Auditor Forces Council Steamroller to Apply Brakes

‘Illegal’ Rulings Harm Reputation

by Pat Dodd Racher

Barnet’s enlightening blogger ‘Mrs Angry’ was assiduous in reporting fellow blogger Jacqui Thompson’s libel claim against Carmarthenshire County Council’s Chief Executive Mark James, and the counter-claim by Mr James against Mrs Thompson, at the High Court in February 2013. I seemed to remember the words “I don’t recall” emerging from the mouth of Mr James. At the time I thought how odd it was that a chief executive would not remember whether or not he was at the meeting which granted him an indemnity to sue for libel, but then I recalled how often Mr James Murdoch had used similar words when appearing before the Leveson Inquiry into the practices and ethics of the British press.

Mr Mark James is reported as saying he could not recall if he left the room when the major matter of an indemnity to pursue libel cases was being discussed, and he could not recall if the council’s legal team advised making a counter claim against Mrs Thompson.[1]

Mr Justice Tugendhat, who heard the claim and counter-claim, said that council officers would feel distressed and intimidated at being the subject of persistent allegations of misconduct, corruption, lying, perjury, and misuse of public funds made without evidence.[2]

Would Mr Justice Tugendhat have interpreted the facts laid before him any differently if he had benefited from the opportunity to read the Wales Audit Office’s report on illegal payments in Carmarthenshire, payments authorised by the Executive Board?

The report, issued today, January 30^th 2014 as a ‘Report in the Public Interest’, states unequivocably:

“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.”

These failings are clarified in paragraph 3 of the Summary:

“At a meeting of the Executive Board of the Council on 23 January 2012 it was agreed that the Council would grant an indemnity to the Chief Executive for the bringing of a libel counterclaim against an individual. The matter was considered as a matter of ‘exempt urgent business’ and did not appear on the published agenda. The Chief Executive was at the meeting but did not declare an interest or leave the room when the matter was discussed.”

The Wales Audit Office is clear that Mr James was present at the meeting when the Executive Board voted to grant the indemnity, although Mr James is reported to have told Mr Justice Tugendhat that he could not remember.

The costs of the indemnity in 2012-13 were £23,217 in external legal costs, with a further £3,209 in 2013-14, says Mr Anthony Barrett, the auditor who wrote the report, adding that the “libel counterclaim is still ongoing and it is unclear what the final external legal costs to the Council will be”.

Carmarthenshire Council has not, at the time of writing, accepted that the decision to grant the indemnity was unlawful. By admitting illegality,of course, members of the Executive Board at the time would be signalling their failure to hold the executive properly to account.

The council also disagrees that Mr James participated in the decision-making process. According to the council, the Executive Board would have an hour-long pre-meeting to prepare for the formal meeting. At this particular pre-meeting, the Director of Resources and the Head of Administration and Law, but not the Chief Executive, were present. Apparently the board members asked lots of questions and were in a position to take an informed decision in the formal meeting.

The auditor is unimpressed:

“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 progress whilst having a disqualifying financial interest in the outcome of the decision.”

The auditor cites other reasons why the Executive Board failed to take into account other relevant material considerations, including the views of the Wales Audit Office, as from “the minutes of the meeting there is no evidence that the Executive Board was informed of the views of the Wales Audit Office when taking their decision”.

Carmarthenshire County Council has seemed to me an authority with its own vigorously pursued agenda, on which large and expensive prestige capital projects like Parc y  Scarlets, Llanelli’s East Gate, Ffairfach’s Ysgol Bro Dinefwr, and so on, feature too prominently. It is local government in the guise of steamroller rather than public-service bus.

With the Wales Audit Office’s almost simultaneous publication of a report into the pay and pensions of senior officers, Carmarthenshire County Council’s steamroller is up against a stout roadblock and has to apply the brakes.  The public interest report into pay and pensions, also by the auditor Anthony Barrett, lists deficiencies, including:

• The Executive Board’s decision, to allow senior officers to opt out of the Local Government Pension Scheme and to receive a pay supplement equivalent to the employer’s pension contribution, is unlawful.
• The decision was made by the Executive Board “without appearing on the agenda and without being open to inspection by members of the public”.
• The report “was drafted and presented by a senior officer” [the Assistant Chief Executive (People Management and Performance)] “who had a disqualifying personal and pecuniary interest in the decision as he was eligible to benefit from the proposed ‘pay supplement’”.

The ‘pay supplement’ received by the Chief Executive in 2012-13 was £16,353, and in 2013-14 £12,397 up to December 31^st 2013. Similar arrangements, also ruled unlawful by the Wales Audit Office, were made for Pembrokeshire’s Chief Executive, Bryn Parry-Jones.

The report on Carmarthenshire goes on to say that the auditor shared his legal advice with the council, which “obtained its own legal advice in response but has declined to provide that advice” on the grounds that the “ ‘written advice is not suitable for disclosure and privilege is not waived’ “.

The Executive Board has withdrawn the ‘pay supplement’ scheme but has refused to admit that it was unlawful.

The Wales Audit Office’s judgements are damning enough. In addition, the time, effort and money expended by the council to devise the ‘pay supplement plan’, and to construct a libel counter-claim against a blogger, have surely diverted attention from serious challenges such as the rapid slide in the use of the Welsh language, the flight of public services from rural communities, and the commitments for the future repayment of and intervening interest payments on £276.63 million in financial liabilities.

What happens now? Will the steamroller go into reverse gear, or attempt to charge down the roadblock? Either way, the drivers are not in an enviable position.

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[1] Broken Barnet, ‘Double indemnity: day four in the Caebrwyn libel case’, February 19^th 2013, www.brokenbarnet.blogspot.co.uk

[2] ‘Case law: Thompson v James – blogger loses libel claim against council’ by Gervase de Wilde, the International Forum for Responsible Media Blog, March 20^th 2013

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