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    District Auditor's Report IOACC September 1998

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    palpatinecymru

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    District Auditor's Report under Section & of the Audit Commission Act 1998 Isle of Anglesey County Councit Audit 1997/98 Cant Stracting District Aucttor DISTRICT AUDIT lioorng puiis die foe he Awkt Commission Sepuaher [Pi Dasteict dentin 's Rep snaler Section ® nf the Sere ety Contents Section § 0 Introduction: Section 2 o Contracts awarded by the Housing and Property Department Section 3 The disposal of assets from the Council's Depot at Holyhead Section 4 Council plots for sale, Nant y Pandy, Llangefni Rheegosh Omer canirasts Com Gace ENOnen Pookonby Joinary Purchase of goods for private use Concissinns Backare Allegation at carsiption Audit tndings wees & Whtehond Breach of wh owing potcy Coacivaions Ea Riegetiaon af ampropeeny Audit baeings Concaisions DISTRICT Ata, Disiicr aucliign's Repeort amiler Section 8 nf te Detailed Report Sep 98 Audit Commission Act 19895 Iste of Aaglesse County Connell Section $ 2 Grants awarded to businesses under + Saag ound . + Bete Sty economic development powers * + Ponsonby Jarnery + Sther grants and retavanahins «DANE grant + eterna! proyret + Mora Aificte feasibility stuay 4 Dither transactions and rotates issues * Goretusions Bastion & 36 Overall conclusions and recommendations for the future Page? Lusmct amcbioe 8 Report ander Section Ruf the Peek] Anaht Comarenicn $e} 19 Isle of Aagiesey Convey Covncit Introduction reat w ‘On the } April 1998 Fexercised ay power under Section 15(3} of the Local Government Finance Act 1982 to issue a Report in the Public interest ta the Isle of Anglesey County Council The report highlighted a mumber of serious matters arising from the 1998/97 audit of the Council’s accounts ‘These matters primarily related to the conduct of certain officers and members, che awarding of contracts and the management of assets The report made twelve recommendations for impraving management arrangements The Council fas since taken prompt action to address these recommendations, firstly by establishing a Preliminary Investigation Committee (PIC) to consider recommendation | segarding possible disciplinary action, and secondly, under the Chairmanship of Mr Michael Farmer QC, establishing a Special Review Committee (SRC) to consider the other recommendations Following extensive public consultation the SRC published a report on the 17 July 1998 which set out the Committee's views an how the Couccil should implement the auditor's recommendations including the establishmenc of a Standards Commixwe, The deliberations af the PIC are still ongoing at the time of weting this report This audit repart does not goncem itself with cither af the above proceedings tut concludes on the audit isozes thal were unresalved at the time of issue of the Report in the Public Laterest, Paragraph 74 of the Report in the Public Interest stated “Team also currently reviewing a nutiiber of other contracts ket hy the Councils Houses and Property Department and i am concerned that the Conueat's Fitsanciat Regulations may have aguin been breuched and the Council may not be obtaineg vilue for moinuy. This work 1s currently engeing and once our erpuries have heen completed ! shail conseder whan action, if any, teed to take.” Those exquivics are now sufticieatly complete to srable we to summarise aur Gndings Again | have decided tat it would be in fhe public imerest for ine to issue a report under Section 8 of the Audit Commission Avt 1998 iprevinusly Section 15} of the Local Government Finarsoe Act 1982) ‘This report is set against the comext uf the fiiowing mauers relevant to the Housing and Property Depanment + The Director of Housing and Property is curcently suspended Grom duty whilst criminal proceedings are heing taken against him He has been charged with misconduct wbilst in public ollice, witness intimidation and attempting to pervert the course of justice Davies tuadvor's Report under Section 8 of the Detailed Report Sep 98 eit Comersesion tet 199% of Anglesey Counly Councit and Property is also being considered by the PIC in respect of conduct matters arising ia the carlior Public Interest Report » The Counly Council’s Chief Executive who was also acting Director of Housing and Property has recently applied for early retirement and is currently on sick leave. & Asa consequence of the publication of the first Report in the Public Interest we have received farther information from officers and members of the public concerning certain activities involving the Council. Some of this, information has resulted in the investigation, distevery ard prascoution of frauds perpetrated by third parties. It has also provided further evidence that the conduct of some of the Council's awn officials has again fated 1 moet the standards demanded of those serving the public, primarily those who are currently employed within the Property Section of the Housing and Property Department. This report provides the faets as I see them together with my conclusions and a recurring theme running throughout the report is the questionable actions and relationships of certain officers with third parties, 7 All of the isses raised in this report are serious in their own right but taken as a. whole, a picture emerges from which I can only conclude that the cukure of the Property Section of the Housing and Property Department is not one which promotes openness and probity. This culture 1 believe has existed for a number of years and prompt and far-reaching action is now needed 10 address the shortcomings and to regain confidence in this Section. However it should not be inferred that the failings identified ia this report can be directed at the Counkil's activities in general. Ja my view the vast majority of Council officials are ondeavouritig ie make correct and positive contnbutions to serview delivery during a particularly difficult period. 8 Pave made six recommendations, desiyned to achieve further Improvements within the Council and they are contained in Section 6 of this report, {tis very pleasing “0 note thet the Acting Chief Executive, with the fall support of the Monitoring Officer and the Leader of the Council, has already snplemented a number of these recommendatinns as cur audit was being concluded This has included the suspension, within prejudice, of to officers. In addition the Council is dererrmined ta and has again welcomed the Tact chat the contents of this made available to the public, onstrate openness -opart will be Linweductien, Tagea PISTUCr AOR tistrct Andtior Report under Section 8 of the Getalted Report Sep 98 Auch: Comautsvion Act 129% Iste of Anglesey County Councit 9 With the exception of ane matter, all the issues raised in this report ‘occurred befoce the publication of the Council's new Codes of Conduct, the earlier Report and the SKC reper. The recommendations comeined in this report should enable the Council 19 ‘irengthen further its financial and general controls and build on the strong, foundations outiined in its new Protocols and the SRC report, My intention is to refer 10 the progress made by the Council in dealing with all these matters when 1 issue my Management {etter later this year 1 A mumber of the matters contained in this report are still being investigated by the Police Ts avoid prejudicing Police enquiries some of the companies and individuals have beed referred to anonymously 11 The investigations referred to in this report were undertaken itt partnership with the Council's own Internal Audit Section | would like to express my thanks to the officers of the Internal Audit Section, in particular the Chief intemal Auditor, for thetr co-operation and assistance during the course of out investigations. lasrrtuction Page 5 DETR T AUDIO District Auditar's Report utder Section # of the Bo Coleg stadt Commission Act 199% Isle of Anglesey Couniy Conca Contracts awarded by the = Rhosgoct Housing and Property = omnes contacts Department + Sotri Otzes + SN Gwet ~ gonersl osntrsctsr = Pengenby Jninory © Byrchage of ghits ter prvate use © Conclusises Rhosgech n The eastier Report in the Public taterest referred to failings in the Council's arrangenionts to safeguard assets al the Rhosgoch site which formed part of a charitable trust. Since then we have continued to assist the Police and the Couneil with their enquices. it has become apparent that assets in additions to the hardcore and transformers may have bean stolen, These include copper cabling, oil and a crane. Evidence obtained as part of these enquiries is currently being investigated by the Police. We have also interviewed members of the public whe claim to have inspected equipment with the intention of purchase ro find that, in their view, it may have been tampered with to make it unattractive ta potential purchasers Although we have no evitlence to support these claims we have received similar wines: comments in relation te other Council assets and this is discussed in Section 3 Paragraph 128 of the earlier Report in the Public Interest outlined my concems that officers of the Council had been tex in theic dealings with the contractor employed by the Council to carry out certain work at Rhosgach, particularly as this contractor was also engaged by these seme officers for private work, This matter is now the subject of ongoing Potice enquiries and an investigation is also being certied our by the Charity Commission Other contracts 14 Asa result of our earlier concerns and information received. we have. reviewed in more detail the work awarded by the Housing and Preperty Departiment to a number of contractors. We have identified a dlatinet patterns whereby work has beer awarded 10 favoured eonuactors without regard ta the Council's Contract Standing Orders. In my view insufficient steps have been taken to demonstrate probity in the appointment process and that value for money has been obtained 2 Contacts awasdee Byte ‘Sonsing and Prepesty Depaiauers Page ISTHE ALOR Disiict dutiar 's Report ander deetion 8 of he Detailed Report Sep 9B favke Coummiceinn act 109% isle of Anglesey County Cour: Cefni Glass 16 18 ZC gmizaeis awarded by Ub Furchecmore, we have becomie aware of clase ftiendsbips beiweea one particule officer whos was responsible for appoinling and supervising contracts and ihe contractors involved. This is even mare concerning 35 we tater discovered fiaod perpetrared againat the Council by two of these contractors. Details of these frauds ere suinmarised in Section 5 of the report, Further details of tho contract matters are summarised below with a section on each comeactor. During the four financial years 1994.95 te 1997/08 Cefhi Glass received payments toralting £171,493 fram Yays Mon Borough Council and the Isle of Anglesey County Council Year Amount paid (6) Humber ot paymanis ‘Fotat 474,493 1081 ‘These payments relate to general repairs and maintenance work but a signiffonnt proportion, over £43,000, relate to office alterations made at the time of local government re-organisation {mainly the petiod Decembar 1995 to August 1996) to accommodate the additional staff transferring to the Councit’s headquarters al Llangefni, This is reflected in the table above where the greaiest expenditure is incurred in the 1996/97 tingnelal year We have examined the documentation in support of these payments An official order was raised on the ¢ March 1996 requesting Cefin Glass ta “carry out alterations at the Council affices Llangefa:” Six payments were made in respect of this officia} order totalling £36,424.33 The award of this ‘werk was not in accordance with either the Borough Council's or the County Council's Contract Standing Orders which are as tallows Borough Council “uehurew? practicuble computitive quotations sitawkd he oMtained for alt Roads and services supplied to the Council” “Comporins ienders shaukd alse: Be sought for contracts that ave estimated to exceed £40,080. thong and Property Pepartmant Page? TISTRICY AlsDIT Disirics Aaviter 's Report wnder Secbon # of the Betatied Report Sap 98 nattt Commuter Sot 1998 Isieof Angkesey County Counail 19 20 2 Coetzaets awards by the easing and Property Depart Pape County Councit “ie the case uf comiraicts esmatedd nat to exceed £25,008. dre Chief Officer magy ut his discretion disperse wth public adbveruserment and subject ta his having, satisfied hienself that urrangrements do wt exist for the goeds, matertels, or wark to be readily obeumed through a purchasing contsomtinm of which the Council ix a member, dy enter wnite a caritract “with stich persons as he conifers competent for the purposes, buat i sch cases he Sail emicevour to seth and obtain as feast three formal amt compsetiiive quotations. An earlier official order was issued on 1? February 1096 requesting Cefhi Glass 10 “carry our joinery work at Borough Council Offi (Highways Dept} av instructed” Six paymonts were made in tespect of this official order totalling £15,299 59. Awain in awarding this work the Borough Councii’4 Contract Standing Orders were not complied with Ta obtain a view of the circumstances prevailing a1 the time of local government reorganisation, we have discussed the work undertaken with the Prineipal Management Advisory Officer (PMAQ) of the Couneit's Central Services Department. During the perind of local government re-organisation officers were charged with the difficuh task of ensuring adequate suitable accommodation for alt the stafl fo be employed by the ew urutary authority. Challenges included needing fo react to last minute changes incuding when the Council was notified that some staff could not be accommodated by Gwynedd Council is Caernarfon There was therefore anced for flexibility in the manner ia which the work @f adaptations and alterations was undertaken The PMAO informed us that he was “seoonded’ to the Housing and Property Department during this perind. In that way he was better ebie to relalc existing accommodation with the nends of the new Council and to promptly identify the adaptations that would be necessary He was aot involved in any of the arrangements Jeading to the placing af the work with appropriste contractors, as this was the responsihility of officers within the Property Section, He also stressed that the availability of contractors that could carry out the work as and when required was esseutial Pt was to be completed in time Whilst | accept the view expreceed above regarding the extremely challenging time of local government re-organisation, | believe the approach adopied, paricularly the selection of contractors, should have been reported to members or a request made for the suspension of Standing Crders when it became apparent that the limits would be exceeded. The Standing Orders state that RIC AUDET District Audivor’s Report wncer Sectan ® of the Retalled Report Sep 9 fade Camaroon Act 199 a4 2 Contract awan he the County Councit ar tener for queotaivors} utter ihuan the lowest shalt not be accepted untit the Counetl hers comesideredd ca reprtt from the appropriate Chief Officer uttess i the professional opmon of the Chies Offteer concerned 1 will give better vadie for meney, iv which case a reprt shall be submittedt ta the next aveuiable meetiig of the responsible committee or sub comautiltee.” “The Borough Couneil’s Standing Orders wore similer éa this We raised dhe selection of contractors with the farmer Director of Contract Services, Mr Gareth Roberts, He openly adruiited that most officers had “favoured” contractors who were usually given the majority of certain types of work. The application of Standing Orders appears ta have been of secondary importance to that of getting the job done, One such oxmiactor “favoured” by Mr Garetit Roberts and some of his officers in the Property Section was Cefni Glass, The transparency of the process leading to the appointment of Cefsi Glass for the above work call be further questioned when the following marters are taken into account © Althougt the company was willing and able to assist the Council, and some of its employees ware joiners, the company’s main trading activity is the supply and instattation of vPVC windows, doors and conservatories + ‘The Company is based in a Council owned industria! unit at Penyrarsedd, | langefni and hus consistently been in arrears with its rent on the unit, At the Lime that this work was being awarded the company had arrears in excess of £4,000. Phe company is still in arteais with rent on this unit. + ‘The proprietor of the company Mr Ken Jones is a close fiiend of the “Technical Assistant, Mr Pax{ Roberts about wharn we expressed concems in our last report. Mr Roberts has confirmed this Friendship. + Our review of official orders and paid invoices shows that Mr Paul Roberts was the afficer who usaatly completed the offictal orders, and checked the goods or services received ftom Cefti Glass Mr Roheris was als the main person responsible fhr supervising the work of the contactor, This is demonstrated by the fact that his timesheets and overtime returns show he was in work during the peck tines invoiced as worked by Cefni Glass. (ie during the peried December 1995 1 August 1996, Mr Roberts woriad a tora of ‘174 hours overtime at 2 cost Of £10,764). Housing and Frepeny Department Frege? DISTRICT AUpTT Diaries decticr’s Report sider Section # of the Bietaited Report Sep 96 Ait Carmi 8c F185 Isle of Anglesey County Conncit + Mr Paul Roberts’ brother is empioyed by the Council's Planning Department He eucrently hay a joint interast with: Me Ken Jones in a pine farniture cutlet, which irades fiom the sme pramises 28 Cefhi Glass at Penyrarsedd. We have been informed that this officer has declared hts business relationship but no declaration of ay kind has been made by Mr Paul Ruberts + MrKen Jones and his employees carried out werk on ‘Mr Paul Roberts’ own house when it was being constructed. Mr Roberts has admitted to as that this was done without monetary payment. Mr Roberts does not accept that in accepting this favour he has placed himself in a compromising position + We have received allegations that the persons engaged by Mr Ken Jones on Council contracts were unemplayed and in receipt of housing benefit. We have evidence to support this allegation end are currently pursuing our enquiries an this matter JN Owen — general contractor as 2 Contracts awarded by the ‘During the financial years 1994/95 10 199798 payments totalling £69,613 representing 196 separate transactions were made to jcbbing contractor EN Owen, of Guutchmai Amount paid (£) Mr Owen had previously been eniployed a8 a sub-contractor for the Council's Bulding Maintenance DLO, The payments summarised above are in respect of a variety ofjobs but a substatitial proportion of the expenditare relares to furniture removals and security work undertaken during the perind of tacal goverment re-organisation We make ihe following observations about these payments, © Mr Paul Roberts was alse responsible for completing documentation for this work, For example, payments made on aflivial order HP3971 cequesting the contractor to “carry ot general wark as mstracted at Barnugh Council Offices, Limgepur” woralled £7,928 excluding VAT. Quotations should have been sought for this work in accordanee with ite Borough Council's Contract Standing Orders. Hwang and Propony Departevent Page it pETUCT AUDIT tnnet auditor's Repart wander Section Saf the. Detailed Report Sep 98 uct Comammssion tet 198% of Auplosey Coutity Council + Details on the invoices are inadequate to demonstrate the hous spent per day, rames of the persons employed and the focation of the work, We would consider this fo be essential information, particularly ia respect of the overnight security work undertaker The invoices submitted for payment were raised by Mr Owen's wife who was up until 17 March 1998 employed ty the Couneil at ive Depor in Gaenwes. + The invoices we have examined were sddressed to Mr Patil Roberts and show that he certified receipt of the gouds. Mr Raberts was aiso responsible for the supervision of the contractor a the relevant tines are again reflected in his overtime returns + Tewas Mr Paul Roberts’ view that JN Owen had been appointed because he was a ‘favoured’ supplier of the Director of Housing who knew Aim in both 4 professional anet personal capacity ‘This report does not imply any criticism in respec of the quality of work performed by 5 N Gwen, Officers have commented on the contractor's ready availability and witingness 10 help during the difficult period of locat government re-orgenisotion. However T would question the experience of this contractor to undertake security work and whether appropriate steps were taken to vat the contractor's employees who were placed in a position of trust, We have subsequently attempted to confirm details of the einployees be used, but to date Mr Owen has not provided us with all the information we require. In summary, 1 am concerned about the poor internal controls thal operated over the ordering of the work, the supparting, documentation and the approval of invoices for payment, In the context of this later point Mr Paul Roberis has confirmed to ws that he certified receipt of some services e g, security work, on the basis of tnist Ponsonby Joinery 28 Another company that has received a significant amours of work front the Propeny Section is Ponsonby Joinery We were aware of close business Jinks between this company and Cefhi Glass 674 During the financial years 1994/95 to 1997/98 payments totalling representing 18 separate transactions were made te Ponsonby Joinery 2 Cemtracta awerdod by the ousing and Property Depariaer Page 1 pISHUCT Aur Disrrics Auditor's Report under Section of the Detaled Report Sap 96 Anslt Commission Ave 129% Isle of Anglesey County Councit 30 3h Amour pats (©) Number of payments An examination of official orders showed that Mr Paul Roberts had again initialed much of this work and signed the goods received boxes on the invoices, During our enquities we were informed ihat all the hardwoud windows and the staircase af Mr Pau! Roberts home at § Nant Y Pandy, Llangefni, had been supplied by Ponsonby Joinery in the Autumn of 1994 10 the value of several thousand pounds. Our investigations revesied that Mr Roberts has paid a partial instalment of £1,700 for these goods, which ke has subsequently confirmed. He did however say that he alway? intended to sete the remainder of the debt, In my view itis unusual that any supplier in normal circumstances would walt nearly fur years for an eccount to be settled Purchase of goods for private use 32 As part of our audit we obiained information that Mr Paul Roberts was ordering wallpaper on behalf of Council officials for private use, This matter wos pat to Mr Roberts who sald that he had ordered wallpaper on behalf of Coundil officials at a discount, but the officials themselves were responsible for collecting goods on delivery and paying the supplier. He did not widely publicise this ‘scheme’, av he did not want fo create further work for himself Sve contacted the wallpaper supplier whe provided «is with the information that they did not operate such « scheme and thet discounts (of up 10 69%) were only available to the Council and not its employees Furthermore they did act deliver in Wales and deliveries would have been made by an appointed independent courier. They also added hat couriers would tot accept payment on behalf of the supplier. Further audit enquiries identified two officers and a Councillor who had purchased wallpaper through Mr Paul Roberts in traasactions tetalling £796.33, The purchases were made using official contralled stationery and using Council funds. A ssmmmary of the trapsactions is shown overteat 2.Coratis awanda by the Houseng and Property Deparment Page DISTRICT AUDIT District Auditar's Report wncder Secteray 8 of tht Detailed Report Sep ¢ Audet Comméseran Act 1998 fle of Angiesey Conny Counc 38 vv 38 Goste — Divcount £ Date of Order 18263 S836 26 aly 1998 Secretory and Principa’ Nousng = 414.28 367.20 18 September 1995 Offices {joint purchase order) Former Leaner of Council 266 63 25 Mares 1598 “The Councillor reimbursed the Council within three months of che wallpaper being ordered. He has subsequently informed us that because he was busy he asked Me Paul Roberts, as a favour, to obtain wallpaper thai he had previously seen and liked. He did not realise thai it would be ordered and paid for by the Gouncit ar that financial regulations would be breached, tn the case of the two officers referred to above, reimbursement fo the Council was not made until some two years after the wallpaper had been purchased The two-officers reminded Mr Paul Roberts to send them an invoice on numerous occasions, The official invoices were drawn up by Mr Paul Roberts on the 30 June 1997 The invoices were processed in the samme batch used to recover the income due in respect of the sale of hardcore from the Rhosgoch site fram the Director of Housing and Property and two private contractors. This matter was referred to in our previous Report in the Public Interest {paragraph 125} as follows: “The invoices in relation to the ‘resddom rubble’ contract were not sont 10 the three contractors until swe and @ balf years after the tenders were accepted ated during the period when the Director of Housing and Property was being investigated by the Police” We are concemed with the trarsactions outlined above fvr two reasons, Firstly that officers and a senior member of the Councif hive benefited personally from the arrangement by means of rade discounts and secondly that the Couric's Financial Regulations have been brokea Ynys Mon Borough Council’s Financial regulations sated “Ne order shod fe signed for goods arid services fw cost of which 1s nor cenvered hy the approwed dusial estimates or hy spousal fineniciad provision.” We are aware thar simliar orders for other yoods and services have taken place amongst vatious officers within the Housing and Property Department including the then Director of Contract Services, Mr Gareth Roberts, who purchased a chair at substantial discount ia this way He did however settle is account promptly with the Ceurit 2 Contacts wand by the Hons ad Property Deparment Page PASTRICT AUDIT ‘tsaecs Auditor s Repors under Section ® of the Detailed Report Sep 98 Audis Comrassion cf 1998 ‘slo of Anglesey County Couned Conclusions 39 "The Loca! Government Management Hoar sets out in its National Code ‘the eninimwm standards that should apply to the conduct of local government officers, The Code sets cut clearly expected standards of conduct with respect to relationships with contractors. These are suramarised below: +All relationships ofa business or private rature should be made known to the appropriate manager. + Orders and contracts must be awarded on metit, by fair competition, in accordance with the Council's Standing Orders and Financial Regulations. + No spevial favour should be shown to businesses run by, for example, friends, partners or relatives. No part of the local community should be discriminated against + Employees involved in the tendering process and dealing with contractors should be clear on the separation of client and contractor roles within the authority. Senior employees who have both a client and contractor responsibility must be aware of the aed for accountability or openness = Employees in client or contractor onits must exercise fairness and impartiality when dealing with all customers, suppliers, other contractors and sub-contractors, «Employees who are privy to confidential infonnation on tenders or ‘costs for eltiser internal or external contractors should not disclose that information to any smauthorised party or organisation + Employees should ensure that ne spacial favour is shown to current oF recent former employees or their partners, close relatives or associates in awerding contracts to businesses run by them or employing them in a senior of relevant managersal capacity 40 ‘The National Code of Conduct also clearly states that “it ix not exrough ta avoid actual impropriety. You should ai alt times aveud any occasion for suspicion and eppearasee of improper conduct”. 1 is clear from the mations outlined above that a certain officer named in this report has significantly felled fo meet the above standard of conduct and did not declare his persona! dealings ar clase relationships. Also given that many of the official orders and fvoices reviewed were certified by more senior officers within the Honsing and Propeny Deparment it's difficult to understand why these conflicts of imerest were nat idemified and acted upon Ly the Department itself. 2 Cantoats award ty the Housing and Property Department Page ta DISTRICT AUDE Dastriet duditor's Repavt uadter Seciton 8 aS the Detailed Report Sep 98 adhe Commission Act 1992 tele of Anghesey County Councit ai ‘The Council's Democraiic Services Sub-Committee un 5 February 1998 resolved to amend Contract Standing Order 8/dd) to require officers to seck formal quotations far afl work unless the estimated expenditure was less than £600 The Director of Fingawe has told us that the Council's Housing and Propenty Department resisted this amendment During the course of our audit work we identified that trund had been perpetrated against the Council by Celia Glass and Ponsonby lomery by means of business grant applications (summansed in Section 5}. Although Mr Roberts had no invalvement in any of these transactions there are potential Hioks with another oilicer of that Section who was ten working as an Evonomic Bevelapment officer. The ackons of these companies combined with the breacties in Council procedures highlighted above are Tikely to have « significant impact on the confidence members will have in officers of the Property Section, 1s for these reasons that we have made 4 number of recommendations far the Couneil to act upon gad these axe contained in Section 6. 2 Contacts awierded be Be essing ond Property Deparment Pays |S OSPRICT AUDET Distiet dior’ Repart under Section Sup te ea] Snel: Comamsion Bet 139% Isle of Anglesey County Comer The disposal of assets from the + eect Council's Depot at Holyhead * Alezation of co Background 43 44 rc + Asi findings + Sons & Vihtebead ind 4 Greach af whistletiomeg po’cy + Coretisions Between the late 980s and early [990s the former Ynys Mon Borough Council operated a uPVC window-making factory at its depot in Holyhead. The financial viability of the factory was, However, declining and the Council reselved to exase its operations in 1991, The assets etnployed by the window-making operation and their value in 1986 was a3 follows, tere Vatue (6) ‘Double mitra saw Single head copy rower 3,480.00 aver 2794 (5 bead 27839 ‘Weider WMS 711 LTY 13,405.30 ‘Comer cleaner Weguma MEA 3,404 08 ‘Glass cating tate ‘Totat texetudting VAT} After the factory had ceased frading in (991, the above assets, excluding the glast-cutting (able, were valued independently at an expectedly lower value of £11,550 Following the cessation of operations the Elotyhead Depot was subsequently et ia November 1994, ta a company called Aiuform Ltd that was engaged in the manufacture of duminium roof trusses Fie disposal of agsets fromm the ‘Council's Degen at Flabhvead Pape ts PASTRICT Abt Dusrict auditor's Report under Section & of the Detailed Repost Sep 96 Audit Commission Act 100% a fede of Anglesey County Council In Sepember 1894, Mr Gareth Roberts the then Director of Contract Services (who has since retired and is now employed as a consultant on the consiryction of the new Council Offices) reported to che DLO Board and atacle recommendations regarding the disposal of the assets relating 19 the window-making factory. The report stated: "On 34 Jeomary 1904 the Board resolved to soll the plant amd equipment formerty used for the manufacture of PYCU windows amd doors 0 Aluform Ltd for the sea uf £6,000. fn tate Jane 1984, | became wacre that Ainform itd had vaccied ihe Jormer Halphecsd Depot withord notice ard that some of the machines bad been removed. The company had not paid for ary of the machines, nor had they paid the Council rent for the unit. Some damage hed heen ceused tee the buskding and there were stgns of forced entry. The Police and the Conmneil’s insurers were informed of the situation cout | understand that the Police and iniand Revenue inspeciors are naw Irying to locate the former chrectars for questioning in comection with these and other maiters. However, | must stress thai there is no evidence that the missing hems were removed by the company. Tivo weeks later the unit was again forcibly entered and further minor damage was caused both to the building and some of the remaming plastic window equipment, 1 aise received a report from the owner of an adjacent tue on the estaie that he had foiled an attempt by persons unkerown fo gain eniry inta the building through the roof shortly after the successful breaketr. Inv August 1994, Precemedd an offer fvom Cefni Glass for the thtee of the machines in the unit, v0 of which hued been demaged hut sere repairable be order ta avoid further risk of thajt av damage and tn secure at least some income, | accupted the offer and the equipment was sold to Cefni Glass for £2,000. The items were a glass. wehave independently found thal there ware financial irregularities resulting fom the allegations made «these itregnarities would not have corte to light without subsequent audit involvement although they should have been identified ifthe new procedures had heen properly applied = the allegations should bave raised concern with the Assistant Director of Housing and Property given the reservations we hadi raised on the conduct of Mr Paul Roberts in our earlier repon in the Public Interest + the Confidence of junior staff fn coming forward and exprssing theis sancems may have been undermined 2s a result of the actions of the senior officer in this instance. 1 Fhe dinpaal oF atoete fon the Cuncits Hepat at Hebend Page 2 Disc tudor’ s Report wader Scotus 8 of tee Audet Commission tet 1998 Isle of Anglesey County Counet Council plots for sale, + Allegation af ompropriety Nant y Pandy, Llangefni + Audit fringes 74 This section provides evidence chat officers of the Housing and Property Department have not acted solely in terms of the puble interest but have used their position ty obtain personal benefit. Allegation of impropriety 73 In july 1998 we received a pomplaint from a local elector who had detided to come Forward aflor seeing the press coverage of our Report in the Public Interest. He provided the following information 76 tm 1993 he had applied 10 purchase one of the Borough Counail’s plats for sale et Nant y Pandy, Llangefh}. He explained that at 4 meeting of prospective purchasers, the Director of Housing and Property and the Director of Contract Services he was allocated plot number 3 following a candom draw of names from 4 hat. He was very pleased with this allocation since plot 5 was some 15% bigger than the others in that row and was one cof the furthest away from an adjacent Council estate, He expressed frustration at the subsequent delays on behalf af the Counc in allowing him to complete the purchase of bis plot = iis main contact was Mr Gareth Roberts af the Housing Department who informned bien on a number of occasions that there were delays an behalf of the Council's Legal Department, He was particularly concerned that, in his view, with the exception of plot 1, building work had commenced on most ther plots. In the end he withdrew his application and formally notified the ‘Council in a lerter to Mr Gareth Roberts dated 28 April 3994 ‘Further fa my conversation with one of yeur staff on Mrday afternoon, F sone fhe to cestfiri tay withdrawal from the purchase of plot mater 3. J fee! that tt has taken far ton tong for the prarchase t be completed. On a recent inspection of the plot Ewas disorayedt to fuel tar plow 4 had mete use of my plot for storage, and ICB ruts have ovese mace on anarea of the plot.” JR He was particularly aggrieved to discover that 2 ahior. ine aller withdrawing his inferest a Council offichal, Mt Paul Roberts fad commenced building on plot $ He was aware that Mr Roberts had been intending to purchase plot 1 but claimed he was not af the buyers’ meeting when the plots were allocated trom the draw. 4 Ciaarat plots for Nant Pandy, Llangetar Page 24 FISTRITE AUDFT District Auditor's Report under Section 8 ef the Detaited Report Sep 98 dbdie Commeassion det 1998 fale of Anglesey Canmy Council Audit findings 78 We have reviewed the files maintained by the Council's Legal and Housing Departments in relation to the development 2t Nant ¥ Pandy. We have not, based on the documentation seen, observed any reasons for significant delays on behalf of the Council in allowing the sale to be completed on plot 5. However, we are concemed about the following matters. On file we noted a letter wrinen by Mr Paut Roberts to Mr Gareth Roberts on 26 April 1994 stating: “4s you are aware J was allocuted plot | of the ahove scheme cat the original meeting some vvelve months aga, Following recent developments T now respectfully wish to transfer my application frem plot No 110 plat No 5”. 81 On 28 April 1904 Mr Gareth Roberts replied to Mr Paul Roberts as follows “Trefer to your letter datect 26 April, 1994. f confirm that F have transferred your allocation of plot No t ta pled No 5 Nant ¥ Pandy, Llangefni, Gad hope thi you can now proceed with the purchase of plot § as soxon as possible." 82 When interviewed neither Mr Gareth Roberts ot Paul Roberts could explain how the availability of pet § became known to Mr Paul Roberts or why there hind been delays with the purchase of the two relevant plots, Both are of the opinion that they have not acted improperly hut ecknowledge that personal benefit may have arisan from being an employce of the Housing and Property Department Roth Mr Paul Roberis and Mr Garesh Roberts were unsympathetic to che concerns expressed by the person who brought the matter to our attention Conclusions 83 The internal correspundence referred to above was ali wtitten in the seme typeface and format, The original purchaser of Plot $ wrote a letier withdrawing his interest on 2S Aprit and Mr Paul Roberts applied to transfer his application from plot 1 to plot Son 26 Apel, Based on this, sequence of events I believe Mr Paul Roberts benefited personally from information objained from his position within the Repactment, by abtaining 2 larger and more sought-after plot that ultimately may have a higher market value on re-sale. In my view the correct procedure would have been to seek further interested parties for the plot to avoid claims of Avouritism or insider knowledge “4 Counc plots for ade Nant y Pandy, Ulaugelni Page 25 DISTRICT AUDIT strict Auditor s Report under Section 8 of the Audit Commission Act 1993 Detailed Repox Sep 98 tle of Anglesey Country Councit 4 Lord Nolan in his publication listing the seven principles of public hfe comments: “Holders af publec office stontd act ssbely in terms of the public anerest. They shel not do son order to gain financial or ather material benefits far themselves, their family or shear friends”, 85 This psinciple was introduced by Nolan to prevent the type of incident we have highlighted above from occurring and tamishing the reputation of local government 4 astra forsale, ~ ‘Mant « Paid, Lanes Pye 2a DRTRICTAYOrT Dustrict

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