The long awaited Penn report looking in to financial mismanagement at Croydon Council will be published tomorrow (24).
After deliberating for more than five hours the Appointments and Disciplinary Committee committee unanimously agreed to publish the report.
Councillors also agreed eight redactions to the main report. Each redaction is limited to no more than one sentence and in fact in some cases just a few words, said Mayor Jason Perry. The list of interviewees will also be redacted to protect anonymity.
Croydon Council’s Chief Executive Katherine Kerswell had earlier recommended to the committee publishing the Penn Report.
Implementation of the Penn report’s recommendation and any other actions the committee decide on its own initiative, will be subject to a follow up report said Mayor Perry.
This will be considered by the committee on March 23 which will also receive the findings of the Kroll/Fairfield Hall investigation.
The committee including the Mayor Jason Perry and opposition leader Stuart King; Conservative finance lead Cllr Jason Cummings and his opposite number Cllr Callton Young had gone in to closed session because they had to consider a significant amount of personal data.
During Part B which is not open to the public they considered item six and item seven – deciding whether it is in the ‘public interest’ to publish the independent investigation report by Richard Penn – before returning to open session to conduct the vote and announce the outcome.
Kerswell told the committee that if published, the Penn report would ‘make clear’ concerns of the “action and inaction and conduct of individuals such as misjudgement of actions, which lead to a absence of budgetary controls and mechanisms for evaluating and agreeing asset investments and failures to advise members properly of the breadth of escalation of risk that placed the council’s core purposes in jeopardy.
“This was alongside systemic failures of internal controls and finally the failure to stop a corrosive top down culture of what is commonly described as overcontrolling bullying.”
She added: “This committee has long respected the public interest of publishing this report if at all possible and equally the need to ensure a proper accountability process for those responsible. The committee has been advised previously the need to properly consider the legal issues arising, and the risk of ligation.
“These matters will be explored in full in the private part of this meeting and as you made clear Chair all correspondence received will be shared with this committee.
“Leading counsel has advised the decision must be based on the right thing to do because of the great legitimate public interest, so the question to answer today is what is the right thing to do to publish or not to publish?
“My role as the principle policy advisor to this committee is to offer members advice on the matter before them today, so my advice therefore, is the right thing to do in the public interest is to support the recommendation to publish.”
Earlier when councillors had been asked if they had any disclosure of interests, Cllr King said that while not a disclosure of interest he had contacted the monitoring officer yesterday after receiving a letter from one of the individuals who ‘has engaged with the council on this process’.
The detail of the letter by the unnamed writer had also been shared with Cllr Young and related to matters before the committee said Cllr King. He had brought it to the monitoring officers attention and the decision was made to share it with the rest of the committee in Part B.
The Penn Report was completed 18 months ago and was written by Local Government Association’s Richard Penn. He looked into the financial mismanagement of the council before it was forced to issue a Section 114 notice, declaring effective bankruptcy.
It is likely to name and attribute blame for those responsible for the collapse of the council.
Subsequently the council has issued two further Section 114 notices and has so far been bailed out by the government to the tune of £150m and is carrying £1.6m in debt with the Mayor announcing plans for a 15 per cent rise in Council Tax.
Penn interviewed more than 60 officials, including trade unionists, chief officers and councillors, and found organisational dysfunction at senior levels of the council and risky commercial property investments.
The Mayor Jason Perry, Cllr King, Cllr Young and the CEO Kerswell all disclosed to today’s committee, which began sitting at 10am that they had been interviewed by Penn.
The council was embroiled in a legal wrangle after details of the draft report were leaked at the end of last year. It had revealed that staff who came from other councils had told how they were shocked at the way Croydon was run. One likened the town hall to the ‘Wild West’.
There was a lack of transparency, interviewees claimed, bordering on cover-up . . . proper financial controls were not in place . . . inconvenient evidence, even from the council’s own legal department, was sometimes ignored . . . important paperwork was missing . . . failure was rewarded . . . democratic processes were not always followed. Too often those at the top also displayed an ‘almost reckless disregard of the potential adverse consequences of risk’.
In 2020, auditors found that Croydon borrowed £545m during 2017-20 to invest in housing and commercial property. This included a £200m loan to its own housing development arm Brick By Brick, which hadn’t returned a dividend.
It invested £30m in the local Croydon Park Hotel in 2018-19. This went into administration in June. It also spent £46m on a shopping centre. The council’s strategy of “invest[ing] its way out of financial challenge” was “inherently flawed”, as councillors did not properly understand the retail and leisure markets, auditors said.
It allowed a £39m overspend on adult and children’s social care to spin out of control after 2017 when an Ofsted inspection branded its children’s services “inadequate”, and subsequently used accounting tricks to mask its failure to control costs in these departments.
Both the Labour council leader Tony Newman and finance cabinet lead Simon Hall (pictured front row left and right) stepped down as the financial scandal emerged while chief executive Jo Negrini was given a ‘golden handshake’ pay out after an alleged “breakdown in trust” between her and ex-leader Newman.
She was laid off in August 2020 with a settlement, including
pension, of £437,973. The council has since found there were “significant failings” in the report given to the authority’s appointments committee which made the decision on this payment.
Newman who had been a councillor for 27 years accused the investigation of being a ‘witch hunt and a shambles’.
Revealing in a Tweet in March 21, that he had been taking advice from leading counsel he said there are ‘many issues’ with the draft report produced by Penn which he says contains ‘factually inaccurate and baseless allegations’.
Hall, who is an accountant by profession, serving for 16 years as a councillor similarly complained, having taken advice from legal counsel: “I view complaints against me from a flawed factually inaccurate draft report as baseless. “
The father-of-three said he had been forced to resign because of the “scapegoating” and threats to his family had made the “situation untenable.”