given to the QC, and what was not, on which the advice the Council relied on justify the payment was based. It was made clear to the auditor that it was impossible for us to support our objections properly without sight of that information.

The auditor’s response to this, in the “Background” section of his decision letter, was:

‘I am satisfied that the provisional views letter sent to you on 3 August 2017 read with the Audit Committee minutes and Conrad Hall’s letter dated 14 December 2016 gave you sufficient information in order to have provided comments to me, such that there has been no unfairness in not sharing the advice.’

In effect, he is saying that the primary documents are not ‘material information’, but that the interpretation of those documents given to him by a Brent Council officer is, and that it:

‘… contains the material facts on which we have relied upon when reaching our decision. For this reason and given that the Council has not waived its legal professional privilege, I have not shared the actual documents containing or recording the legal advice with you.’

In other words, the auditor has reached his decision based on what Brent Council has told him, and has not shared with the objectors any actual documents related to the payment we objected to because Brent Council did not want him to. I am sure any reasonable person will understand why I believe that the process by which the auditor reached his decision was neither fair, nor impartial.

As the auditor would not allow us to see the “material documents”, the objectors had to make their “further comments” on the best information available to them. In his “Background” section the auditor said:

‘Following the Employment Tribunal above, there was a breakdown in trust and relationships between some Members of the Council and Cara Davani.  … This was considered to be an ongoing reputational risk to the Council and that it was difficult to see how Cara Davani could be effective in her role as Human Resources Director, working with Members, going forwards.’

The reputational damage had already been done in September 2014, with the facts about the appalling treatment of Rosemarie Clarke by the Council and Cara Davani receiving wide publicity after the Tribunal judgment was published, and by the failure to take disciplinary action against Ms Davani. Given the situation described, why was nothing done about it until May 2015? My comments gave the auditor evidence of why – showing that Ms Davani was being “protected” by both Christine Gilbert and Cllr. Butt – but that by May 2015 the Council was selecting a new permanent Chief Executive, so that Ms Davani would soon lose that joint protection.

The auditor’s view of the prelude to the “settlement agreement” objected to, following on from the passage quoted above, is described as follows:

‘Meetings took place between the Leader, Chief Executive and various Members to try and resolve the differences but relationships did not improve.  We understand these meetings did not have minutes taken. Following discussions between the Leader and the Chief Executive, it was determined that it would be in the best interests of the Council if Cara Davani and the Council parted company and that legal advice should be sought on possible ways forwards.’

It does not appear that any documentary record exists of those discussions, but the next step is set out in the auditor’s “Findings” as follows:

‘Legal advice was sought in May 2015, which concluded the Council did not have a case to conduct a fair dismissal, noting that Cara Davani had informed the Council that she would take the Council to an Employment Tribunal for unfair dismissal if her employment was terminated.   Given no disciplinary procedures had previously been taken in respect of the findings from the Employment Tribunal, in these circumstances and given the legal advice obtained, it does not appear unreasonable for the Council to decide to proceed with a settlement.’

The ‘legal advice’ referred to was contained in an undated note, made by the Council’s Chief Finance Officer (why was the Council’s Chief Legal Officer, a solicitor, not involved?) about a discussion between Christine Gilbert and a QC, which he had been the only other party to. It was apparently not checked for accuracy by the QC who gave the advice, given the auditor’s recommendation that such advice ‘should be recorded formally immediately after the call and key issues confirmed with the legal adviser.’

---

Objections to Brent’s 2015/16 accounts – lawfulness of Cara Davani “pay-off” still to be resolved

Guest blog by Philip Grant

It appears that I was being optimistic when I gave an update on this subject in January LINK  referring to “progress” in dealing with the objections by five local electors to Brent Council’s accounts for 2015/16. I am writing this article to keep interested “Wembley Matters” readers informed about the current situation.

Four months ago, the objectors were waiting to receive some Brent Council documents from the Auditor, so that we could make further comments in support of our objections, and in reply to the Council’s response of 14 December 2016 to our objections. We are still waiting!

Progress on investigating the objections has not been helped by a change in the person at Messrs KPMG who is acting as Auditor. We were informed of the change at the same time this was disclosed in a report by KPMG to Brent’s Audit Committee on 20 March:

‘We would like to inform the Audit Committee that Andrew Sayers, a partner based in our London office, is replacing Philip Johnstone as the engagement lead on the audit. Andrew has already met with Carolyn Downs, Althea Loderick and Conrad Hall to help ensure a smooth handover from Philip. Andrew has a wide experience of audit and is currently the engagement lead at five other London boroughs as well as KPMG’s national Lead Partner for Public Sector audit.’

Mr Sayers did confirm, when first writing to the objectors, that he would share with us all the documents which he considered to be material to his decision on our objections, although he made clear that these might not include those ‘subject to professional legal privilege’. I made the following comments in my reply:

‘That legal advice, the circumstances around and timing of when it was given, and who it was given to, are all key factors in determining whether the payment to Ms Davani was lawful, as the Council claim, or unlawful. Why are Brent's senior officers afraid to allow the objectors to see the evidence of that legal advice, in confidence and purely for the purposes of your investigation, as auditor, into our objections? If they are confident that this "legal advice" document will stand up to scrutiny, they should consent to you sharing it with us; I am copying this email to Carolyn Downs and Conrad Hall, in the hope that they will now give that consent.’

I wrote to Brent’s Chief Executive on 23 March, asking if she would, on behalf of Brent Council, ‘now consent to the auditor sharing with myself and the other objectors (subject to safeguards over confidentiality, and solely for use in respect of his investigation into our objections) the legal advice on which the Council's justification for the £157,610 payment we are objecting to is based.’ 

I hoped that the answer would be “yes”, but if it was “no”, I asked for some further information about the meeting at which the “legal advice” had been given, and the notes of that meeting (which appear to be the only documentary record of what that advice was). I hoped that this information would be provided ‘as a matter of course, in assisting with a proper resolution of the auditor's enquiries’, but asked Ms Downs to treat it as an FoI request if that was not the case.

The reply I received (not from Ms Downs, but from a Senior Officer on behalf of the Council) was very abrasive, but did provide the information I had requested. The “legal advice” had been given in May 2015 by Counsel to Christine Gilbert, then interim Chief Executive, who was accompanied by one other Senior Officer (but, surprisingly, not the Chief Legal Officer or any member of her legal team) who prepared the notes. The reply also referred to a decision notice, issued by the Information Commissioner’s Office on 22 March 2017, using this to justify why the legal advice should not be disclosed to the objectors.

That decision by the ICO was to reject a complaint by Cllr. John Warren against Brent Council’s refusal to disclose the “legal advice” used to justify the payment of £157,610 to Cara Davani, under an FoI request which he made in July 2016. Cllr. Warren had claimed that, although this was covered by “legal privilege”, it should be disclosed ‘in the public interest’. However, the ICO did refer to the Auditor’s investigation into the objections against the £157k payment, and made clear that this was a separate statutory process, so that Brent is wrong to claim that the FoI decision also precludes disclosure (in confidence) by Mr Sayers to the objectors.

The ICO report included a summary of the types of information which Brent has, and which would have been disclosed if Cllr. Warren’s FoI request or complaint had been upheld, saying:

‘The council stated that the withheld information comprises of email correspondence between council officers and the council's barrister relating to the termination of a, now, former employee's contract of employment and associated file notes.’

I have pointed out to the Council, and the Auditor, that this includes more documents than the objectors were led to believe (in November and December 2016) existed, and that all of these documents should be made available to the Auditor, if they had not already been provided to him. (Hopefully, they may still be shared with the objectors!).

I understand that the Auditor also asked Brent, in mid-March, to provide some further information and documentation (even though KPMG had asked them last November to provide all of the documents relevant to our objections). I do not know whether that is part of the reason for the continuing delay. 

When nothing further had been heard from the Auditor by early May, I wrote to ask when the objectors could expect to have the documents shared with us. Mr Sayers has replied that he anticipates sharing the documents material to his decision with us by the end of June, but has not indicated why it should take so long. 

The end of June 2017 will mark two years since Brent’s disgraced Director of HR walked away with £157,610 of Council Tax-payers’ money (as well as having her share of the Employment Tribunal settlement and legal costs in the Rosemarie Clarke case paid by Brent on her behalf). The objectors are having to be patient, but we will see this through. The sad thing is that key figures at Brent Council still seem determined to cover-up the details of what went wrong (and who was responsible for it), even though they finally admitted last year that ‘this had been a very unhappy episode’.

Philip Grant

 

The Cara Davani Saga - objections to Brent’s 2015/16 Accounts to be investigated

Guest blog by Philip Grant
 

In August 2016, Wembley Matters reported that Cllr. John Warren (as a local elector, not as a councillor) had asked Brent’s Auditor to make a Public Interest report about items of expenditure in the Council’s 2015/16 accounts relating to Cara Davani and the Rosemarie Clarke Employment Tribunal case. LINK  I added a comment to that blog, saying that I had also exercised my right to object to those accounts, and I understand that there were four other Brent electors who objected, with five of the six objections relating to Brent’s £157,610 pay-off in June 2015 to its former HR Director, Cara Davani, and related matters.

I know that a number of interested readers may be wondering “what has happened about this?” Until a few days ago, the answer appeared to be “not very much”, but in the past few days I have received a letter from the Auditor at Messrs KPMG, so can now give you an update. The letter was marked “Private and Confidential”, so I will not attach a copy, but as some of the points are already in the public domain, and others are just an outline of procedure, I am happy that I can share the following information with you.

The Auditor wrote on 14 November to formally accept that my objection of 10 August was validly made under section 27 of the Local Audit and Accountability Act 2014. The letter confirmed that I had set out a case which could give grounds for the Auditor to apply to the Court for a declaration that Brent Council made unlawful payments during 2015/16 in respect of: 

a) A proportion of the total amount paid by the Council in the out-of-court settlement of the Rosemarie Clarke case, which should have been the personal liability of the second respondent in that case, Cara Davani (the Council’s former HR Director). 

b) A proportion of the Council’s legal costs (both external and internal) in the Rosemarie Clarke case which should have been recharged to, and paid by, Cara Davani personally, as a separate respondent in that case. 

c) The whole of the £157,610 “compensation for loss of office” paid to Cara Davani, and shown as part of the Senior Employees’ Remuneration to ‘Human Resources Director (to June 2015)’ at Note 30 to the Council’s draft accounts. 

d) The whole of any amount paid around June 2015 as an “Exit Package” to Andrew Potts, the Council’s former Principal Lawyer (Employment and Education) or similar title, which is included in the amounts for either ‘compulsory redundancies’ or ‘other departures agreed’ at Note 32 to the Council’s draft accounts.

The Auditor also accepted that, if his enquiries led him to the view that these payments were not unlawful, I had validly requested that he should issue a public interest report in relation to matters a) and c) above.

The Auditor’s letter also set out how his firm’s enquiries would proceed, in respect of my objection (and other valid objections) to Brent’s 2015/16 accounts, saying they would now:

■ ask the Council for their response to the objection;

■ ask the Council for documents relevant to the objection;

■ collect the documents that we think will help me make a decision about the objection; 

■ give you and the Council the opportunity to make further comments on the objection;

■ make any further enquiries we consider to be appropriate;

■ if appropriate, tell you and the Council our provisional findings and views; and

■ decide the objection.

The letter concludes by saying:

‘While this marks the start of the formal objection process, we encourage you and the Council to discuss the issues raised to see whether you can come to an agreement. Please also note that you are free to withdraw your objection at any time.’

Readers who have followed this saga will realise that I am unlikely to withdraw my objection without seeing convincing evidence that the payments involved were properly made. I would, however, be willing to discuss these issues with the Chief Executive / Chief Finance Officer of Brent Council, if they are willing to make available (“in confidence”, if necessary) the information and documents needed to ensure that any such discussion could be meaningful.

I am aware that Cllr. Warren has received a similar letter from the Auditor in respect of his objection, but I do not know whether any of the other three local electors who also sent objections to payments made by Brent to, or on behalf of, Cara Davani have also heard from Messrs KPMG. It would make sense if the local residents involved could co-ordinate their dealings with Brent Council (if there are to be discussions). If you are one of those objectors, please contact me (via Martin, if necessary, see email address under “Guest Blogs” in right-hand column), or at least put a comment with your views below. Thank you.

Philip Grant

Auditor asked to make a Public Interest Report on Davani pay-off

The Cara Davani issue just won't go and the news that she now runs a 'boutique hotel' in Suffolk LINK isn't going to exactly endear her to those who have been seeking out the truth about her £157k pay-off.

Now Councillor John Warren, leader of Brent Conservative Group, has asked Brent Council's Auditor, KPMG, to make a Public Interest Report under Section 24  of the Local Audit and Accountability Act 2014.

Dear Mr. Johnstone, 

I seek your consideration of a public interest report in respect of the Accounts of the L.B.of Brent for 2015/2016...........

1. I am on the electoral register in the Brondesbury Park  Ward in HBP4.

2.” Why you are objecting and facts on which you rely.”

I am objecting that you have not issued a report on what I shall refer to as the “ Rosemarie Clarke saga .”.......and put forward the following....

(a) L.B.Brent has suffered a significant financial loss due to mismanagement,incompetence,and decision - making at the highest level that fail totally to pass ANY test of “ reasonableness.”
(b) The cumulative cost of this saga totals in excess of £1 m. for 2014/2015 and 2015/2016.
(c) There is considerable interest in this saga from Brent residents.
(d) As admitted by L.B. of Brent, here has been considerable reputational damage to the Council as a result of this saga.

3. “ Details of any matter you think the external auditor should make a public interest report about .”.......

(a) The saga as referred to above with specific reference to .....

•          did the personal relationship between Christine Gilbert ,former Chief Executive ,and Cara Davani have any effect on the decision - making  in this saga?
•          did the fact that  the two afore-  mentioned individuals had previously worked together at both Ofsted and L.B. of Tower Hamlets play any part in the decision - making in this saga?
•          was it ,in  any way possible, “ reasonable “ for Ms Gilbert NOT to  initiate a disciplinary process against M/ s Davani in the light of the brutal judgement and comments by the Judge in the  Employment Tribunal case  at Watford - 3302741/2013?
•          did “ unreasonable “ decision - making in this saga mean that Brent Council should never have been placed in the position of having to agree an exit payment to M/ s Davani of £157,610 - as per 2015/16 accounts?
•          was it a proper use of public monies for L.B.of Brent to pay the costs/ damages awarded personally - as a defendant- against M/ Davani?

4. “ What you would like the external auditor to do ?”

I should like you to issue a public interest report on the reasonableness or otherwise of the decision - making in the “ Rosemarie Clarke saga. “..... because of the significant cost in money terms, Council reputational damage  and Brent  staff- relations ....
•          was it reasonable to take disciplinary action in the first place against Ms Clarke?
•          was it reasonable to appeal the Tribunal verdict in the light of the Judge’ s comment that “ Brent had no reasonable prospect of success ?”
•          was it reasonable not to take disciplinary action against Ms Davani in the light of the Tribunal judgement?
•          was it reasonable for Brent to pay all Ms Davani ‘ legal costs and damages personally awarded against her?
•          was it reasonable for Brent to make the exit payment of £157,610 to Ms Davani?

As is required by law the request has also been submitted to Brent Council's Chief Finance Officer, Conrad Hall.

If anyone else wishes to make a request it must be written in a proper form to the Auditor by August 11th. Here is some guidance from  Philip Grant submitted earlier today as a blog comment:

if you are on the voters list for Brent, you have a right, if you wish, to object to the expenditure of £157,610 by Brent Council, BUT ONLY if you submit your objection in a proper form by Thursday 11 August.

If you do want to do this, it can be done by email to the auditor at KPMG: philip.johnstone@kpmg.co.uk , and a copy must also be sent to Brent Council's Chief Finance Officer: conrad.hall@brent.gov.uk .

Your email would need to say that it is about the accounts of the London Borough of Brent for 2015/16, and that you are objecting under Section 27 of the Local Audit and Accountability Act 2014.

You need to say that you are an elector in Brent, give your full postal address, and (if you know them) the name of the Ward in the borough and the constituency (e.g. Brent North, Brent Central or Hampstead & Kilburn) in which you are registered to vote.

You must say what you believe is wrong about the accounts and why you believe they are wrong. If it is the £157k payment, you should say that you are objecting to the compensation for loss of office payment of £157,610 to Brent's former Human Resources Director, shown at Note 30 (Senior Employees' Remuneration) in the accounts, and that you think it is wrong to include this amount in the accounts because it was not a proper payment for the Council to make.

In support of your objection, you need to explain why you think the £157k should not have been paid, and provide what evidence you can. Based on your comment, you could say that Cara Davani should already have been sacked for gross misconduct after the Tribunal findings against her (Note: these were NOT for racial discrimination, but for victimising Rosemarie Clarke and for wrongly having her suspended for misconduct just because Rosemarie had complained about being bullied and harassed by her); that she should not have been given a compensation payment for leaving (or at most only a small one, quoting the normal redundancy rates from your comment); and that the £157k payment shows she was being treated more favourably than she should have been because she was a crony of Christine Gilbert.

You don't need to provide much evidence, as you can also say that you are aware that there has been another objection about the leaving payment to Cara Davani, and that you would like any evidence provided in any other objections to be used in support of your objection as well.

At the end of your objection email, you would need to ask the auditor to investigate the payment you have objected to, and either:

1) ask the Court to declare the payment unlawful, under Section 28, if he thinks there is a strong enough case for this; or,

2) make a public interest report, under Section 24, giving his views on the payment and asking Brent Council to take action to remedy it.

Further questions regarding Brent Council and the Cara Davani case

Cllr John Warren, leader of Brent Conservatives has responded to  Philip Grant's recent guest post on the Cara Davani case, which Philip sent to the leaders on Brent Council,  LINK with the following additional questions, copied to all Brent councillors:

1. Why did Christine Gilbert,as line manager, not take disciplinary action against Ms Davani following the conclusion of the Watford Employment Tribunal case? The judgment LINK handed down was " brutal " against Ms Davani......members should have a read.

2.Did the Gilbert/ Davani / Butt relationships have any impact on this saga?

3.How will future Brent disciplinary cases be affected by the way Ms Davani was not disciplined? Will not Brent staff be able to use this example...and ask how action can be reasonably taken against them in the light of the decision on Ms Davani. Surely this raises the bar very high as to when the Council can take disciplinary action against any member of staff?

4.Did the Council consider,or not ,whether Ms Gilbert had acted reasonably in her decision not to initiate disciplinary action against Ms Davani?

5. Should Brent 's auditors include this Rosemarie Clarke/ Cara Davani case as a " public interest " report in the final accounts for 2015/2016?

   I have written this week to our auditors making a detailed argument that this should be included .I urge anybody else who agrees with me to write to.....

  Philip.Johnstone@ kpmg.co.uk

6. Why did the " Pavey HR review , " which was supposed to learn lessons from the Rosemarie Clarke case, not even look at the case. How are you supposed to learn lessons .... if you ignore the case that was responsible for the review in the first place!

School financial mismanagement under scrutiny tomorrow

Following the controversy at Copland High School over allegedly illegal bonus payments, Brent Council has tightened up its audit arrangements. The 'Copland Six' are still to stand trial but meanwhile several other head teachers and other staff have been suspended while the possibility of financial management irregularities are investigated. Some have faced disciplinary action leading to dismissal.  There has been publicity about these events in local newspapers and the Evening Standard and the Times Educational Supplement.

Some commentary has suggested that this is a particular problem in Brent while others have suggested that the problem occurs elsewhere but because of Brent's experience it has been better at uncovering it. Generally there is a concern that as schools become more independent of local councils, being set up as 'free' schools or when they convert to academy status, that there may be more occurrences.The report from the Director of Finance and Corporate Services and the Director Children's Services which will be considered on Thursday by the Children and Young People Overview and Scrutiny Committee states that Copland, as a foundation school, had made its own audit arrangements, rather than be visited by the local authority team, until 2009: 'The significant additions (to pay) were not picked up during any of the external audits conducted annually at the school.'

Although there may be deliberate attempts as fraud it may also be the case that some of the occurrences are the result of inexperience or incompetence on the part of headteachers and governing bodies. Although the local authority offers financial training to headteachers they do not have a business management background and their main task remains the management of teaching and learning.

Two main issues have emerged which the report says the Council has addressed:

Senior Leadership Pay: a key issue that had been identified through the audit process relates to schools complying with the statutory requirements regarding the setting of pay levels for Headteachers and other Senior Leadership posts. The regulations are complex but nevertheless compliance with them is a statutory requirement and a comprehensive action plan was put in place by the Council to both support and challenge schools to ensure compliance. A great deal of progress has been successfully made as set out in Appendix C which shows the detailed action undertaken by the Council. Further on-going work is necessary to ensure continued
compliance with the regulations.

Leasing: In 2010, the Council identified that a number of schools had entered into very unfavourable leasing arrangements with large finance companies for the hire of equipment such as photocopiers. The Council is of the view that these leases should be treated as being void from the outset, as the schools in question did not have the legal power (‘vires’) to enter into them. If the leases were enforceable, they would have a negative impact on the schools’ financial positions. There are various grounds as to why the Council argues the leases should be considered void. The Council has taken the following action in order to protect the public funds exposed to these purported leases:

• Sent a number of letters and uploaded intranet postings clarifying the importance of complying with the leasing requirements set out in the Council’s Financial Regulations.
• Arranged for Council officers to meet with school officers where appropriate in order to discuss leasing issues.
• Hosted a number of presentations at Governor, Headteacher and Bursar meetings, clarifying the requirements of a lawful lease and offering support to schools that may have ostensibly entered into leases which are void in law, in order to encourage schools to obtain legal advice.
• Referred schools to the Council’s internal and external solicitors who are able to advise the schools (the content of the advice is confidential and subject to legal privilege).
• Obtained advice from a QC (the content of which is confidential and subject to legal privilege).
• Facilitated court action: A number of schools have stopped paying the sums purportedly due under these purported leases. As a result, one finance company has issued legal proceedings against two separate schools for amounts allegedly due. The Council’s solicitors have been instructed by the two schools to defend these claims. The schools are counter-claiming for restitution of the sums paid under the purported leases. The cases are on-going.
• Released guidance to all schools setting out the framework agreements
available, in order to help schools purchase or lease equipment at favourable rates.
• Hosted regular leasing / procurement training sessions with school bursars.

Using a traffic light system of Assurance about Audut Outcomes for audits in 2011-12 the report gives 7 primary schools a green light (substantial), 9 an amber (limited) and 4 a red (nil). The report gives a long list of issues that have been identified 'in the majority of schools' over the last two years. These cover Governance, Procurement, Unofficial Funds, Budgeting, Income and Banking.

The Head of Audit's opinion reported to the Audit Committee for 2010-11 sums up some of the issues:

I also remain concerned about the apparent lack of financial control within a significant minority of the council’s schools and the general approach to internal audit findings. Whilst schools are responsible for their own budgets, they are required to adhere to both legal requirements and to financial regulations issued by the council. These ensure public money is properly spent and accounted for. A number of schools are demonstrating a lack of compliance with basic procurement regulations. This is placing schools at risk of failing to achieve value for money and at risk of potential legal challenge where EU procurement regulations apply.

In addition, a number of schools are failing to adhere to the national rules concerning teacher’s pay, specifically in relation to head teacher pay being outside the prescribed bandings determined by the school size. Although, in certain circumstances schools are permitted to pay above the maximum group range, I consider that in a number of cases these circumstances may not apply and school governing bodies may be paying above the ranges set out within the national conditions document to facilitate incremental increases in pay once the natural pay cap, relative to the size of school, has been reached. This is further exacerbated by Governing Bodies not always being diligent in their recording of the reasons for granting permission to exceed to cap thus placing the school at risk of challenge.

In response to the issue of headteacher (and thus deputy headteacher) pay being outside the criteria published in the School Teachers Pay and Conditions Document (STPCD)  the Children and Families Department in October 2011 asked chairs of governors to return headteacher pay information. The report states that 'many schools failed to respond to this request in a reasonable timescale and it is only now that a full picture is emerging' and schools are being supported and challenged to ensure compliance with the STPCD.

Clearly this report raises important issues about probity, accountability and governance and deserves thorough discussion tomorrow.

The meeting takes place at 7pm in Committee Rooms 1 and 2 at Brent Town Hall on Thursday  July 19th Agenda: HERE

Declaration of interest: I am chair of governors at two primary schools and a former primary headteacher - all in Brent. I do not have a Swiss bank account!