#30. A case of bolts and stable doors.

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The internal review of ip&e (the council-owned trading company set up by the Leader of Shropshire Council Keith Barrow) presented to Shropshire Council Cabinet on 17 February 2016, but not released to full Council until 21 July 2016, glossed over many of the problems that developed after the company was established, failing to address how those problems were not only allowed to develop but continue unchecked.

The report failed to directly reference the absence of the kind of scrutiny that would have prevented the company’s directors from allowing ip&e to become the personal fiefdom of its chairman, Keith Barrow, instead making only a passing reference to the consequences of that lack of scrutiny at the end of paragraph 5.7…

5.7 The recent financial health check of the company has identified that certain significant improvements are required in internal controls associated with financial management, IT systems and contracting policies and procedures and governance. The new company board has acted swiftly to ensure that appropriate controls and delegations are in place to address these weaknesses. However, it is unlikely that these control weaknesses would have occurred in the Council. [My italics.]

In blog #24, I describe how ip&e was effectively removed from whatever scrutiny might have been possible had ip&e’s operations been retained within Shirehall instead of being moved out of sight, sound and mind of whatever regulatory discipline might have been brought to bear to keep the company’s governance within bounds. That was allowed to happen.

Keith Barrow’s decision to move ip&e’s operations to a unit on a Shrewsbury business park away from Shirehall didn’t just distance the company and its operational management from Shirehall, it also distanced ip&e from the scrutiny of Shirehall and the officers charged with ensuring that ethical standards are not only established but maintained within the Authority.”

Does all this matter or should it be allowed to die the death of all other “historical” incidents of bad management that have plagued Shropshire’s administration and then just been allowed to disappear into the archives in the name of peace and reconciliation?

Well, because the people responsible for that lack of governance are still there, glossing over such incidents helps no one except the people who knew they’d be allowed to get away with it because they had the power (and the connections) to make it all go away. That’s the way it works and has worked for too long, which is why it is still happening and why it has to be stopped.

There is an all-pervading culture of group-entitlement that borders on arrogance and there is nothing, NOTHING, in the current set up at Shirehall that threatens “the few”, so profound were the changes wrought by the previous administration and so determined is the current administration to maintain immunity, either from criticism itself or the resultant fall-out that any criticism might bring.

I won’t go into a lengthy explanation about “entitlement” and the sense of immunity it confers because I dealt with it towards the end of blog #27:

Patronage plays an incredibly important part in the formation of the power groupings, it’s power magnified by the social cohesion created by political party constituencies exercising their power and influence. It isn’t just about financial and back-office support, it’s the moral support they offer through the social functions that draw like-minded people together, confirming bias, the groups thus created forming the bonds that bind; break the bond and you threaten the cohesion of the group. Dare to do that and you’re dead – politically and socially. To a member of any mainstream party that’s the end of the civilised world.

I am angry that nothing has changed in the way “the council” self-regulates itself because that isn’t the result of ignorance, it’s a case of due process being ignored, which raises the question of culpability, and that opens up a hell of a can of worms.

The recent report by the independent remuneration panel highlighted the failure of the current Shirehall scrutiny system to, well, scrutinise, at least in any effective way that acknowledged the generally accepted meaning of the word. The dismissive reaction of the administration to that criticism of its internal regulatory functions should come as no surprise to regular readers of this blog.

But just how deep do the fault-lines go? Is criticism of the scrutiny set-up just chipping away at the visible bit of the iceberg? After all, what’s been going on has been going on for a long time – a very long time. Long enough to have become an integral part of Shirehall’s corporate culture.

It took me a while to figure out why allegations of quite serious breaches of Standards were not being fully investigated in any meaningful way. When I did start to realise what was happening the realisation threw me because I really didn’t want to accept the conclusion. It was one of those light-bulb moments when you realise that “it” has always been there but you just couldn’t see it because you were looking too hard.

It was simply that passing a case of a breach of Standards to the police kills it off!

As I explained in blog #24, for the police to follow through they require the burden of proof demanded in a criminal case before passing it on for prosecution – proved beyond reasonable doubt. Fail to reach that standard of proof and the case is dismissed or, as happened to the recent case against Keith Barrow based on a criminal complaint (made by someone other than me) “disregarded”. The Council then counter any attempt to follow up on the complaint with the now well-rehearsed: “It has already been passed to the police who found there was no case to answer.” End of.

A ‘lighter’ civil case rests on the requirement only that on the balance of probability there is enough of a case to answer to justify passing the case on for further investigation by an independent solicitor outside the Council. Should that investigating solicitor consider that, on the balance of probabilities, there is sufficient evidence to justify a trial THEN the case can be passed to the police for criminal proceedings to advance to trial. Otherwise the case can alternatively proceed to a less formal conclusion, as reached in the Keith Barrow case, but in both instances the decision as to which path would be the most appropriate for the offence is down to a wholly independent investigating solicitor. Only thus can the process have any credibility.

You can see how it works. So, given that Shropshire Council’s knee-jerk reaction to any complaint about a possible breach of its Standards (its Code of Conduct policy) is to pass it on to the police, why wasn’t mine? Because it didn’t start life as a criminal complaint, it didn’t even start life as a Code of Conduct complaint because it wasn’t in any way about a breach of the Council’s Standards. If it was a breach of anything, it was the accounting standards that govern the appointment of auditors; at that point a civil, not a criminal matter. That was its status when it got to the Shirehall Standards Sub-Committee, bypassing the police and finding its way into the hands of a civil investigator.

It went from being a Member’s Question to Full Council, wanting answers about what appeared to be the imprudent way the appointment of ip&e’s external auditors had been made, to a formal Code of Conduct complaint about the probity of appointing external auditors with close direct links to ip&e’s chairman. That happened because the original Member’s Question was considered by the Legal & Democratic Services department to be “too serious” not to stand investigation. Who was I to argue?

The breach of Standards for which Keith Barrow was found guilty came out of the subsequent investigation as an unforeseen consequence. I now realise that it succeeded because it was not passed directly to the police.

Keith Barrow took the hit on that one, but considering what I subsequently learned about his influence on every aspect of Shropshire Council’s activities what, precisely, was the role of the company’s original directors other than to rubber-stamp the decisions of the Company Chairman? Where was their ‘professional scepticism’? Notwithstanding the force of his considerable personality, they allowed him to get away with it.

During a lengthy and detailed conversation with a senior officer of the council in December 2015, when I was chasing up the final report from the solicitor investigating my Code of Conduct complaint against Keith Barrow, one of the key things said in that conversation about the “true” nature of Keith Barrow’s chairmanship of ip&e – and as Leader of The Council – was the revelation that “some officers had lied for him in order to save his skin”.

Think about that. It was known at the highest echelons of Shirehall and spoken of in a way that made it clear the speaker was surprised that I didn’t know.

So, you can see now why what I wanted to see in that report to Council were statements from the key players in the setting up and subsequent running of ip&e explaining their respective and collective roles in the establishment of the company and what, if any, executive control they applied to its governance during and subsequent to its being established and council services and their staff and resources transferred away from the supervision of Shirehall, because something was going on that shouldn’t have been going on, as acknowledged in the otherwise ‘innocent’ statement quoted at the head of this article:

However, it is unlikely that these control weaknesses would have occurred in the Council.”

Really? Well there’s a thing!

So why is there such reluctance on the part of Shropshire Council to at least properly review in any meaningful way, let alone investigate, who was responsible for the subsequently discovered glaring shortcoming in ip&e’s audit processes, not least those involving the day-to-day accounts procedures that will doubtless feature in the forthcoming trial of Penelope Wilkinson on the 22 August who, whist employed by ip&e, is alleged to have stolen money from the company whilst working in the company’s finance department?

 

POSTSCRIPT:

Further to all of the above,  I was recently sent a copy of the report prepared by the police with regard to the Penelope Wilkinson (also known as Rhian Huxley) case. As a summary of the cultural failings within ip&e it is damning.

The investigating officer has so far uncoverefi a samewhat ungoverned Company set up in haste and which on the face of it appears so have had little financiai oversight. Company credit cards were regularly used and significant cash transactions appear to have taken place. Receipts were not secured, the filing of receipts that were submittied appears ad hoc and there does not seem to have been proper governance in place from accredited accountants. Indeed Rhian herself was required to undertake the tax return for the Campany despite having no accountancy experience. This is demonstrated by the fact that investigaiing officers have uncovered that the first potentially fraudulent transaction teak place in March 2014. Numerous others have taken place every month until January 2016 when the matter was eventuaiiy discovered and reported to police. Clearly, an established accountancy process would have uncovered such activity
sooner had one been in place. It is clear to investigating officers that IP&E was poorly set up and run and this fraud appears to have been easy as a result.