UPDATED ~ Compromise Agreements ~ Wirral Council’s reckless approach ~ also, how the District Auditor is sitting on his hands

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Compromise Agreements ~ 19th September 2012

Today, within a much larger list of items, a detailed Internal Auditor’s report was presented to a meeting of councillors at Wirral Council (The Audit and Risk Management Committee).  If you’d blinked, you may have missed it.  Here it is:

http://democracy.wirral.gov.uk/documents/s50006042/Internal%20Audit%20Update%20Report.pdf

The local media hasn’t picked up on this item yet, and local papers went for the following subject instead, which looks more “tasty” and was brought before councillors at the SAME meeting [oh dear]:

http://www.liverpooldailypost.co.uk/liverpool-news/regional-news/2012/09/24/damning-report-prompts-wirral-council-review-into-gifts-and-hospitality-99623-31895671/

The subject I’ve decided to go with gives a worrying insight into a key area, one which very often touches upon scandal, controversy and malpractice.  It’s a crucial and sensitive process, but one which wasn’t being recorded correctly or receiving proper scrutiny and oversight.

Compromise agreements are “full and final settlements” issued by employers to departing staff.  They’re often hastily arranged when there’s a dispute, a whistleblowing incident, a serious complaint or an internal or external investigation.  Their use is growing UK wide and they are now becoming common even in redundancy and equal pay claims.  They often contain gagging clauses which prevent both the employee AND the issuing body from talking about the circumstances of the departure.  Some commentators have described these clauses as potential breaches of Article 10 – the right to freedom of expression – under the Human Rights Act.

The general assumption is there may have been a lot of staff departing from Wirral, but the public don’t know how many have left and how many have been issued with these agreements by the council; not in 2011 at least.  Furthermore, how many of these have had their silence bought?  If the Council are keeping figures, they’re not telling us.  They’re not “putting it out there”.

Perhaps now would be a good time to update this Freedom of Information request, lodged in early January 2011 ~ where Wirral was the very last to report of the 345 English councils approached for their historical six year figures on compromise agreements.

Due to the courageous and public-spirited actions of a growing number of whistleblowers exposing malpractice, Wirral Council has found itself mired in scandal going back many years.  It has staggered through several internal and external investigations, usually resulting in the departure of key staff – but the shadowy nature of the blood letting and the refusal to permit official oversight is now giving even greater cause for concern.  We are currently on our 5th Chief Executive within two years, having lost among others Steve Maddox and Jim Wilkie.

Wirral Council was never renowned for being open and transparent in the way it operates.  Rather, it is earning a reputation for minimising the impact of these fiascos in both factual and monetary terms, before lurching into cover up mode.  A desire to “manage its reputation” has become the overriding primary impulse.

Here, the Chief Internal Auditor, David Garry, (now EX-Chief Internal Auditor) has awarded Wirral’s “system” for compromise agreements just one star (the lowest level of assurance).  The relevant section of the report, highlighted in stark red within the document, begins:

“1. The system, process and procedure for all Compromise Agreements (whether above or below the threshold for referral to the Sub-Committee of the Employment & Appointments Committee), should be documented.”  (My emphasis)

He has also classified Wirral’s compromise agreements process as:

“An area within a wider list of items of a high priority nature where a fundamental risk has been identified that might affect the ability of a specific service area to achieve its key objectives.”

I’ve made the safe assumption that the Wirral approach to compromise agreements would not have been “fit for purpose” prior to the audit period covered here (1st June to 31st August 2012).  However, I’d go further than Mr Garry and state that the sloppy approach adopted will have allowed gross misconduct to go unpunished and malpractice to carry on unchecked.

Another point, perhaps for another blog post is: why has it taken so long for Mr Garry to uncover this state of affairs?  One would have thought there were audit mechanisms already in place, doing their business, that would have “red-flagged” it by now…………?

Among the staff to eventually receive compromise agreements were two key senior members of the Department of Adult Social Services, the erstwhile Employee A and Employee B, cleared of all allegations in 2008.

These two officers, although named by whistleblower Martin Morton and identified as key players within the Anna Klonowski Report (Employees 13 and 22), and widely thought to have been involved in years of learning disabled abuse, were potentially gagged, potentially paid off and allowed to depart, reportedly “by mutual consent” the day before the release of the full Klonowski Report in January 2012.

Former CEO Jim Wilkie is another potential candidate thought to have been eased out, or eased himself out, through a dodgy, unscrutinised, unrecorded legal document, drawn up virtually behind closed doors.

Since I posted this, rather than face the expected disciplinary process, Director of Law Bill Norman has again secured a six figure sum, securing so-called “redundancy”.  Press article here: Wirral News

To discover now that Wirral’s already tarnished public servants have buried themselves in a process found by internal auditors to have been suspect is in many ways not surprising.  But to discover that beneath the veil, and out of sight of prying eyes, a very large amount of public money will have been willingly handed over “no questions asked” in order to secure their silence, and to potentially protect the reputation of senior staff and the reputation of the council itself… is disturbing.

Above all though, the shameless enablement of further disabled abuse, done in our name, which could break out elsewhere in the future is disturbing, highly irresponsible and simply outrageous.

The danger has been cranked up further now as one of the senior employees, potentially given a “clean bill of health” by Wirral Council, is currently advertising his / her wares on the LinkedIn website; looking to pick up their next senior role in the care sector.

Mr Garry doesn’t busy himself with the failure to discipline those responsible for abuse, or the concealment of this abuse within legal documents, or the squandering of public money used in pay offs, or the shadow created over the future welfare of vulnerable and disabled people – they seem to be matters either beyond his audit, or of no concern to him – and concludes simply that there is a:

“3.2 Potential failure of the Audit and Risk Management Committee to comply with
best professional practice and thereby not function in an efficient and effective
manner.”

A related link: Concealing malpractice / enabling abuse with a Compromise Agreement / Gagging Clause


To follow: An emailed update from District Auditor Mike Thomas, and my response…..

Email received on 27th September 2012

Background.  Back in May 2012, I raised with District Auditor Mike Thomas the subject of the two former DASS senior officers who were gagged inside a compromise agreement, paid off a large sum in public money and NOT disciplined for their involvement in what looked like many years of abuse.  A very unhappy consequence of this arrangement was that further abuse was enabled by not “marking the cards” of the offending employees.  One of them is now looking for a senior job in the care sector elsewhere.

From: Mike Thomas [mailto:m-thomas@audit-commission.gov.uk]
Sent: 27 September 2012 15:51
To: ‘Paul C’
Cc: Liz Temple-Murray
Subject: Wirral MBC

Dear Mr Cardin

Thank you for your recent emails. I can confirm that I have now had a response to my information request to the Council regarding the issues within your emails that fall within my remit.

As I stated in a previous email any information I request from the Council is requested solely for the purposes of me carrying out my responsibilities as the Council ‘s District Auditor and for no other purpose. Section 49 of the Audit Commission Act 1998 places restrictions on disclosure by me of information I obtain in the course of my audit. Please also note that in my capacity as an auditor appointed by the Audit Commission I am not a ‘public authority’ for the purposes of the Freedom of Information Act.

My responsibilities as set out in the Audit Commission Act 1998, in broad terms, are as follows:

Firstly, to audit the financial statements and to give an opinion as to whether they give a true and fair view of the Council’s position during the year subject to audit, and

Secondly, to form a conclusion as to whether or not the Council has adequate arrangements in place to achieve value for money, the value for money conclusion.

In my Annual Governance report to the Council presented to the Audit and Risk Management Committee on Wednesday 19th September I stated that I intended issuing an unqualified opinion of the financial statements and an adverse conclusion on the Council’s arrangements for securing value for money. One of the issues that contributed to my proposed adverse conclusion was inadequate arrangements for dealing with compromise agreements as highlighted in an Internal Audit report which provided the lowest level of assurance – one star ‘limited assurance’.  My enquiries indicated that the inadequacies in arrangements highlighted by Internal Audit were evident in respect of a number of compromise agreements entered into by the Council during 2011/12. Whilst I have found no evidence of unlawfulness there was a clear need for the Council to improve its arrangements regarding compromise agreements.

The Council has acknowledged weaknesses in arrangements in this area: the Acting Director of Finance flagged them in his presentation to the Committee.  The Council responded to the criticisms by putting in place revised arrangements including a sub-committee of the Employment and Appointments specifically to consider proposed compromise agreements.  Given the changes the Council has made I am not proposing to take any further action with regard to this matter as part of my audit of the Council’s accounts for the year ended 31 March 2012.

Please be aware that Grant Thornton LLP were appointed as the Council’s auditors for 2012/13 with effect from 1 September 2012. I will make them aware of the issues raised.

The wider concerns you raise about ‘abuse’ are outside my remit and I note your various emails to the Chief Executive and the local Members of Parliament regarding your concerns.

Yours sincerely,

Michael Thomas

District Auditor

*********************************************************************
My response:
From: Paul C
Sent: 30 September 2012 09:06
To: ‘Mike Thomas’
Cc: ‘eaglea@parliament.uk’; ‘grant.shapps@communities.gsi.gov.uk’; ‘grahamburgess@wirral.gov.uk’; ‘davidarmstrong@wirral.gov.uk’; ‘l-temple-murray@audit-commission.gov.uk’
Subject: RE: Wirral MBC

Dear Mr Thomas,

Thank you for your response.

Firstly, does the extraordinary length of time that the council took to respond (four months) give you any cause for concern?   I’ve failed to pick up on any after reading your reply.

Secondly, I’m concerned that you may have “strung me along” for all this time, only to tell me ultimately that “abuse is outside your remit”.  You appear to have ‘washed your hands’ of the abuse, without offering any suggestion on whose remit you may believe it to be.

But thirdly, and my biggest concern is in the area of compromise agreements.  My specific complaint related to two of these in particular, regarding two senior DASS officers, which seem to have been drawn up hastily, without oversight, with the circumstances apparently not recorded – the finding of Wirral’s own internal Chief of Audit.  You are vague about which agreements in particular have lacked scrutiny, but it appears abuse has been concealed, further enabled and possibly hundreds of thousands of pounds in public money may have been handed to two senior officers who featured prominently as Employees 13 and 22 within the AKA report.  These officers’ behaviour was such that their imminent departure from office (a learning disabled abusive office) became a requirement – but due to complete lack of oversight and the council’s concerted efforts not to have its procedures in this area properly vetted, recorded, scrutinised and sanctioned, nobody knows what went on – it was all done out of sight and out of mind – even the Audit and Risk Management Committee appears to have been kept in the dark on the closer details.

This will be the ‘tip of the iceberg’.  There may have been a hidden compromise agreement issued to former Chief Executive Jim Wilkie.  Following request lodged in June 2012.  Not answered:

http://www.whatdotheyknow.com/request/agreed_departure_of_chief_execut

Moreover there are no figures for how many have been issued in total.  Where is the accountability for this public body?  I have copied in my MP to keep her informed on continued abject failure at her local council, and to highlight to her your response:

“The Council has acknowledged weaknesses in arrangements in this area: the Acting Director of Finance flagged them in his presentation to the Committee. The Council responded to the criticisms by putting in place revised arrangements including a sub-committee of the Employment and Appointments specifically to consider proposed compromise agreements. Given the changes the Council has made I am not proposing to take any further action with regard to this matter as part of my audit of the Council’s accounts for the year ended 31 March 2012.”

Do you see how inadequate your failure to take stronger action on this matter is?  Given the Chief Internal Auditor’s issuing of the lowest level of assurance for “compromise agreements” in his June to August quarterly audit report, and the discovery of another black hole in Wirral Council’s probity, you appear to have missed an opportunity to act properly and to order a further investigation into how disciplinary sanctions were circumvented, the legitimate and compelling public interest was sidelined, possible future learning disabled abuse was enabled, people were gagged, and large sums in public money were squandered.

Your failure to act and your acceptance of what may prove to be hollow assurances could possibly have given this broken council carte blanche to persist with its dreadful behaviour.  It may now have free rein to squander further huge sums of public money hand over fist, or to continue concealing and enabling disabled abuse within its legal documents in the future.  The danger remains, as you’ll see from this current link:

[link removed to protect data subject]

Yours sincerely,

Paul Cardin

UPDATE   1st October 2012

I’ve lodged an FoI request asking for Wirral’s figures for the number of compromise agreements issued in year 2011:

http://www.whatdotheyknow.com/request/total_annual_figures_for_comprom_347#comment-31617

UPDATE   9th October 2012

…no response to the above email yet from Mike Thomas, District Auditor.

UPDATE   16th October 2012

…no response to the above email yet from Mike Thomas, District Auditor.

UPDATE   23rd October 2012

…no response to the above email yet from Mike Thomas, District Auditor.  I have now given up on receiving anything from this particular public servant.

UPDATE   20th November 2012

Three further employees (anonymous ones) have left under compromise agreements, which are a type of full and final settlement which prevents employees from bringing (most) future legal claims against their former employer.  I suspect these will have included one or more gagging clauses  because, although the council is still in partial lockdown over these sensitive issues, the agreements appear to have been drawn up in dispute circumstances.

It’s progress.

In the past, an obscuring veil was drawn across such matters, and it was all done out of sight, beyond the view of the public or even of elected members.  The issuing of these agreements would have rung alarm bells and drawn unwanted attention – so, despite public proclamations from whichever council leader was in place of  “a new drive towards openness and transparency”, the process wasn’t monitored, recorded or democratically scrutinised in any way ~ and the public interest was stifled and sidelined.

So hooray.  The public have only had to fork out a total of £96,917.  I strongly suspect that this expenditure could have been avoided if matters had been dealt with in a more mature way, rather than going all heavy and dysfunctional on the disputing individual and treating them as ‘a problem which needed to be eliminated’.

Note the inferior sums on offer for ‘lesser’ individuals – whom I imagine were not movers and shakers, nor holding fast like limpets to the crumbling pillars supporting the dysfunctional upper tier of the council’s management.

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3 thoughts on “UPDATED ~ Compromise Agreements ~ Wirral Council’s reckless approach ~ also, how the District Auditor is sitting on his hands

  1. You’re right about the ARM meeting (where the reporting was mainly over the gifts register), however I did report on the first Employment and Appointments Sub-Committee (Compromise Contracts) on the 20th September 2012 here http://johnbrace.com/2012/09/20/employment-and-appointments-sub-committee-compromise-contracts-wirral-council-20th-september-2012/ . As the politicians decided to chuck out the press for the crucial agenda item 4, I can’t write much more than that about that meeting without spending a lot of time digging!

  2. Oh and as you mention a former Wirral Council Chief Executive Steve Maddox, I saw him on Thursday afternoon at Merseytravel in Liverpool. Shame I didn’t get a chance to chat, but he left at the end before I had a chance to.

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