Agenda item

Under s100B(4)(b) of the Local Government Act 1972, the Chair of the meeting was of the opinion that the item should be considered at the meeting as a matter of urgency by reason of special circumstances. These circumstances were that there had been a need for additional consultation with Legal and Property services to enable the finalisation of these reports.

The Chair highlighted that some of the information relating to this item was exempt and should not be discussed during the public section of the meeting. It was noted that all questions would be directed through the Chair, would be based on the information set out in the report, and would be directed to officers. It was added that questions should relate to the remit of the Corporate Committee and not the remit of the Overview and Scrutiny Committee.

The Head of Audit and Risk Management introduced the report and noted that the Committee had received a summary of the internal audit findings in relation to the decision not to purchase Alexandra House at its meeting in March 2021. The Committee had considered the findings and had requested a follow up report on the decision making relating to the purchase of Alexandra House and whether council policy and procedure had been followed. It was highlighted that the role of the Committee was to consider the governance, internal control environment, and management of risk.

It was noted that the full Mazars report was now presented to the Committee. It was explained that Mazars had reviewed the process for the decision and noted that the former Interim Assistant Director of Property and Economic Development was open to the suggestion to purchase Alexandra House as it could have helped to deliver Medium Term Financial Strategy (MTFS) savings and it could have supported the accommodation strategy. It was considered that the governance arrangements to manage an acquisition of such significance were weak, that there were a number of informal and ad hoc processes, and that there was a lack of documentary evidence regarding the people involved and the decisions made. There was also no evidence of a thorough business case which would have given decision makers an opportunity to consider all issues in full.

In response to the issues raised by the investigation, officers had undertaken to improve the arrangements for dealing with property acquisition, including an Acquisition and Disposals Policy that had been approved by Cabinet, a management review of governance, changes to the senior reporting arrangements covering acquisition, improved formalised communications with the Cabinet Member, formal minutes for Strategic Property Board meetings, a formal tracker in Strategic Property so that all acquisitions were noted in one location, and further reviews of the arrangements in the future.

Cllr Ejiofor noted that Cabinet Members at the time of the decision had been proactive and had made a number of requests, such as the confirmation of a formal acquisitions and disposals policy. It was enquired whether there was any evidence that the Chief Executive or Leader at the time had been informed about the opportunity to purchase Alexandra House. The Head of Audit and Risk Management explained that internal audit held officers accountable for internal governance. It was noted that Mazars had found that the procedures in place at the time were not adequate and that, although the benefits of purchasing Alexandra House were referenced incidentally in some documents, no options or advice had been presented in a formal document. The Head of Audit and Risk Management stated that, in his view, a specific, formal document would have been necessary to allow any decision maker to make an informed judgement.

Cllr Amin asked how the Committee and local residents could be assured that there was transparency in relation to future decisions. The Head of Audit and Risk Management noted that the role of the Committee was to seek assurances. It was explained that these issues had been identified and management should put adequate controls in place to ensure that future decisions were properly considered. It was added that there should also be regular reviews by internal audit to ensure that the processes were sufficient and were operating correctly.

Some members stated that the report was not clear in relation to which individuals undertook certain actions and who was responsible at each stage and asked for further clarity. The Head of Audit and Risk Management explained that the report highlighted that the procedures in place were insufficient to provide this level of clarity and it was therefore difficult to say what should have happened. It was noted that ensuring that there were adequate processes was the responsibility of management. It was added that, from an audit point of view, the focus was on the processes undertaken and not on the decision itself.

The Chair noted that the Mazars report referenced the fact that key stakeholders had been interviewed. There was a later reference to reliance on the interview with the Assistant Director for Capital Projects and Property (Interim) and it was enquired how many people had been interviewed or whether there had only been one interview. The Head of Audit and Risk Management believed that Mazars had predominantly relied on information from the interview with the Assistant Director but most likely would have spoken to others in the relevant service and it was noted that this might require confirmation with Mazars.

The Chair stated that Mazars had seen two separate papers that had been presented to the Strategic Property Board in December 2018. It was noted that, according to its terms of reference, the Strategic Property Board met quarterly and it was enquired why Mazars or the Committee had not been given sight of papers from November 2018 to May 2019.  The Head of Audit and Risk noted that the two reports in December 2018 were the only formal records of any decision and that there had only been incidental references to the purchase of Alexandra House at other times. This highlighted the importance of having clear processes with written reports and formal minutes.

Cllr Tabois noted that this would not have been the first time that the council had bought a building or something similar. He believed that there had been a failure to follow procedures in this case and that someone needed to be held accountable. The Head of Audit and Risk Management explained that the matter had been reviewed by Mazars who were independent and they had raised concerns that the governance arrangements in place were weak which had resulted in a largely informal process. It was noted that this had been discussed with the Committee and that measures had been put in place to ensure that there were internal controls that were strong enough to correctly consider decisions.

Cllr Ibrahim noted that local authorities were sometimes criticised for being bureaucratic but that processes were required to avoid situations such as this case. She accepted that the process for deciding not to do something may have been less clear but that this could still be detrimental to services. She stated that the council should learn from this that executive members should be able to ask questions to ensure that things had been done correctly. She stated that it was important not to assign blame to individuals but that all parties should take responsibility and ensure that the right questions were asked when decisions were made.

Following consideration of the exempt information, it was

RESOLVED

1.    To note the report and attached documents.

2.    To note the improved internal control governance arrangements for dealing with property acquisition detailed in the Mazars report.