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Predictably, there seems to be a rearguard action among Lutfur Rahman’s supporters to try and downplay the PwC report.

We can sum up their arguments thus:

1. PwC found no evidence or fraud or corruption

2. What about other councils such as Newham, Basingstoke and Dean, and Timbuktu (ad nauseam): why not investigate them, why pick on Tower Hamlets?

3. How dare PwC lecture Tower Hamlets taxpayers on the best value of public money when it ‘creams’ off millions in Government contracts.

4. It’s a Tory plot.

Numbers 2, 3, and 4 are the arguments of student common room (where 9/11 truthers might even find a home).

On Number 1, the report says it was made aware of nine cases of suspected fraud involving grants and contracts during its inspection, but it agreed to leave these alone as further questioning might jeopardise police/council investigations.

We can assume that money linked to the Brady Youth Forum was one of those nine and, as I pointed out in this post here in April, the council has some explaining to do on that.

The report, when you read it in detail, is excellent. As I’ve said before, the PwC auditors were clearly shocked by what they found.

And from the tone of the report, you can see where they believe the problems lay. I suspect they had some (probably more than some) sympathy with most council officers (although there are one or two significant exceptions to that).

On the other hand, they seemed wholly unimpressed with certain elected members and their powers of recall to remember important facts and details. The Mayor himself, lawyer, suffered from that problem, but he is much busier than his underlings.

The devil is in the detail, as they say. There was unjustifiable political interference in decision-making. Grant awards could easily have been made on the back of an envelope.

What I’d like to see is much more evidence on how the grant monies were/are actually spent. Which salaries are b eing paid for, what do they do etc etc?

When, in 2012, I highlighted the questionably invoices submitted by Gulam Robbani for his work as a mayoral adviser, there was outrage across the political spectrum, including from inside Lutfur’s camp.

Those invoices, which ‘detailed’ some pretty dodgy timesheets for his work, were signed off by the head of Lutfur’s office, Murziline Parchment. Did she check work done against his invoices? No. He may well have done work to justify his contract but those invoices didn’t show it.

There was no financial or management control in place. And when there are no such controls, you create an environment where wrongdoing can happen. Or where you don’t get the best value for public money.

That’s what PwC have highlighted. How many of these groups receiving grants are submitting solid invoices to back up their original applications?

Surely Lutfur’s supporters can see this? You wouldn’t run a business with your own personal money in that way, so why should a council be any different?

As for Number 2: let’s not forget that the politics of Tower Hamlets have been a nationally known basket-case for many years. It’s reputation become increasingly poisonous. You only have to watch to the video of Alibior Choudhury labelling former Labour councillor Ann Jackson a fascist-type ‘black cardigan’ (when she was in mourning for her ex-husband) to see how low it has stunk.

The dysfunctional politics (together with the challenging transformation to a mayoral system of governance) has caused real problems at officer level. The lack of a strong chief executive and a decent monitoring officer is both a symptom of that, and a contributory factor to the reputational chaos.

On Number 3. This is another form of whataboutery. Shoot the messenger. There are of course concerns about corporate lobbying of government and Whitehall waste. The latter has been something of a political mantra for Eric Pickles himself. But banging on about the bigger macro picture does a disservice to the actual cause.

If we have more scrutiny and adherence to processes at a grassroots/micro/town hall level, then there’d be less need (and work) for the likes of PwC. PwC were brought in because there were obvious failings in that respect.

Take care of the council pennies and the national pounds will better (to some degree) look after themselves.

As for Number 4: if it’s a Tory plot, might you argue: Why hasn’t Pickles gone after the country’s biggest Labour dominated authority, ie Newham?

Lutfur was an easier target, of course, because he was no longer part of the political mainstream. He didn’t have Labour support. But again, this is all part of the dysfunctional politics.

So where are we at?

The council has given its assurance to DCLG over the distribution of further grants, as required by Eric. It has until November 18 to make its representations on the proposal to send in Commissioners.

Some in Lutfur’s team want to take an aggressive stance and examine a possible legal challenge…another misguided David vs Goliath battle.

I know there are senior council officers who would rather now just knuckle down and take the medicine. Further legal challenges would just further erode the borough’s reputation.

Lutfur should see the appointment of commissioners as an opportunity. With them there, it’ll arguably be more difficult for people to criticise him. He’d benefit, both politically and as an administrator. He’d be better able to concentrate on his messages such as housing.

And when/if the Commissioners leave in 2017, a year before the next election, he might even have a good success story to sing about.

In the meantime, I leave you with PwC’s report on how the council co-operate with the inspection team (this, remember, after the town hall had ‘welcomed’ their arrival). The penultimate paragraph, 1.46, is particularly telling. The Interim Monitoring Officer is not named: It’s Meic Sullivan-Gould.

Timing and duration of the Inspection

1.28 The Inspection commenced on 4 April 2014, the date of the Appointment Letter. Our field work was substantially complete by 5 September 2014, since which time we have focused on fact checking with the Authority and with individual witnesses (see below for more detail) and in finalising this report.

1.29 In the Appointment Letter, we were directed to report our findings from the Inspection by 30 June 2014 or such later date as might be agreed between us and the Secretary of State. This flexibility reflected the inherent uncertainties at the outset of the Inspection. Examples of these uncertainties included the

volume and ease of access of information that might need to be examined; the extent, nature and implications of any issues that might emerge; and the level and timeliness of co-operation we would receive from the Authority.

1.30 By a letter dated 27 June 2014, PwC informed DCLG that it would not be in a position to report by 30 June. This letter formalised the position that had been apparent for some time prior to that date and which had been discussed between PwC and DCLG on a number of occasions. The primary reason given in the 27 June letter for the need for an extension beyond 30 June 2014 was the failure of the Authority to provide information on a timely basis, or at all, in relation to a number of important requests made by the Inspection team. Given the inherently iterative nature of the Inspection, the delay in provision of information had a significant impact on our overall progress in pursuing our enquiries in the various areas of focus, as well as our ability to plan for and arrange interviews, which were expected in turn to bring to light further information and documents that we would need to review and consider.

1.31 By a letter dated 30 June 2014 DCLG replied, agreeing to a postponement of the reporting deadline. It was proposed that further discussions should take place between PwC and DCLG in the first half of July 2014 to determine by when PwC could reasonably be expected to report under the circumstances. Those discussions led to the conclusion that we were unlikely to report before the middle of September 2014, but that the position would be kept under regular review.

1.32 For the sake of completeness, it should be noted that by a letter dated 4 July 2014 (received by PwC on 7 July 2014), the Mayor wrote to PwC objecting to the manner in which the Authority’s level of cooperation and responsiveness to requests had been characterised in PwC’s letter to DCLG of 27 June 2014 and asserting (in summary) that such characterisation was inaccurate and partial. PwC responded to the Mayor’s letter by a further letter dated 17 July 2014. In the 17 July letter, PwC rejected the Mayor’s assertions on the basis that there were no material errors of fact in our 27 June letter, and also took the opportunity to expand on some of the aspects of the Authority’s stance that had contributed to delays in the provision of requested information and documentation.

1.33 On 25 September 2014 we received a further letter from the Mayor responding to our letter of 17 July 2014 to him. The Mayor reiterated his view that our 27 June 2014 letter did not present an accurate and impartial view of the Authority’s co-operation with the Inspection. We remain of the view that our 27 June 2014 letter presented a materially accurate and fair view of the position. We will respond formally to the Mayor’s latest letter shortly.

Approach to our work

General principles

1.34  As directed by the Secretary of State through the Appointment Letter, our primary focus throughout the Inspection has been the four areas outlined at paragraph 1.8. Our approach to each of these areas is set out in more detail in the relevant sections of this report, however, at a general level, our approach to each area has typically included the following common elements:

Fact finding meetings with relevant officers (i.e. employees of the Authority) (“officers”) to gain an understanding of the operation of the area in question;

“Walk-throughs” of relevant processes to confirm our understanding;

Requests for information, data and documentation of relevance to the Authority’s financial systems, relevant processes generally, or individual programmes or transactions, as appropriate;

Detailed analysis of individual transactions or categories of transactions targeted on a risk based approach; and

Formal interviews with selected officers, councillors and the Mayor.

1.35  The above steps are iterative and often overlapping, rather than strictly sequential. Furthermore, while each of the four areas has been the subject of a separate work stream within the Inspection, there are certain points of cross-over between them, which are brought out in the relevant sections of this report.

Selection of items for detailed examination

1.36  Within the four primary areas of focus, the selection of specific transactions or categories of transaction for detailed examination has been judgemental and risk-based rather than purely random or statistical. As intimated above, the Inspection has not occurred in a vacuum. It was instigated as a result of concerns brought to light by a variety of sources, some of which have been aired in the media. In addition, further sources, from both inside and outside the Authority, have approached us with information during the course of the Inspection. We have also had regard to matters escalated through the Authority’s own governance processes, including the deliberations of the Overview & Scrutiny Committee (the “O&S Committee”) and the work of the Authority’s Internal Audit function. Finally, we have made our own judgements about where risks might lie given the nature of the transactions in question.

Information sourced other than from the Authority

1.37  In the early stages of the Inspection, we established a dedicated and regularly monitored email address (lbth.inspectors@uk.pwc.com) through which anyone wishing to provide information in confidence could contact us. This email address was featured on the DCLG website. Over the course of the Inspection, we have received 256 communications into that email address from 38 individuals. In addition, other sources have approached us directly (i.e. other than through the dedicated email address referred to above), again with information of varying degrees of relevance to our remit. Not all of these communications were relevant to our terms of reference, but those that were have been factored as appropriate, into our approach.

1.38  In addition to the above, we have also had dialogue with a number of former officers of the Authority about their contemporaneous knowledge of matters relevant to the Inspection.

1.39  We have actively sought to engage with those sources who have come forward and who appeared to have information of potential relevance to our terms of reference and where we required further detail or clarification. Not all sources have been able to back up their concerns or allegations with tangible evidence and in those instances, where we have not been able through our Inspection to fill this evidential gap, we have been unable to give the information they have provided much, if any, weight.

Fact checking by the Authority and by interviewees

1.40  The extensive factual components of sections 3 to 7 inclusive of this report have been subject to a fact checking exercise between us and the Authority. The Authority was given a 10 working day period from 11 to 24 September 2014 to review factual extracts and provide comments and, where appropriate, any additional evidence which it wanted us to take into consideration. In parallel, individuals whom we have interviewed, and from whose interviews we were proposing to cite particular statements (with or without attribution), were given the opportunity over 10 working days to review and comment on those citations. We have received responses from the Authority and the majority of the relevant individuals, which at our discretion we have reflected as we deemed appropriate in this final version of the report.

The Authority’s stance vis-à-vis the Inspection

1.41  On 4 April 2014, the date of our appointment, the Mayor’s Office4  issued a statement welcoming the Inspection stating “I welcome the Secretary of State’s decision to send independent auditors to review our grants processes. This review will demonstrate that the Council acts in the best interests of all Tower Hamlets residents ”.

1.42  On 1 July 2014 (some three months later) the Mayor wrote to the Secretary of State informing him that he had asked the Authority’s Interim Monitoring Officer to initiate a judicial review of his decision to instigate the Inspection. We note that, in refusing the Authority’s application for judicial review, the judge considered each of the grounds advanced by the Authority in its application as “unmeritorious” and the first ground as “hopeless”. We understand that the Authority has now applied for an oral hearing and that this is due to be heard by a High Court judge on 14 November 2014.

1.43  It should be acknowledged that the Authority gave assurances to us that the initiation of judicial review proceedings would not affect the on-going cooperation of the Authority with the Inspection. Notwithstanding the issues outlined below and elsewhere concerning the level of cooperation of the Authority and its responsiveness to our requests for information and documentation, it is fair to say that the commencement of judicial review proceedings did not in itself have any significant effect on the Authority’s dealings with the Inspection team.

1.44  At the outset of the Inspection the Authority established a Project Management Office (“PMO”) to oversee and manage the flow of information and documentation to the Inspection team and to assist in the arrangement of meetings and, in due course, more formal interviews. This was in principle a helpful step and created a useful mechanism for liaison between the Inspection team and the Authority, very much in accordance with our desire for there to be a clear line of communication and a single point of contact for formal requests. The Inspection team has met regularly with the PMO team to discuss the status of information requests and provide further explanation and clarification where necessary. Initially, such meetings took place on a daily basis, reducing in frequency as the Inspection progressed and the need for such frequent meetings reduced. We recognise the PMO team and no doubt many other officers have put in considerable effort to collate and provide the requested material.

1.45  Over the course of the Inspection, we made a total of 290 requests via the PMO for information or documentation. Some of these were quite broad, in some cases involving the provision of large volumes of documents or data, while others were for targeted items mentioned to us in meetings or interviews or referred to in other documents already provided to us. Inspectors are required to give three days’ notice of a request. In practice, we have not generally insisted on being provided with full responses to all requests within three days, recognising that some of our requests were substantial in scope or that the requested information or documentation might reasonably be expected to take longer to collate.

1.46  As discussed at paragraph 1.41 et seq, despite its public assertions of support for the Inspection, the Authority has at various stages raised a number of obstacles to our progress which have significantly delayed the provision of information or documentation and which in large part led to our request for an extension of the time table for the Inspection. These obstacles broadly related to the Authority’s concerns about the legality and/or scope of the Inspection. Additionally, the Authority raised issues as to whether or not we were entitled access to documents that might be covered by legal professional privilege.

Taking each of these in turn:

On 12 May 2014, we were informed that the Interim Monitoring Officer required us to “certify” a significant number of requests. There is no legal basis upon which the Authority could require such certification, and we were not prepared to do so. Furthermore, the form of words the Authority sought to prescribe in the certification defined the scope of the Inspection too narrowly and were therefore not in a form which we could accept, even if we had been prepared to do so in principle. All requests for which the Authority was taking the position that it needed individual certification were put on hold. On 13 June 2014 (just over a month later) without further explanation, we were informed that certification was no longer an issue.

On 7 May 2014 we requested access to certain legal files. This request was followed up as outstanding on a number of occasions until 4 June 2014 (almost a month later), when the Authority informed us that we were required to sign up to a number of written conditions and undertakings in relation to the requested material. These included an acknowledgement up front that all the said material was privileged, which we pointed out we could not know without seeing it first and which was unlikely in any event, given the probability that even legal files would contain material that was not itself privileged by virtue of the circumstances in which it had been created. Without our acceding to all of the Authority’s demands in relation to this material, we started to gain access to it on 16 June 2014, some six weeks after first requesting it.

1.47  One example of a request of central importance to the Inspection which was subject to very significant delay was the provision of basic accounting data covering the majority of the Period. Until 1 April 2013, the Authority used a JD Edwards Financial System, migrating to an Agresso Financial System during that year. While in discussions with the Authority about the provision of data from the current Agresso Financial System (which also resulted in some delay) we requested data from the JD Edwards Financial System on 29 April 2014. We know from discussions with relevant Authority staff that the data was extracted and ready to be provided to us by 12 May 2014. However, the Authority challenged the legality of this request, and it has continued to reserve its position on this matter, even as it finally authorized the release of the data to us on 20 June 2014, almost two months after the initial request and just ten days before our original reporting date. We have referred to the data from the JD Edwards Financial System and the Agresso Financial System together in the remainder of this report as the “Financial Data”.

 

After highlighting Rabina Khan’s live BBC London interview on this blog yesterday, it’s only fair to point to Lutfur Rahman’s rare live TV outing last night.

He granted BBC London political correspondent Karl Mercer some three minutes at 6.45pm. That’s way too short a time to interrogate him on matters of detail….and that’s the advantage the interviewee gains doing live TV.

The clip, which is available until 6.30pm, can be seen at 18minutes in here.

Karl suggests to him that weaknesses found by PwC included £407,000 of grant money given to organisations that failed to make the minimum requirements in application assessment process. Karl also suggests that some £100k was given to Bengali/Somali groups which didn’t even apply for grants.

Lutfur, in combative mode, replies:

Absolute rubbish. That’s not the case. If someone didn’t apply for grants they would not have got a penny. The assessment that this council, our officers gave awards to organisations that didn’t apply is absolutely wrong and it’s absolutely misleading, so let me correct that for the record.

People have to apply in the first place and a [r]/vigorous assessment process which is overseen by officers then is awarded the grants.

And on it goes with more defences of council processes. He said the applications went through proper processes, “overseen by officers” and via appeals channels to his cabinet.

As it happens, his interview came immediately after his monthly cabinet meeting in the room next door. It was the first one I’d attended in a while and while they always were, even under Labour, something of a rubber-stamping exercise I was struck by the lack of interrogation and the intellectual timidity of his members.

Of those cabinet members, who get paid £12,000 extra a year for their roles, only former deputy mayor Cllr Ohid Ahmed dared to ask a question of a senior officer. Good for him.

The only other councillor to ask a question was Lutfur’s old ally, Marc Francis of Labour, who welcomed a new council housing strategy but wanted reassurances on affordable homes numbers.

I wonder how happy these cabinet members are and what powers, if any, they genuinely have. Are they there for show…and the status and money of course?

This all comes down to governance. Is too much power invested in Lutfur and his unelected advisors and mayoral office?

Does that inner circle fully respect council processes?

In the area of grants, at least, PwC found that not to be the case.

I am going to write more detailed analyses of this report, but for the time being here’s a selection from the executive summary on mainstream grants (MSG) The last paragraph is revealing…or not, as the case may be.

(By the way, I think the BBC were confused in their assertion that some grants were given to groups which did not even apply. I think they were probably referring to 32 cases where the mayor intervened directly to increase their officer-recommended grant without the group itself actually asking/appealing for a review. See para 2.35 and 2.36 below.)

Development of MSG grant proposals

2.30 Officers from the relevant directorates evaluated grant applications in accordance with agreed criteria and scored each application on a consistent basis. Based on these evaluations, which were subject to moderation through discussion amongst officers and a degree of adjustment to reflect their analysis of gaps in expected outputs or outcomes as defined in MSG grant Service Specification documents, officers put forward a set of award recommendations in early August 2012. This was later than originally envisaged, owing to the higher than expected number of grant applications, which considerably exceeded that experienced in the previous MSG round (2009-2012). The August 2012 officer recommendations were for awards to 255 organisations totalling some £8.2 million across eleven different funding streams (covering a 30-month period, equating to £7.4 million pro-rated for 27 months).

2.31 During August and September of 2012, an iterative process took place, whereby one Member in particular who sat on the CGPB [Corporate Grants Board] intervened to make significant changes to the officer recommendations prior to their being presented to the CGPB. This has been explained to us as the application of “local knowledge” to achieve a wider spread of grant monies across more organisations, as well as seeking better to address key areas of need and promote a thriving third sector across the Borough (we have also been told that there were “errors” in the officer recommendations, albeit that the nature of these has not been specified). Taken together, these aims would in principle be unobjectionable in themselves, however the process by which they were pursued lacks transparency and is inadequately documented. Further, without a record of what local knowledge was applied it is not clear how this is linked to the assessment criteria for the MSG 2012-2015 awards.

2.32 There is evidence that officers were concerned as to what the basis for the proposed changes were and, indeed, evidence of a concern that such changes might reduce the effectiveness of the use of grants in terms of securing viable services from third sector organisations. Concerns of a similar nature were also raised by the chairman of the Tower Hamlets CVS, the sole external member of the CGPB. There was also an acknowledgement by the senior in-house legal adviser considering this issue that the changes were significant and that care would need to be taken to ensure that the process and its outcome could be justified.

2.33 The result of this process was a new set of recommendations which were significantly different from those made in August. Out of a total of 431 initial applications, the updated recommendation was different in 347 cases (81% by number). This included 15 applicants who had not met the minimum eligibility criteria even to undergo evaluation and scoring by officers. These applicants were recommended to receive aggregate awards of £243,500. A further 18 applicants were recommended who had, on the basis of officer evaluation, failed to reach the agreed minimum score to qualify to receive a grant and had therefore not been recommended by officers for an award. These applicants were recommended to receive, in total, awards of £407,700.

2.34 We note one example of Member input into the decision making of MSG 2012-2015 awards whereby Members recommended £40,000 of funding to an organisation despite identified manipulation in the documents provided to support the applications of the organisation and an Internal Audit report assigning nil assurance to the organisation’s control environment in September 2012. This organisation was not scored by officers as it failed to meet eligibility criteria. In addition to this we note that three other applications to the same funding stream, were turned down for funding with the following comment “this was a reasonably good scoring project, however there was very high demand for funds from higher rated proposals which meant that this project was not able to be supported”. Given the scarce resources available and the apparently good quality capacity already in place it is not clear how seeking to build capacity within this organisation was the best use of resources within this funding stream.

2.35 The new recommendations were put forward at a Cabinet meeting (open to the public) on 3 October 2012. At this meeting, the Mayor indicated that he was minded to accept the recommendations, however he was announcing a seven-day review period, during which grant applicants could ask to have their proposed award (or lack of award) reconsidered. In the event, some 177 applicants asked for their award to be reviewed. Of these, 76 were awarded an increased grant. In addition, a further 32 applicants received increases although we have not seen evidence that they had in fact asked for a review of their award.

Degree of involvement of the Mayor

2.36 In interview, the Mayor told us that he had not been involved in the detail of awards, although he had kept abreast of things generally through occasional high level discussions with one Member in particular. This is somewhat at odds with an email dated 8 August 2012, shortly after the initial circulation of the original officer recommendations, which stated that “the Mayor has requested a vastly expanded Appendix 1”.We also note that a press statement dated 1 April 2014 put out by the Mayor’s office in response to the BBC Panorama programme included an assertion to the effect that the Mayor, acting within his powers, had intervened in 32 specific cases (details of some of which were also given). We consider it likely that the 32 cases referred to in the press statement concern largely the same applicants as the 32 applicants, included in the final award, who received an increase without requesting that their awards be reviewed. In response to our request for clarification of whether or not the Mayor intervened in the manner suggested in the press statement, neither the Mayor’s office nor the Authority has been able to shed any further light on the matter.

Rabina kahn, tower hamletsCllr Rabina Khan, Lutfur Rahman’s cabinet member for housing, was the latest to draw the short straw for media appearances yesterday.

Lutfur himself only agrees to Panorama interviews these days.

His deputy, Oli Rahman, is considered, er, a little too bold for these occasions, so it was left to Rabina, who has previously worked for the BBC, to defend the council after the PwC report yesterday.

She has ambitions to become the Tower Hamlets First MP for Bethnal Green and Bow.

She gave the interview to BBC London News last night while standing in the foyer of the town hall in Mulberry Place. One person who witnessed it said she was being coached on what to say (during the interview itself) by the council’s head of communications, Takki Sulaiman.

I’m told he was waving at her like a disoriented semaphore operator. “No evidence of fraud,” was what he apparently mouthed at her repeatedly.

I think he may have put her off. Something did. It was a bit of a car crash. She should have been more natural.

The interview is about seven minutes in here.

(The clip is only available until 6.30pm tonight, so someone may want to put it on YouTube and send me link to save it for posterity.)

On April 16, 12 days after Eric Pickles sent PwC to Mulberry Place, Takki Sulaiman, Tower Hamlets council’s £100,000 a year head of communications and marketing (and publicity), wrote this in an email to me:

Maybe those who followed your lead may regret they rushed to judgment about LBTH and our processes? Meanwhile we get on with the business of running services – and working with the auditors.

I’ve been looking forward to publishing those words today.

It’s always easy to jump to judgment with Tower Hamlets council. Some of the “damning report” headlines that appeared across the media this morning were quite probably pre-planned.

I said in my last post I’d reserve judgment until I’d gone through some of the details and listened to the exchanges in the Commons.

Well, the exchanges among Tory and Labour MPs were universally damning, there’s little doubt about that. My prize goes to Ealing MP Steve Pound, who can always be relied upon for vivid language. He said the mayor’s office was responsible for a “foul, fetid, reeking stench” emanating from wonderful Tower Hamlets.

Eric himself was also up there. “There can be no place for rotten boroughs in 21st Century Britain,” he said…(to which Tim Minogue, the editor of Private Eye’s Rotten Borough column, tweeted: “Is that a threat?”)

But what of the substance of the report itself?

There was no knockout blow, but I have to say, the more you read the details, the more damning it is.

The tone suggests the PwC auditors were shocked by what they found.

The council and Mayor Lutfur Rahman are today trying to downplay its importance. They claim “no criminality or fraud” was found and that council processes had already picked up much of the PwC findings.

Pull the other one.

To paraphrase Takki, maybe he and Lutfur may regret they rushed to judgment about the journalists investigating and reporting on Tower Hamlets.

Lutfur, whose hopes of returning to Labour are now dead, may also regret the day he decided to “reform” the way grants were decided at the town hall. One of his early decisions as mayor was to abolish the Grants Panel, an open committee of councillors that published in full the background papers for their decisions, and replace it with a behind-the-scenes committee of mates and officers…with himself having the final say.

I warned at the time this was a mistake and I included it in a lecture to delegates at the Centre for Investigative Journalism in 2012. It was also the area I advised the Panorama team to go hunting when we first met in the summer of last year.

As it happens, the PwC report is a full vindication (not that one was needed) for the Panorama programme.

It’s worth noting this statement today from the BBC and Films of Record, the production company behind the Panorama programme:

We welcome the findings of the report. Panorama’s investigation uncovered serious concerns about the use of public money, and today’s report vindicates the strong journalism we have continued to defend amid inaccurate commentary and misinformation surrounding the programme. 

John Ware, Panorama reporter, said: “Even before transmission of Panorama, the Mayor insisted there was no merit in any of the very serious questions I and my colleagues at the BBC and Films of Record raised over his approach to governance. He said our motivation could only be explained by racism and Islamophobia. This was manifestly never the case and today’s report shows our journalism was 100% justified.”

Before we get into the detail of some of the report, let’s get a few other statements out of the way.

From John Biggs:

This is a shameful report that shows a disregard for proper, transparent, accountable decision-making by the current administration. If money has been allocated to preferred organisations or areas of the borough then it follows that others have missed out.

The Mayor cannot dismiss this damning report by independent auditors as an attack by his political opponents as he always has done until now. He now has nowhere to hide and should think very carefully about whether his actions are compatible with remaining Mayor.

Labour group leader Cllr Rachael Saunders:

Cllr Rachael Saunders, Leader of Tower Hamlets Labour Group said:

“Labour demands the highest standards of probity in our elected representatives, and this damning report vindicates the decision to expel Lutfur Rahman from the Labour Party.

Councillors in Tower Hamlets have been fighting unjust grants allocations and opaque, rotten decision making since Lutfur Rahman was thrown out of the Labour Party and stood as an “independent” Mayor.

Earlier this year we sought to start a recruitment exercise for a Chief Executive – we do not currently have one. Lutfur Rahman has chosen not to co operate.

Now PwC has called into question the adequacy of the council’s governance arrangements. It is a cause of sorrow and shame for this great borough that Luftur Rahman as Mayor has taken us to the point of government intervention.

He should consider his position. Tower Hamlets deserves better.

And Lutfur Rahman:

We need to be clear that there was no evidence of fraud or criminal activity identified in the PwC report published today.

All governance issues identified in the PwC report have already been highlighted by our internal processes and are being rectified accordingly.

Given that Tower Hamlets Council is one of the highest performing local authorities in London, and the wider UK for service delivery to our residents, I am surprised at the Secretary of State’s comments today in the House of Commons.

I believe that there is a huge disparity between the detail of PwC’s report and the level of the Secretary of State’s comments. We will be responding to Mr Pickles in due course.

This certainly sounds as if those clever lawyers at Tower Hamlets are urging some kind of legal challenge.

I think they and their masters would be wiser to pipe down, take the medicine, and get on with the business of governance. And prove to the Commissioners who will soon arrive to oversee parts of the authority that they’re semi-competent.

So what’s actually happened?

Eric Pickles was scathing in the House today, and he clearly enjoyed himself. Politicians like taking action, no matter how much they say they don’t.

Based on the PwC findings he’s proposing to appoint three Commissioners to oversee the distribution of grants, the sales of properties and council publicity.

The Commissioners will also oversee the recruitment of three senior positions on a permanent basis: a new chief executive, monitoring officer (bye-bye Meic Sullivan-Gould) and a new chief finance officer.

None of these positions is currently filled on a permanent basis, and that, according to the PwC, has been part of the problem.

In Tower Hamlets it’s easy to become immune to some of the goings-on. We’ve seen them time and again for far too long. But for newcomers, the situation is surely shocking.

So it’s not good enough for the mayor’s supporters to downplay important process failures or to suggest similar discrepancies would be found in a £1m audit of any other local authority.

As The Guardian’s political editor Patrick Wintour reports:

Pickles plans to dispatch three commissioners to administrate grant-giving, property transactions and the administration of future elections in the borough.

The commissioners, who will be answerable to Pickles, will be in place until March 2017 and are tasked with drawing up an action plan to improve governance in the council, including the permanent appointment of three senior council officers including a chief executive.

Pickles said his direct intervention was against everything he believed in, but he said the report, conducted by the accountancy firm PwC, showed the directly elected mayor, Lutfur Rahman, had sown division and should bow his head in shame at the report’s findings. Executive power had been left unchecked and misused, he added.

…Pickles said the report painted “a deeply concerning picture of obfuscation, denial, secrecy the breakdown of democratic scrutiny and a culture of cronyism risking the corrupt spending of public funds”.

He proposed that all Tower Hamlets grant-making, property disposals and publicity functions be sanctioned by the commissioners. In an attempt to reduce the threat of electoral fraud in the 2015 general elections, Pickles also announced that the appointment of electoral registration officer and returning officer are to be exercised by the commissioners.

He added that he wanted the council’s written agreement within 24 hours that they would not appoint an officer or make any grants pending the start of his intervention package.

He said grants had been distributed without rationale, any clear objectives, monitoring, transparency and with officer recommendations systematically overruled.

He pointed out that across mainstream grants by the council, 81% of officer recommendations were rejected, and more than £400,000 was handed out to bodies that failed the minimum criteria to be awarded anything at all. He added that Poplar town hall had been sold against official advice to an individual who had helped the mayor in his electoral bid.

The report is almost 200 pages long and I’ll do a series of write-ups over the coming days.

It is also likely to have cost more than £1m to produce. I had been expecting Eric to announce DCLG would pick up the tab, but he said the burden must fall on Tower Hamlets taxpayers.

That’s surely unjust–and a mistake politically. It gives Lutfur’s team an attack line. The politics of martyrdom plays well in Tower Hamlets, after all.

Would this report, had it been published before the election, persuaded many Lutfur voters to desert him? My instinct is not many, and I do wonder whether Rabina Khan might now be emboldened to go after Rushanara Ali in Bethnal Green and Bow in May.

In fact, there are some Lutfurites pondering the possibility he himself may resign and call a Mayoral by-election to re-establish legitimacy. I doubt he would.

As I said, more on the detail tomorrow.

It’s going to be a busy day for me today so apologies for being brief.

The PwC report is here.

I’m reserving judgment on exactly how “damning” it is. On a first glance there are serious criticisms on council process failures. These could amount, in series, to a damning verdict.

Eric Pickles is due to make a statement at 12.30pm but I suspect a new chief executive is inevitable. He’ll also possibly announce he’s appointing commissioners to take over the grants system and to oversee the sale of council properties.

PwC have certainly found governance failures.

They also hint that too much executive power has been given to one individual regarding the mayoral system. Tower Hamlets may be the extreme example which demonstrates a broader need for improvement in the system.

Politics in Tower Hamlets has been dysfunctional for many years. The arrival of Respect in 2005 blew apart Labour’s monopoly in the borough and that was the catalyst for instability.

The resulting revolving door of councillor defections and swapping of Labour group leaders created a factionalism that even highly regarded senior council officers found difficult to deal with.

We then had the worries over the influence of the Islamic Forum of Europe and its links with certain councillors. Then we had the Respect-led petition which paved the way for the directly elected mayoral system.

And then the Labour party imploded with the row over the selection of Lutfur Rahman.

So Lutfur became a powerful executive mayor as an independent without the checks and balances of a party group. He hired a brand new mayoral office, and that created its own power plays at officer level in the council.

On top of that, he was an angry man under extreme pressure, with one fundamental aim: to get re-elected.

I think he was then badly advised. He took direct control of grants and was surrounded by fawning bidders from external groups.

The dysfunctional politics also meant that when Kevan Collins resigned as council chief executive in 2011, we had an almighty bun fight over his successor.

In short, the successor never happened.

And we’re here today.

Note that East End Life was not examined by PwC and nor were nine examples found by the council of possible fraud in the delivery of youth service grants.

Exactly seven months after Eric Pickles ordered Government-appointed inspectors to examine the books at Tower Hamlets council, the Communities Secretary will tomorrow publish their findings.

The report from PricewaterhouseCoopers will be published on the DCLG website at 9.30am, just as a written ministerial statement is made in the Commons.

Three hours later, the minister himself will make an oral statement in the chamber outlining the Government’s response.

Only a handful of people know what’s in the report: ie at PwC and at the very top of DCLG.

At this time of writing (about 8.20pm Monday), even Mayor Lutfur Rahman does not know what’s in it. It may be that the report has been sent to the council’s Head of Paid Service, Stephen Halsey, but even that’s not clear. Presumably, Mr Halsey would have to brief Lutfur if he had received it.

So anyone claiming they’ve heard this or that about the report’s findings is quite likely spreading unfounded rumours.

However, it would be a surprise to almost everyone if Eric did not announce he was imposing a new chief executive on the council…at the very least.

Clearly, whether he goes further depends on what has been found.

Lutfur’s camp believe, from the various questions they’ve had to answer and check during the past seven months, that any direct Government intervention, eg the appointment of Commissioners to run procurement and grants, would be vulnerable to a legal challenge.

So we could see more taxpayers’ money spent on legal bills….on top of the cash currently going on lawyers for the judicial review of Eric’s original decision, a hearing due at the High Court on November 14.

When Eric made his initial announcement on April 4 (four days after the Panorama programme), the council “welcomed” the chance to clear its name.

Here’s that statement:

We welcome the opportunity to demonstrate that council processes have been run appropriately and to date we have seen no evidence to suggest otherwise. This inspection affords the borough the best opportunity to demonstrate that the borough has acted in the best interests of all residents. We will release further information in due course.

Well, you could say they had a funny way of showing it. There’s a feeling in Whitehall that the council deliberately dragged its heels over supplying information to the auditors.

As I’ve noted before, the inspection has been trying to determine whether the council has achieved “best value” with the public’s money. Handing it to lawyers to try and block that process didn’t go down too well. It fed a narrative.

Has there been any fraud? I have no idea. Certainly, Panorama never made that allegation….although their team did find evidence of a fraud linked to the Brady Youth Forum, as mentioned here.

If the PwC report hasn’t found fraud, expect the Lutfur line to be “I told you so”.

But I’d be astonished if there isn’t severe criticism of the council tomorrow.

A minister like Eric Pickles just doesn’t make oral statements to the Commons so he can have egg chucked in his face.

So over to you, then, Eric, me old chum.

This is a guest post by Andy Erlam, one of the four Tower Hamlets election petitioners (along with Debbie Simone, Azmal Hussain and Angela Moffat). It’s a response to my blog post yesterday, here.

It is kind of Ted Jeory to give some more uninvited advice about how we best manage the Election Petition case.  However, we are sure Commissioner Mawrey QC does not need his instructions interpreted by Ted.

The Commissioner has announced that he may allow statements to be included in the case without the names and addresses being revealed to Lutfur Rahman or John Williams or their legal teams. This is a significant development which we had a duty to inform the press and the public of.

There are some other inaccuracies in Ted’s account, which is not surprising as he did not attend the Press Conference.

Who did attend, we are told, was a spy for Lutfur Rahman, an uninvited solicitor, a trespasser in fact, so Ted may wish to check with him/her.

The comment made by Janet Digby-Baker OBE was slightly misquoted. The case she was referring to was another case and she made it to illustrate how nasty intimidation can become.

Of course, the intimidation and the threatening of witnesses is itself an extremely serious criminal offence, punishable by imprisonment on conviction.

This is the worst way to show contempt for the court and we will not shy away from reporting each and every reported incident to both the court and to the police and carefully monitor progress of any investigation. The police have not yet covered themselves in glory in this case, but we live in hope.

We will respect the court but we expect our opponents to respect the people.

The Scrutiny of the entire mayor election vote starts in the High Court on Monday morning November 3 and as it takes place in the Royal Court of Justice, we can expect that it will be a sedate affair with special care taken towards transparency and due process.

We leave it to your readers to decide whether this will be better than the Tower Hamlets election count of May 23-27.

Instead of sniping ‎from the sidelines, Ted should get back to some quality investigative journalism:

Who is financing Lutfur’s hugely expensive legal team?

Are we certain the Tower Hamlets ratepayer isn’t somehow financing Lutfur’s legal team?

What does the PwC report show and recommend?

Surely a leak from PwC can be organised? I am reliably informed that LBTH has tried to “lean” on PwC which if true is surely another gross miscalculation.

‎Ted predicted wrongly that we would be laughed out of court at the initial High Court hearing in July.

In fact, the unwise attempt to have the case struck-out supported by 10 QCs and solicitors ‎(yes 10 and some paid for by the tax payer) against our brilliant barrister, Francis Hoar, was thrown out of court.

A further High Court Challenge over the PwC report, also paid for by the Tower Hamlets taxpayer, was later rejected by another judge as “hopeless”.

That has not deterred the mayor from seeking another expensive oral hearing which will take place on November 14.

Ted may be impressed by famous QCs but we will not be intimidated. Taking on hugely expensive lawyers is not a sign of strength, but of weakness.

We are not frightened of anyone.

Comment by Ted Jeory: I’m a bit puzzled that a petitioner who is going to court over allegations of impropriety is urging someone in PwC to leak an official report. I think Andy is right to ask who is funding Lutfur’s legal team; maybe he should set down a marker and fully disclose who is funding his own team.

I maintain that the petitioners are brave…but they’d perhaps be wiser to do their talking in the courtroom (as I think Richard Mawrey QC would prefer).

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