Agenda item

(Copy herewith)

Councillor Beardsworth thanked the Internal Auditors for the informative report. She stated that reference had been made to the loss of £10.25 million, but stated that the total cost was considerably higher as it included interest on the loan, professional fees and relocation of the Athletics Track and asked that the Council pursue the recovery of all of the money. She stated that the previous Liberal Democrat Portfolio Holder for Finance had been approached by the football club for a loan and having undertaken due diligence had refused. She stated that she had not witnessed a major project loan being rushed through as quickly as this was and stated that there had been insufficient investigations into the Club finances.

In response to questions asked by the Committee, Councillor Beardsworth commented that she considered that the decision was made in haste due to the ambitions of a former Councillor. 

The Internal Auditors submitted a report and elaborated thereon explaining the scope of the report had been defined by the Audit Committee and had followed normal internal audit report proceedings. It was explained that the report had been fully accepted by the Council and that the internal auditors had worked very closely with colleagues in the Police and External Audit. The terms of reference were elaborated on including the scope of the work, key findings and lessons learnt.

In response to questions asked by the Committee, the Internal Auditor explained that the decision regarding the loan of monies to the Football Club had been identified and displayed as a key decision, in accordance with the Constitution. He noted that the decision had been collectively taken by Cabinet and that the approval for an extra £1.5 million had not been taken by Cabinet, but had been taken under delegated authority, as legal advice had indicated that it was not necessary for the further loan to be taken by Cabinet. The internal auditor commented that in the interest of openness and transparency, the decision to increase the loan should have gone back to cabinet even though there was no legal requirement to do so. It was further explained that no formal risk assessment had been undertaken and the lack of progress on the stadium site had not been identified.

Replying to further questions, the Internal Auditor elaborated on the fact that an extensive number of emails had been identified which clearly indicated significant time pressure and emphasised the haste in getting the loan in place. It was also explained that the report presented was a review of the circumstances and procedures leading to the decision being made and it was not within the remit to interview individuals, as stated in the terms of reference. It was explained that there was no evidence that Officers were attempting to reduce the speed of the deal and that there should have been more formality in the structure and the framework of decision making; there was evidence that the deal was progressing but very little to indicate that it was being properly managed. He further noted that the risks should have been identified through the risk management strategy and should have been monitored from the start but that this had not happened. 

The Internal Auditor explained that a number of emails raised concerns about the short timescales and pressure from management and politicians to conclude arrangements. Had there been good governance in place the consequences would have had less of an impact and good practice would have been to have more independent involvement as the senior officer involvement resulted in independent perspective being lost.

Responding to further questions as to whether other Council loans had been similarly rushed, it was explained that it was entirely possible to put a loan in place in a very quick timeframe, should proper governance be put in place and risks well considered. The more information available upfront the less risks are likely to arise prior to any decision making process.

RESOLVED:

That the Audit Committee noted the findings and lessons learnt outlined in the report from the Council’s Internal Auditor attached at Appendix 1 of the report.