Tuesday, 1 October 2013

It's trough at the top for little piggies

This little piggy went to the High Court,
This little piggy got too much compo,
This little piggy awarded themselves a massive pay rise,
This little piggy had a tax-friendly pension pot,
And this little piggy went wee, wee, wee didn't see anyfink, guv.
(Pic : michaelkonkik.com)

I'm coming to this late, but as reported by Y Cneifiwr, Carmarthenshire Planning, Inside Out, National Left and others last week, auditors have uncovered foul-ups in the annual accounts of Carmarthenshire, Pembrokeshire and Caerphilly councils.

Carmarthenshire Council frolics in own filth

Two payments relating to Carmarthenshire Council's (CCC) Chief Executive Mark James were – in the auditor's unqualified opinion (an auditing term generally meaning "without reservation") – unlawful :
  • £23,217 of indemnity funding used by CCC in libel action (against Carmarthenshire Planning's Jacqui Thompson).
  • £16,353 paid directly to Mark James in lieu of employer pension contributions to the Dyfed Pension Scheme.
The first one probably breached Welsh Government regulations outlawing the use of public funds by local authorities to undertake (rather than defend) libel actions.
Local Authorities (Indemnities for Members and Officers) (Wales) Order 2006 :

6 (3) No indemnity may be provided under this Order in relation to the making by a member or officer indemnified of any claim in relation to an alleged defamation of that member or officer but may be provided in relation to the defence by that member or officer of any allegation of defamation made against that member or officer.
Jacqui Thompson was lumbered with CCC's costs, not only of their defence but their counter-claims too. As she said herself last week, it's probably best not to comment on the ramifications of the auditor's findings for the time being.

The second payment would've been made anyway. Pension contributions can be paid directly to the employee (or rather, the employee's private pension) instead of an occupational pension fund, but that's sometimes ofset by salary cuts (known as a salary sacrifice).

CCC highlight "changes to the tax system" that make occupational pension schemes unattractive to high-earners (Mark James currently earns ~£209,000 in salary + other contributions).

If it's been deemed unlawful then it might relate to how the payment was made (i.e. not following standard accounting/governance procedures) rather than the payment itself.
Carmarthenshire residents now have a very useful list of the councillors who approved these changes in 2011. I'm sure the names will be familiar.

It's worth touching on the mystery of the just over £20,000 advance Mark James received for his role as returning officer in the 2012 local elections too.

CCC don't know precisely when it was paid, which is odd, as returning officer payments are usually (but not always) made after an election when the precise number of candidates is known (as that's what the payment's based on). Those sums of money, you would've thought, would've been rigorously tracked too - receipts and things like that.

It appears Carmarthenshire are the only local authority in Wales having trouble providing this information, as highlighted by this thread on Aberdare Online.

The advance wasn't picked out by the auditor. However, considering the timing
(towards the end of the tax year) of both the advance and changes to the pension rules, there's the possibility the two could be linked, who knows?

Pembrokeshire pork : Littlest tax haven beyond Wales

In Pembrokeshire, BBC Wales report the Wales Audit Office refused to sign off their audit of Pembrokeshire's annual accounts because of a similar pensions arrangement for their Chief Executive, Bryn Parry-Jones (salary + other contributions ~£194,000), and other senior officers. There's a more detailed account on this from Independent Cllr. Jacob Williams.

Pembrokeshire Council have since, as reported by Y Cneifiwr, signed off the annual accounts themselves following a narrow vote in favour by councillors, carried by the ruling Independent Plus Group and opposed by Cllr. Williams himself, other non-affiliated Independents, Conservatives, Labour and Plaid Cymru.

Both Pembrokeshire and Carmarthenshire councils point to similar schemes run by housing associations and universities, but they're not public sector organisations run by public servants from public funds.

Entering into arrangements like this during a time of austerity, trying to do it in secret, and expecting it to go unnoticed is both arrogant and idiotic.
It also appears Pembrokeshire and Carmarthenshire are the only local authorities doing it in Wales. Even Caerphilly weren't that dumb, and they're up to their necks in it as I'll return to later.

These are prominent people at the top of the Welsh public sector, earning significantly more than the First Minister (who's currently entitled to around ~£135,000, not including expenses and pensions), opting-out of the same pension scheme their employees pay into - many of whom have seen their own pay, working conditions and jobs under threat. By doing so, they're avoiding tax obligations too.

I wonder what ordinary council employees, the public and trade unions think about that?

The Wales Audit Office are carrying out their own separate investigation following complaints, but CCC dispute the findings, claiming they had an "OK" from the Wales Audit Office and independent legal advisers for the first two payments, and seem disappointed the auditors have "changed their mind."

You've also got to question why independent legal/financial advice was sought to cut the head honcho  tax bills. As others have pointed out, independent advice doesn't come cheap. If it's about retaining experienced, top-performing staff, these cock-ups show the current recipients are hardly a ringing endorsement for that line of thinking at the moment, are they?

The local AM, Rhodri Glyn Thomas (Plaid, Carms. E & Dinefwr), described it as "exceptionally damaging for the reputation of Carmarthenshire", and here's an edited transcript of what was said in the Senedd last week:

Rhodri Glyn ThomasMinister....You will know that I have raised the issue of the use of public funding for indemnifying officers.....the report....refers to two issues of unlawful expenditure by the council—one being the issue of indemnity to the chief executive in a libel case. I know you have not had an opportunity to read the report, but will you investigate this matter, because they are very serious allegations?
Local Government Minister, Lesley Griffiths (Lab, Wrexham) - The allegations you mention are serious, if that is the case. I met the Auditor General for Wales on Monday of this week, and that issue was not raised with me. Obviously, it would not be appropriate for me to comment if it is an ongoing audit.
Rhodri Glyn Thomas - The report has been published by the auditor appointed by the Wales Audit Office, but the next step will be for it to be considered fully by the Wales Audit Office....I hope that you will read it and I hope that you will raise this matter with the auditor at some point.
Lesley Griffiths - I will certainly read it, and I will raise it with the auditor general in due course.
Plaid in Caerphilly distracted by frying sausages

Rule #1 of political point scoring : If you're going to criticise another
party/politician, be 100% sure you can't be criticised for the same thing.
NB : Ensure your reasoning is better than "I didn't see nuffink."
(Pic : psychologicalscience.org)

Next, it's time to move to Caerphilly, and what a whopper we have there!

In addition to an ongoing (and largely unrelated) fraud investigation by Avon & Somerset Police, auditors ruled that £218,000 of compensation payments made to two senior Caerphilly council staff in return for withdrawal of car allowances were also unlawful.
What were they driving? Bugattis!?

As much as Independents in particular, and Labour, are involved to varying degrees in all three authorities, Plaid Cymru are complicit in the Caerphilly car allowances as they ran the council in coalition between 2008-2012.

The notion that a former council cabinet member in charge of finance would have "no knowledge" of £218,000 is - to be frank - taking the piss, regardless of whether that's wilful ignorance or not being informed properly.

The £218,000 is (presumably) in addition to £1.1million in senior officer salary rises after May 2012, when - I'll helpfully point out - Caerphilly became a Labour-controlled administration, and the pay hikes were passed by Caerphilly Council's elected boneheads earlier this year. They saw you coming!

These issues are not political as they could've happened anywhere because of how local authorities are governed.
Those with ultimate responsibility for what goes on in our local authorities are officers and the senior councillors who approve their decisions - regardless of party. All you have to do is follow the money and deal with the facts at hand.Appeals to hypocrisy, even if it's logically fallacious and lazy, is one of the most popular political defences there is. Pity those who give opponents the opportunity to use it against them, descending into a bunfight and race to the gutter over whom is worse than whom. It's not going to get the money back.
The collective common sense of a bacon roll

Councillors generally just spinelessly rubber-stamp whatever's put in front of them (though they should damned well pay attention to what is put in front of them) because "officers know what they're doing."

You rarely (if ever) hear of councillors from ruling parties/coalitions telling officers "no" - which should happen in a healthy democracy. I'd go as far as say that cabinet positions in Welsh local government are a sham, and even if we had no councillors at all I doubt it would make any difference to how local authorities are run on a day-to-day basis.

The irony here that the chief executives in question might not have done anything wrong personally, but could be implicated by the actions of those around them. The more cynical amongst us could also call those around them "fall guys", "human shields" or use the term "plausible deniability".

They're not running personal fiefdoms. They'll be found out the moment the arrogance that results from "little mistakes" not being investigated properly, bad advice, lack of transparency, or favourable verdicts by auditors or elsewhere, morphs into big mistakes where they've painted themselves into a corner through laziness, stupidity, self-serving nefariousness or a toxic combination of all those things.

Ignorance is gross incompetence, because officers and senior councillors should be following basic accounting procedures and keeping a grip on what goes on under their noses.

Doing it knowingly or willingly (i.e. keeping information from councillors, attending meetings and not declaring interests when they should be declared) is misconduct in public office, possibly fraud. The sums of money involved are good grounds for immediate dismissal, or at the very least suspension (as proposed by Labour's leader in Pembrokeshire), and you would expect heads to roll

In Wales? Yeah right, and pigs might fly.


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