A High Court judge today rejected Tower Hamlets council’s long running legal challenge to Eric Pickles’ decision to send in inspectors to the town hall.
Mr Justice Goss refused the council permission to proceed to a full judicial review of the legal basis for the inspection, which culminated in PricewaterhouseCooper’s highly critical report of the town hall last week.
Today was the second rejection of the council’s legal bid by a senior judge and its costs are in the region of £50,000.
In August, Mr Justice Kenneth Parker in a written ruling (here and here) had described the application as “hopeless” and “unmeritorious”.
Undeterred, the council, led by Mayor Lutfur Rahman and advised by Interim Monitoring Officer Meic Sullivan-Gould, then requested today’s oral at the Royal Courts of Justice.
However, the council’s barrister, Jonathan Swift QC, lost his argument.
The council’s legal costs on this case alone are at least £40,000.
Today’s judge also ordered the town hall to pay DCLG’s legal costs of £8,500.
When Eric Pickles announced the inspection in April, the council issued a statement “welcoming” the chance to prove it spent taxpayers’ money in a “best value” way.
The council was then criticised by the Government for dragging its heels during the inspection and while it contested its legal basis.
Local Government Minister Kris Hopkins said after today’s hearing: “We are pleased that the courts have thrown out Tower Hamlets’ legal challenge for a second time.
“However, it is disappointing that local taxpayers are having to foot the bill for the Mayor’s legal costs.
“This reflects a culture of denial in the local authority about the dysfunctional governance of the mayor’s administration.”
Mayor Rahman said: “Our case challenged the £1m cost of the audit and raises fundamental questions about the legal relationship between local and central government.
“We are disappointed that the judge refused permission for us to proceed to a full Judicial Review hearing. We are now fully engaged with responding to the Secretary of State’s proposals and will continue to do all we can to ensure that our residents interests come first.”
…………
This was Mr Justice Kenneth Parker’s written ruling from August:
Today, Mr Justice Goss said he could not do any better than his colleague. He read out ground three again in its entirety.
The first ground (on timing) was not considered again today as it was regarded as “hopeless” first time round, and Tower Hamlets decided not to put it forward.
……and two days ago, Ken Livingstone at the Water Lily rally urged Lutfur to hire the best lawyers and challenge Eric Pickles’ proposal to send in Commissioners.
Ken did not say that he would personally fund such a challenge. Funny that.
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?
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”.
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.
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.
Given the heat and potential significance of the sale of Poplar Town Hall, it was a bit surprising to see just one member of the press at the specially convened Overview and Scrutiny committee meeting in Mulberry Place last Tuesday: me.
And yes, I got a seat.
And I also won a minor battle with the council’s communications department, who had initially told me I wasn’t allowed to film the proceedings. The committee’s chair, Cllr Josh Peck, agreed to my request, although because at least one (anonymous) senior officer objected, filming the officers’ contributions, including that of development director Aman Dalvi, was banned. A battle for another day.
I apologise in advance for my iPhone camerawork (you try holding one steady for an hour), and the discussion is just about audible with the sound turned up. I’ve had to compress the quality so it can go on YouTube.
I’ll introduce the characters in a bit, but first a bit of background.
Dreamstar bought Grade II listed Poplar Town Hall after a rather unusual purchase process for £875,000. Within weeks Mujib applied for a change of use on the building from B1 (community/educational) to C1, which meant it could become a “boutique hotel”. It is thought this change of use, which he finally secured in 2013 (under planning officers’ delegated powers–no committee needed apparently), means the property is now worth millions.
Understandably, there have been allegations of cronyism, and worse.
Tory leader Peter Golds demanded an investigation in January 2014. Among the matters he asked for in the motion passed by full council was a valuation report to show what the building was worth in 2011, and what it would have been worth if it had been marketed as a hotel.
It is that last aspect which is troubling people.
Auditors from the Mazars accountancy firm produced a final report this month. Actually, unknown to opposition councillors, they did produce an interim report in February but somehow the council executive managed to kick that stick of dynamite to this side of the mayoral election. Funny that.
I wrote in detail about the Mazars report earlier this month, here. To say it raised a number of serious questions is an understatement. They found that key records on the bid process had either gone missing or didn’t exist at all; that a council lawyer predicted it would end in litigation; and that Dreamstar’s final bid was not only late (and therefore should not have been accepted, but also it was not even the highest. They also found evidence to suggest the mayor himself was involving himself in the actual sale process, which would be highly unusual. And much more.
The report was damning.
But when two of their senior managers appeared at the committee on Tuesday they provided what Lutfur will regard as a killer line to those accusing him or his administration of fraud.
They said:
“If we thought there’d been any dishonesty, we’d have reported to this to the police or external auditors. There’s a big difference between a few missing records and dishonesty.”
I apologise to Lutfur because as I was taking notes at that stage, I wasn’t actually holding the camera. So he’ll never be able to watch that moment.
However, I suspect more than a couple of the committee members weren’t convinced. And it was clear on Tuesday night that even non-political/lay members of the committee (who were actually the stars of the show) thought there had been at least some negligence, perhaps wilful
So here’s some more relevant background. Poplar Town Hall was first mooted for sale in March 2008 under Denise Jones’s leadership of the council. At a cabinet meeting in March 2008, one of the proposed options for sale and marketing was a small scale hotel.
However, nothing further happened until January 2011, three months into Lutfur’s mayoralty. In the intervening three years, the property was used as a temporary venue for the Ian Mikardo School. That use was coming to an end and Lutfur’s cabinet member for finance and resources, Alibor Choudhury, was concerned about the costs of securing a potentially empty building.
So in January 2011, Lutfur’s cabinet discussed the latest situation. Officers produced a report (as an update to that March 2008 decision) saying they estimated the value of the building at £1.5million. Officers were told to proceed for a quick sale.
Officers asked bankers from BNP Paribas to carry out a marketing exercise. Paribas valued the site at £750k-£950k. The offers that finally came in from bidders in June 2011 fell mostly within that range, although Mazars noted one officer remarking the narrow range of the bids looked “odd”.
Mazars also noted that none of the bidders, including Dreamstar or its shareholders, declared any interests with respect to the administration’s officers or elected representatives.
At Tuesday’s hearing, we were not, sadly, graced by the mayor’s presence. In fact, Josh told the committee he was still awaiting answers to a series of emailed questions.
Meic Sullivan-Gould, the interim monitoring officer, showed up and declared everything was fine. But he still got his knuckles rapped when he admitted he and other officers had “forgotten” to carry out the work demanded by Peter Golds’ January 2014 council motion. He said he and other senior officers had “overlooked” it, that they’d been unable to determine whose responsibility it was.
Sullivan-Gould also said the council would be able to claim a slice of the windfall profits Dreamstar will make from converting the building to a hotel, although no negotiations on that have yet taken place.
Aman Dalvi, the development director, also showed up and seemed to feel the pressure under some pretty intense questioning.
But the strangest exchanges came when Alibor Choudhury took centre stage. He does have an unfortunately bizarre manner when he’s performing in public, as this memorable “black cardigans” exchange showed earlier this year.
He may regard the committee’s motives on this subject as purely political, but he really should maintain the moral high ground and treat the body with a little more respect. Perhaps he’s copying his boss’s attitude.
His performance oozed contempt for almost every single person questioning him, so much so that he must have misheard or misunderstood the questions; otherwise, he seems to have told outright lies.
Several times he was asked if he knew any of the people who’d submitted bids for Poplar Town Hall. And repeatedly, he said No. “Absolutely, categorically not,” was his first answer. He then tried to explain he was unable to answer fully because Josh hadn’t put an actual name to him. Bafflingly, Josh was banned by the committee’s lawyer, David Galpin, from mentioning Mujib Islam by name, even though it’s a fact he was at least a director of Dreamstar, it’s a fact that Dreamstar owns Poplar Town Hall, it’s a fact he was named in the Sunday Telegraph, and all this is documented at Companies House and via other open sources.
Mr Galpin said he could only be named in a closed session of the committee, from which the press and public are banned.
And because we were banned from seeing those further exchanges, all we have to go on at the moment is Alibor denying in general terms that he knew Mujib, a man I thought he’d at times worked closely with in the 2010 election campaign.
Oh well, I’m sure that will come out in the wash..
Whether the committee will conclude there was any dishonesty or abuse of process is yet to be seen, but I think they’ll have an easier job saying value for money was not obtained on this historic property.
The two stars of last Tuesday night’s hearing were probably the two lay members: Nozrul Mustufa and the Rev James Olanipekun. They’re both parent governors in the borough. And they both asked the best questions of the night.
Nozrul was visibly incredulous and angry that neither the mayor nor any of his cabinet bothered to ask the obvious question at the outset of the sale; namely, what could the property have fetched if it was sold as a possibly hotel. He pointed out that this was in 2011, a year before the Olympics and when “hotels were popping up all over the place” in Tower Hamlets.
Nozrul said this is what we elect councillors and mayors to do: to ask these questions.
Alibor at first tried to argue his way out of that hole but then realised he couldn’t. So he blamed BNP Paribas. How responsible.
The full exchange lasts for 32 minutes; I think the best bits start just after 16 minutes with Josh and Alibor’s argument. However, the anoraks will want to view the whole lot.
I’ve also transcribed the exchanges from about 16 minutes onwards below. It all helps to give a full record.
As for the people you’ll see…by this point the two Mazars accountants had left, so their seats are empty; Meic is just to the left of the frame and he comes into shot towards the end. Straight ahead is Josh Peck, with David Galpin on Josh’s left. On Josh’s right are two other officers, the three Tower Hamlets First councillors, Maium Miah, Abjol Miah and Suluk Ahmed.
On the right as you look, you see the opposition councillors: Labour’s John Pierce, Denise Jones and Asma Begum; then Tory Cllr Craig Aston, the Rev James and Nozrul.
Alibor is right in front of the camera, with his back to us.
Here’s the video:
And here’s the selected transcript:
Josh Peck: Did you know any of the people who submitted bids for Poplar Town Hall?
Alibor Choudhury: Absolutely, categorically not.
JP: really?
AC: …give me an assertion.
JP: You don’t know any of the people who submitted bids for poplar town hall?
AC: Test me, throw me a name. I’ve told you no.
JP: I’m not going to bandy names around.
AC: That’s ok, I’ve told you no.
JP: Your evidence to us is that you knew no one who submitted bids for poplar town hall.
AC: Back in 2010, 2011..when the bids were being marketed and when the bids had come in, I did not have a clue
JP: That’s not the question I asked you.
AC: You were asking about the people and I’ve told you already, I didn’t know any of the people.
JP: You don’t know anyone who submitted…?
AC: Well name me a name, give me a name, it might jog my memory
JP: There’s a clear allegation in the media that someone pretty closely associated to the mayor [and..] his campaign ended up purchasing the Poplar Town Hall.
AC: You can’t use the media; in the media, they say that you cost the council £26,000 recently for rejecting Lovebox’s licence, which they got overturned in court. £26,000 of our money, taxpayers’ money. Now, if we go by the media, there’s a lot of things I can say to you, and you can say, so please be factual and stick to council records.
JP: I’m asking you a question; there’s an allegation in the media that names an individual and I’m not going to name that individual in open session..
AC: You have to, you have to; otherwise I can’t answer the question. Cllr Peck, it’s like sending me to a dark room and you know..
JP: Ok, we’ll go into closed session after this and we’ll go through some names.
AC: We don’t need to…this is public…Ted has every right to know. I think you should give us the name then test me. So I can then answer properly can’t I.
JP [turns to head of legal services David Galpin]: Mr Galpin, are you happy for us to name individual names?
David Galpin: I am concerned about it in open session, only because it concerns personal data from a third party; I don’t know who that third party is, so for that reason I’d be concerned about it.
AC: He’s concerned but it’s not illegal and I think journalists here have a right to know who this individual is. You don’t know how I will answer; it might be music to your ears, Cllr Peck. We don’t know.
JP: I’m asking you a general question about whether you knew, whether you know any of the people involved in the bids for Poplar Town Hall. You’ve said ‘no’ repeatedly, so that’s fine.. .
AC: Yeah.
JP: So we can take that answer from you.
AC: But you seem to know otherwise, you seem to be probing me thinking you might get a different response if you chuck a name at me, so why don’t you chuck a name at me.
JP: Given what I’ve read in the papers recently and given what I know, I am surprised..so we’ll leave it at that.
AC: What kind of interrogation is that?
JP: Do you know if the Mayor knew anyone who submitted bids for Poplar Town Hall?
AC: Give me a name and I’ll tell you..
JP: Did the Mayor know any of the people involved..?
AC: As far as I’m aware….No.
JP: As far as you’re aware, the Mayor knew no one who bid for Poplar Town Hall?
AC: Unless you give me a name, Cllr Peck, it’s very difficult for me to answer that question.
JP: We’ll go into closed session later. Did you declare any interest in the process?
AC: I wasn’t involved in the process apart from the decision-making part in cabinet
JP: Did the Mayor declare any interest in the process?
AC: I’m sure he would have if he’d had an interest….We’ll have to check our records
JP: Are you happy that a public building sold for £875,000 could now become a boutique hotel worth millions of pounds?
AC: I’m not sure I’ve got an opinion on that really.
JP: Any other questions?
Nozrul Mostafa: You’ve made reference that the £1.5million was an..estimate….at some point the value from BNP Paribas..was up to £950,000. When that was eventually founded (?), was there no question asked why the value was so low?…I know the officers made that decision; at some point cabinet, even the Mayor, I can’t believe the cabinet didn’t know that this building was going to be sold for X amount of pounds.. below even if it was an estimate and not a valuation..Ok, what is the reason why it was so much off the mark…even if the answer was that that was an estimate up in the air. Was that question ever asked: why are we selling it so cheap compared to the estimate? No one, not even the mayor or cabinet even raised it?
AC: It did come back to cabinet. We had the update report in January saying…that we needed to progress and officers would do that, and officers would report to the mayor at some point in time
NM: And in January, that valuation from Paribas would have been there?
AC: With all due respect, I think I’ve answered this already. We were satisfied that the decision made by officers on the basis they made those decisions, that decision was good enough for us. We were satisfied; therefore we did not question it.
Rev James Olanipekun: How closely does Resource and Development work together, given the fact they should be working in tandem?
AC: There is a relationship, Reverend. Resources and asset management work very closely together especially when it comes to disposals because disposals yield money and money comes into our coffers, which then forms our budget or the financial activity of the council..so there is clearly a hand in glove relationship.
JO: Given your submission, isn’t there the necessity to ensure true value for money?
AC: There has to be a degree of trust; these are our officers, they are experts in their profession; we rely on their advice and guidance. We have our political knowledge; we have the grassroots intelligence that we bring to the table. But ultimately, it’s about working together with these officers about coming to an understanding. And I believe we got there. Our job is to challenge officers as well, don’t get me wrong, we’re elected to advocate and represent our communities and challenge officers when the need arises but I felt it was robust enough and it got us where we needed to be. Otherwise the building could be empty still now, bleeding us hundreds of thousands.
NM: That’s the reason why I was asking. As an elected member, I find it quite disheartening that any councillor wouldn’t challenge their officers with reference to the price that they were selling it or marketing it for. This £1.5m was an estimate, but it was out there. That’s what the cabinet decision was based on to sell it. Now when it came, as the Cabinet lead member for resources, it was £1.5million and there’s a discrepancy there..why were no questions asked?
AC: There’s a simple answer to that.
NM: But was the question asked?
AC: There was a guestimate of £1.5million; at the time, the market determined we weren’t going to get that, you’ve got your eight hundred or whatever it was thousand pounds. That wasn’t because officers didn’t try, or the process was flawed, or anything else. Everything was there to ensure we would get the maximum. Clearly we didn’t achieve the £1.5m guestimate..
NM: Was the question asked? You keep saying guestimate? Was the question asked: it was at cabinet for £1.5million; I could understand if the answer came back that that was a guestimate, and that’s the answer, that’s fair enough..
AC: Let me put it another way…
NM: You keep saying the question wasn’t asked and you didn’t know.
AC: ..Say wed said this wasn’t enough and put it on the market again, and re-market it and revalue it, it doesn’t really help our situation does it? Given that officers clearly demonstrated they’d tried to get us the maximum value for that property, and the circumstances were what we foudn ourselves in at the time, we felt that would suffice. You keep asking me about questions, we could question…
NM: With all due respect, with 2012 coming up..in 2008, we had this policy of this being a hotel. This was marketed as an educational as a B1 use, which wasn’t a hotel use. I can’t believe there wasn’t anyone who asked for a valuation if this is being changed to a hotel, what would the valuation would be? I’m not sure if Paribas did that…
AC: ..that was after the fact though..
NM: ..they valued it at £850-£950k ..
AC:…that’s ‘as is’ though..
NM:…yes, as is…with a B1 use. With the Olympics around the corner, that we were having, did no one ask whether there was an element of this from 2008 when it was marketed as a hotel bid, what would the cost be as a hotel use?
AC: Fist of all, I’m not sure whether officers pre-empted it would be a boutique hotel at that time. It was marketed as a former town hall that had a range of uses, for education and community as one, and given that they followed their noses when it came to getting that valuation. If they’d have pre-empted it was going to be a hotel then who knows? But correct me if I’m wrong, the hotel proposal came after the sale.
NM: I’m saying with the various criteria that were there, I’m trying to understand why weren’t different scenarios put out there. If this happens at C1 use, if this has a B1 use, if this has a D1 use, these are the price valuations we get can get for this town hall. I know the planning application came in afterwards and it was agreed by whoever made that decision…My point is when Paribas gave the valuation why was it just valued at a B1 use and educational use? Why weren’t whatever permuations there could be, this is what it should be marketed as?
AC: We used highly skilled professionals to give us the best value for that property and to do whatever necessary to achieve that. Clearly, if you’ve found a weakness in that, we should take that to BNP Parnabus, Barnabus, Paribas, or whatever they’re called. I can’t sit here and preempt the future and assume things. We had to work with what we had; we had to work with an asset as is. And our job is to make that asset didn’t become a burden or a liability for the council. And that’s my job.
NM: Well, personally, we vote for councillors and cabinet members to ask these questions of their officers, so ultimately..it’s up to you to ask these questions and like I say, the bottom line is…it’s relevant it went to a hotel use afterwards, there was a hotel element when it first went to cabinet for disposal in 2008. I can’t understand why – given there were hotels popping up all over the place, in Commercial Road, on Cambridge Heath Road, Holiday Inns, hotels were coming everywhere–that we didn’t have an element where Paribas..well, I’m just going over it again.
AC: I think you’ve got a valid point. It’s a learning curve. Next time, we might not use BNP Barnabus, Paribas, because if they’re that useless and made oversights of that nature, maybe a recommendation that comes from this is that we strike them off and not use them again.
JP: One of the questions we asked of BNP Paribas is whether they’d been passed a planning brief that included a possible hotel use and they didn’t think they had.
AC: I can’t answer that, I’m not aware of that at all.
When I was sent this yesterday I thought it must be a fake or a joke. It’s certainly not the latter.
It’s the latest attempt at comedy from Tower Hamlets council’s in-house joker, the Interim Monitoring Officer Meic Sullivan-Gould.
He likes Facebook, does our Meic, and he seems a happy-go-lucky sort of guy. And at least he has good taste in international rugby teams (Wales).
But I’m not sure how well his latest offerings on social media (during the Panorama programme in March, he attacked the Mayor’s critics) will go down with the hard-pressed taxpayers of Tower Hamlets. Or his colleagues, or Mayor Lutfur Rahman and his team, come to think of it.
I’m not sure what rate he’s being paid as a contractor at Tower Hamlets council but his predecessor, Isabella Freeman, took a salary of £121,000. I suspect Meic would consider himself worth far more than that.
He’s lucky to be in a position where he can afford a new car, even if it is a crappy BMW Z4 (08 reg, worth about £10k). The vast majority of people who pay his wages (or, according to Meic, who paid for his car) can only dream of buying one. According to Tower Hamlets Food Bank, 70 per cent of all households in the borough survive on an annual income of less than £20,000.
So although I’m sure he meant no harm with his little jest (and he probably had a little bet it’d be reported – I’m told his toy is in the town hall car park today), it is a little crass.
In fact, it seems it’s a little tradition of his. Here’s his Facebook offering from March 2013, when he was taking the contractor’s shilling at Cheshire West and Chester council:
Such a scream.
Incidentally, he also wrote this on Facebook after last month’s Tower Hamlets council meeting, when I was ejected.
Thanks Meic!
(By the way, I will be blogging about the Overview and Scrutiny meeting on the sale of Poplar Town Hall on Tuesday, when there were some quite entertaining exchanges between Meic and the chair, Josh Peck, and between Alibor Choudary and almost everyone else… .)
Of all the many redacted documents released last week by Tower Hamlets council was a fascinating letter from the town hall’s “interim monitoring officer”, the Great Meic Sullivan-Gould (for he is indeed very great).
This dragon-slayer arrived at the council with, according to him, a stellar reputation in local government having served with a long list of the country’s finest councils.
The people of Cheshire West and Chelmsford are no doubt grateful for his Travelling Salesman services but for Meic, such praise wasn’t enough. He wanted a crack at the biggest crackpot of them all: Tower Hamlets.
So when the post became vacant in the New Year, having been vacated by Isabella Freeman and her interim successor Mark Norman, Meic offered to help.
He did his research, of course; he read The Telegraph, this blog and Private Eye’s Rotten Boroughs.
But why don’t we let him tell the story. Here’s his coquettish email to BBC Panorama reporter John Ware, which was released under FoI:
There are so many nuggets in here, it’s difficult to know where to start. For someone apparently so well regarded, he is a bit careless.
Forget for the moment his admonishment of Mayor Lutfur Rahman for his a “coup de theatre” (that’s a reference to the little game Takki Sulaiman and Lufur played at the outset of the mayor’s interview with John Ware when they handed the BBC thousands of documents requested two months earlier).
And forget his patronising dismissal of the journalism surrounding Tower Hamlets as “politically motivated” pursued by people “anxious to keep an easy but unfounded ‘Byword for sleaze’ story running”.
But do consider his dismissal of opposition councillors who he describes as “bitterly disenfranchised and largely impotent”. How neutral. You’ll remember he went further on the night of the Panorama programme by taking to Facebook to lavish praise on his boss, Lutfur. That little slip saw him banned from any involvement in the Election count, an astonishing state of affairs for the Monitoring Officer.
And another paragraph in that email might have similar consequences for an Overview and Scrutiny Committee meeting on July 22.
At that meeting councillors will be discussing a report by forensic internal auditors on the sale of old Poplar Town Hall.
Andrew Gilligan wrote about it on January 18 here. The building was sold in 2011 for £875,000 to a shell company called Dreamstar, which was established Mujibul Islam, who was a key ally of Lutfur in the 2010 mayoral election. Within months of that sale, the new owners secured under delegated powers a change of use for the building to a hotel.
Peter Golds and many others believed there was a whiff about it and demanded an emergency investigation by internal audit specialists at the accountancy firm, Mazars.
I don’t know why they bothered. Because on their books they already had the world’s best fraud hound.
You see, Andrew’s article a couple of days before Meic started work so he set about investigating it himself. This is what he told John Ware: “I have over the last few weeks reviewed the council’s files on specific property disposals and planning approvals and I have discussed the published concerns…As I told the people who have commissioned your work, I have found nothing to substantiate the concerns.”
Mazars’ final report has just been published here. It’s fascinating and I understand that Team Lutfur, while still of course maintaining clean hands, are furious at the council’s slipshod record keeping on something that was so obviously a hot potato from the outset. Ever so carelessly (ever so), the council has lost key documents and both Lutfur and Aman Dalvi, the council’s director of development, have “no recollection” of allegedly key conversations they are said to have had about the disposal.
The Mazars report should be read in full but as a flavour here’s a summary of their findings.
In March 2008, the council’s then cabinet (led at that time by Labour’s Denise Jones) declares the listed building surplus to requirements and orders officers to examine a possible sale.
In January 2011, three months after he was elected, Lutfur and his cabinet order an “accelerated sale” (between 2008 and 2011, the building had been used by Ian Mikardo school). Bankers from BNP Paribas then estimate it could fetch in those circumstances between £750-£950k. The cabinet decided against waiting for the property market to recover.
In May 2011, the property is marketed by BNP Paribas for six weeks.
In June 2011, 10 sealed bids are received, ranging from £876k in net present value terms to £350k. The Limehouse Project charity had offered £1.2m over 20 years, but that was worth £526k in real terms. All the other bidders were commercial enterprises and one individual. Among them was a £850k bid from Dreamstar.
On July 1 2011, Paribas write to bidders asking for ‘best and final offers’ by close of play on July 8 2011.
On July 11 2011, these best and final offers were opened in the presence of three council officers and two Paribas staff. Mazars find that neither the council nor Paribas have kept the official documents relating to the opening of the bids.
On July 11 2011, the best and final offer from Dreamstar arrives. It is three days late. And it has increased from £850k to £875k. Mazars state: “The offer from Dreamstar was received late and therefore does not comply with the council’s procedures.”Mazars asked why the bid was accepted for consideration and the council said it would have been ‘remiss’ not to have done so. The council claimed Dreamstar had told them they would be submitting a new bid and that they’d posted it on July 8… . Mazars add: “In addition to accepting the late bid from Dreamstar, we would note that the offer from Dreamstar was not the highest received and therefore the council, by not noting the reason for its decision not to accept the highest offer, has not followed its own policy in regard to accepting the highest offer either.”
On July 12, BNP Paribas advise the council to tell Mr X he is the highest bidder with £876,000 (subject to survey). They suggest telling him to prove he has the finance. They also recommend telling Dreamstar “they have been unsuccessful [and] to focus their attention on Limehouse Library”. They advise naming three other parties they are the “underbidders” in case Mr X fails to come up with the goods.
Throughout August a number of emails bounce back and forth within Aman Dalvi’s team. They are concerned that council delays might cause some bidders to withdraw interest.
On August 24, the council’s “head of valuation and estates” emails Aman to say “the range of returns [ie bids] is very narrow, which looks a bit odd to be honest”.
On August 25, the council’s Capital and Asset Management Board meets (although Aman is not present). The minutes state: “..there will be progress on this [Poplar Town Hall] after [Aman] has met with the Mayor today.” Mazars state: “We spoke to [Aman] who said he was not sure what this reference was made to, and reiterated that he was not present at the meeting when this point was minuted and that he had no recollection of speaking to the mayor in regard to this matter.”
On September 8, the council’s head of corporate property emails Aman Dalvi to say because the bids from Mr X and Dreamstar are so close (£876k vs £875k), they should be invited to a “contracts race” to see who can get to exchange of contracts first.
On September 14, Dreamstar is registered and incorporated at Companies House.
On September 15, Aman emails back to agree the approach.
On September 15, a note is placed on the legal file regarding the contracts race. The note is written by the “Council Solicitor”. It is not known whether this is Isabella Freeman, although the word ‘he’ in the following statement suggests not. The note states: “I said ‘My heart sinks’. How can we possibly have a race for property of this type which we are selling off on a long lease? It’s bound to end in dispute and litigation, all that needs to happen is for one of the buyers to say that that [Council Solicitor] in your legal department sent something out to the other side 24 hours before he sent it to us. However, [Asset Manager] is only doing what he is told, this has come from the Mayor. [Head of Asset Management and Valuation] was listening in and obviously volunteered to take over, so I spoke to him and expressed my doubts, which he didn’t really share, saying he had done contract races before when he was at Lewisham. He said he had made it clear in his report that £876 beats £875, and Aman agrees, but it has come from the very top…”.
On September 20, BNP Paribas invite Dreamstar and Mr X to a contracts race.
On September 29, Dreamstar win the race and contracts are exchanged.
On November 11, sale completes.
On December 6 2011, Dreamstar formally asks the council’s planning department for a change of use and listed building consent on the property to make it into a “boutique hotel”.
On July 3 2013, change of use is granted. Mazars are told the decision was made under delegated powers (rather than go through a publicly held committee) because the application didn’t trigger 20 or more objections and it didn’t meet various other criteria for that to happen.
Mazars in their final report are at pains to stress that the “sole purpose of this report is to assist the council in deciding what further action it may wish to take in this matter”.
In the event they make six recommendations:
1. “The council should locate the original bid opening sheet to examine what comments were made by officers at the time of the opening and identify what consideration was given to the bid from Dreamstar.”
2. The council should examine what legal advice it sought about accepting Dreamstar’s late bid.
3. The council should consider further interviews with staff and/or members to investigate the matter.
4. Council should consider whether another internal audit of its fixed asset sale processes is needed.
5. The council should consider whether potential buyers of council assets should be provided to make a declaration about any relationships with council members or staff.
6. Council should review the processes for deciding whether such change of use matters should be carried out under delegated powers.
All in all a murky mess.
Dreamstar’s original bid was below the highest bid of £876k. A council officer says the “narrow range” of bids looks “odd”. Dreamstar’s revised bid (after the original bids are opened) increases from £850k to £875k, but it is received late…against the council’s strict rules. Yet it was accepted. The council says it had a duty to secure value for taxpayers.
Crucial paperwork is missing. A council lawyer reports being told that a decision to trigger a contracts race between Dreamstar and Mr X came from Lutfur. Neither Lutfur nor Aman “recall” having any such discussion.
There may well be a series of cock-ups in here that give the perception of conspiracy. But it certainly doesn’t look good and it seems a council lawyer was so concerned they left a potential bombshell of a note on the legal file. That lawyer no longer works for the council but they might be called back to explain themselves.
But then again, we all know that would be a waste of time because Meic has already determined there’s nothing to worry about.
For a council perpetually under the cosh, Tower Hamlets doesn’t exactly help itself in the matter of public perception.
While I and many other journalists are used to being delayed by the Communications and Freedom of Information departments (actually, it sometimes seems they are one and the same), it’s probably not a good idea to deploy similar tactics with Government appointed inspectors.
Some on this blog speculated it was because the auditors had pre-booked holidays to honour. But it doesn’t work like that.
Today, Mr Pickles explained the delay to the House of Commons:
The investigators PwC have informed me the council has considerably delayed the investigation by delaying the provision of key information or simply not providing it at all. This is simply not acceptable and I am consequently extending the period for PwC to report. The cost will be met by the council. Whether the council likes it or not, this investigation will be thorough and comprehensive and I will update the House in due course.
Yes, there’s an element of politics in the language, but given it is PwC itself telling the Secretary of State the delays have been caused by the council, it’s serious stuff.
I have no idea what information the council is failing to provide. It could be a deliberate delaying tactic by the town hall’s lawyers (loose-tongued interim monitoring officer Meic Sullivan-Gould is in charge, so fear not taxpayers!); there’s some speculation they are considering an expensive Judicial Review on the audit.
That could also be the reason why the council is also refusing to supply me and other journalists a key spreadsheet. The day after the Panorama programme, Takki Sulaiman, the Head of Timely Communications, issued a statement to say the BBC had got its sums wrong. He said only £1.6m of the latest grants round had been awarded to organisations which had a Somali or Bengali CEO, chair or applicant. Panorama had accused Mayor Lutfur Rahman of increasing funding to Bengali and Somali groups by £2.1million to £3.6million.
We asked the council for a detailed breakdown of its numbers.
Last week, they refused the FoI request by relying on a Section 22 exemption, namely that the “information is being re-evealuated and it is intended to publish the information through the appropriate channels”. When I called for an explanation, an officer told me they were waiting for the PwC audit to finish because this information was being examined by them.
So I asked Will Kenyon, the PwC partner in charge of the audit, whether he had been consulted about the FoI request/refusal and whether he had asked for the answer to be delayed.
He replied:
As far as I am aware, your FOI request to the council has not been raised with us at any stage, nor has there been any discussion concerning the publication of the information you refer to.
So while the council was exceptionally quick to fire off its “rebuttal” statement in the wake of Panorama, it has been characteristically slow in providing the proof.
And still they complain when people ask “What have they got to hide?”
The tragicomedy that is Tower Hamlets council keeps on giving.
Yesterday morning the Met Police issued the following statement:
On Friday 4 April 2014 the Metropolitan Police Service received three files of material from the Department of Communities and Local Government (DCLG) relating to the London Borough of Tower Hamlets. These comprised of material referred to the DCLG by a member of the public and by the BBC Panorama programme.
The files have been reviewed by a team of officers over the past 6 days. In addition, officers have liaised with Pricewaterhouse Coopers LLP (PwC) who are conducting a full and wide-ranging audit of financial matters at the London Borough of Tower Hamlets.
There is no credible evidence of criminality within the files to provide reasonable grounds to suspect that fraud or any other offence has been committed at this stage. Therefore the MPS will not be investigating at this point in time and believe that it is appropriate for the material to be reviewed further by PwC and DCLG. We will continue to liaise with them should their audit uncover any evidence of criminality.
Which made Lutfur Rahman and his head of communications Takki Sulaiman crow with delight (expect ‘Mayor cleared’ headlines in East End Life and large sections of the Bengali press this week).
Takki was so bursting with joy that he turned into an eve of combat Colonel Tim Collins for the afternoon. Here’s an email he sent to fellow communications chiefs in other local London authorities:
Apologies for the mass email but as you know the battle for hearts and minds starts within the local government community itself!
A small step in restoring trust in LBTH is the announcement by the Met today that there is no credible evidence of criminality or fraud to be found in the Panorama files.
Our statement and the Met’s can be found on our (revamped) website.
This is a long journey and the auditors will be here for three months. Given the context of the elections we’ve also had to tone down the nature of our comms thus contributing to the challenge.
Regards
Takki
(Bless, he must be really worried about what they think of him.)
And here’s the statement he authorised his communications department to release to the wider world.
Council response to Met Press Bureau statement following BBC Panorama Programme
A statement was issued by the Metropolitan Police Press Bureau on Wednesday 16 April in relation to recent allegations made in the BBC Panorama programme on London Borough of Tower Hamlets.
A council spokesperson said: “The news from the Metropolitan Police is to be welcomed and Tower Hamlets will continue to work with the Auditors and DCLG.”
Let’s pick all this apart.
No allegations of criminality were “made in” the Panorama programme and Takki knows that full well. Yet he allowed his statement to mislead; this served the interests of his political master.
In his defence, however, the Met Police statement on which he was relying was also highly misleading. But Takki knew that was the case as well.
Here’s why.
In his interview with Panorama, the Communities Secretary Eric Pickles said he would be looking “very carefully” at Panorama’s evidence. So Panorama handed over two files to his civil servants who had already gathered evidence from elsewhere.
Apparently, those two Panorama files contained spreadsheet analysis and other evidence of how the Mayor overturned officer recommendations over grants in favour of Bengali and Somali third sector organisations, plus other matters.
I understand one of those other matters concerned about £11,000 of grants given to an organisation called the Brady Youth Forum.
Panorama started posing questions to Takki about this on March 7. When six days later Takki had still failed to reply (he’s a very busy man, you know), John Ware sent him a reminder with some additional questions.
Very helpfully on March 19, he told Panorama that there was an ongoing criminal investigation into the Brady issue. He told the programme makers the council had been notified about a fraud by a whistleblower in the middle of last year and that external auditors from Deloitte had reported back on the matter in January.
The Brady Youth Forum was one of several lines of inquiry which I gather Panorama felt needed more work on.
So they left it out of the programme, even though they knew a Fraud Squad investigation was under way.
So imagine our surprise when the Met said yesterday morning there was no credible evidence of fraud in the Panorama files!
I called the Scotland Yard press office for clarification. At about 5pm they called to say er, yes, there is an investigation relating to the Brady Youth Forum. Doesn’t that make your statement this morning a bit misleading, I asked? Er yes, you have a valid point, they said.
The police have now issued a “clarified statement”:
Here it is:
On Friday 4 April 2014 the Metropolitan Police Service received three files of material from the Department of Communities and Local Government (DCLG) relating to the London Borough of Tower Hamlets.
The files have been reviewed by a team of officers. In addition, officers have liaised with Pricewaterhouse Coopers LLP (PwC) who are conducting a full and wide-ranging audit of financial matters at the London Borough of Tower Hamlets.
There is no new credible evidence of criminality within the files.
Prior to this, a report was made to Tower Hamlets Police on 20 March by Tower Hamlets Council. The report concerned an irregularity with regards to money being awarded to the Brady Youth Forum, in January and April 2013, that was identified by an internal review. This investigation is being carried out by Tower Hamlets CID.
Therefore there are no new MPS investigations being carried out by the MPS as a result of information contained in the three files of material.
Spot the difference?
They’ve inserted the word “new” before “credible evidence”.
Which itself is odd.
I suspect there were two different teams in the Met examining two sets of files.
The file sent by the council regarding Brady Youth Forum was sent to Tower Hamlets CID on March 20 and I’m not sure how much work detectives there had spent on it.
And I’m guessing the files sent by DCLG were handed directly to a team based at Scotland Yard itself.
What’s not clear is whether those possible two teams actually spoke to each other, or compared notes. Had Tower Hamlets CID flagged up their file on the Brady Youth Forum?
Had a Scotland Yard team handed over information from Panorama on Brady Youth Forum to the Tower Hamlets CID team?
When I called up the Met Police press bureau yesterday, I was told they couldn’t find any reference to Brady Youth Forum on their main pan-London database.
They had to go and check at a local level.
I strongly suspect the Met as a whole was in fact in possession of credible new evidence as a result of DCLG’s actions; I suspect there was a lack of communication internally among the super sleuths.
But what’s also odd is the behaviour of the council in all this.
First of all, the Takki Sulaiman has a “setting the record straight” section on the council’s website. This is where he places rebuttals to stories he dislikes or doesn’t understand. You’d think from the title he’d at least strive for some accuracy. Yesterday morning he was very quick to publish the Met Police’s statement there.
Since then, I and others have told him and the head of paid service, Steve Halsey, that that statement has since been clarified. Has the council updated its website? Of course not (as at 5pm on April 17).
But forget for now the misleading statements because that’s just par for the course for Takki Sulaiman, but look again at the Met Police’s clarified statement.
They say they were notified by the council of the alleged Brady fraud only on March 20.
As I said above, Meic helpfully said Deloitte had reported back on the issue in January.
So why had the council waited all that time to go to the police?
It’s worth noting that some details of Panorama’s investigations into this had been contained in the ‘dossier’ taken to Lutfur’s office at the end of January by the so-called “whistleblowing” Bengali researcher.
The council presumably had sufficient evidence to go to the police, but it seems strange that they appeared to sit on it until Panorama began to hint they would be including it in the programme.
I said a couple of weeks ago that the back story to the Panorama programme might prove bigger than the broadcast itself. Watch this space.
Oh, and don’t forget…the auditors from PwC have only just started their work. This is the serious business of it all.
But you’d never have guessed from Lutfur’s latest press release.
Here:
Scotland Yard find “no credible evidence” in Tower Hamlets probe
Mayor Lutfur Rahman today welcomed the announcement by the Metropolitan Police that there was “no credible evidence” to claims of fraud at Tower Hamlets Council.
Mayor Rahman said:
“I have always maintained that there has been no wrongdoing and the Met’s decision that there is no credible evidence and not to investigate these claims is a vindication, however, the public now need to know who brought these allegations, why they were given such credence by the Secretary of State and whether the upcoming elections had any impact on the timing.”
The investigation was apparently based on documents presented to the Secretary of State for Communities and Local Government, Eric Pickles by BBC Panorama’s John Ware. Before the broadcast, a member of the programme’s own production team leaked production notes from the film and made accusations of political and racial bias on the part of the programme-makers. This evidence has been legally barred from publication by the BBC.
The dropped investigation is the latest of several inquiries into local democracy in Tower Hamlets that have returned no evidence of wrongdoing. In 2013, the Electoral Commission published a report into claims of voter fraud, investigating around 160 separate allegations and finding no evidence to support any of them.
Mayor Rahman added:
“There is a clear pattern in Tower Hamlets of opposition parties and sections of the media claiming everything from fraud to electoral malpractice to extremist takeovers in an attempt to discredit my administration. Once again, such claims have been shown to be lacking the critical factor of evidence. I hope that with these latest smears dispelled we can turn back to the issues that matter to local people’s day-to-day lives.”
For a lawyer, he does have a habit of talking conflated disingenuous bollocks, doesn’t he? Now even he’s trying to deny there’s a fraud investigation. Maybe his memory is failing him.
By the way, if anyone has any information about council contracts, grants, public money spent on PR and disposal of properties, they can write to PwC at lbth.inspectors@uk.pwc.com.
8.15am…This has just come to me. At 8am this morning a number of specially appointed auditors from PriceWaterhouseCooopers arrived at Tower Hamlets town hall in Mulberry Place on the express orders of the Department for Communities and Local Government.
Eric Pickles has heard enough and he has now put his words into action.
Officials at DCLG have been watching Tower Hamlets extremely carefully for many months, amassing their own evidence.
The BBC Panorama documentary on Monday was the final straw. Evidence amassed from that programme, and not just that relating to the broadcast itself, is also being examined.
I understand PwC’s people are taking away boxes of files relating to the grants process and the disposal of assets, probably including the sale of Poplar Town Hall.
Mayor Lutfur Rahman is due to hold an anti-Panorama rally in Stepney on Saturday. I suspect the tension will be ratcheted up.
More on all this later, but spare a thought for interim officer Meic Sullivan-Gould, who’s missing all this fun having flown to Japan…where they know what to do in these sorts of circumstances…
I’ve written a more detailed account for Express.co.uk here.
And here are the letters sent from DCLG to the council and PwC.
Meic Sullivan-Gould, a Past President of the Association of Council Secretaries & Solicitors, has ruffled a few feathers since becoming interim monitoring officer at Tower Hamlets council in January.
I’m told he’s a great fan of Private Eye and that he believes he’s a real bloodhound when it comes to sniffing out town hall wrongdoing.
He’s something of a travelling wilbury in local government circles. Councils queue up for his consultancy services, it seems. He must be the best thing since sliced bread. He’s an expert. In everything.
Except keeping counsel as a good lawyer perhaps should.
Within a few short weeks of of working in Tower Hamlets the white knight of local government was letting it be known there was nothing to investigate. He, Meic, had given the council and Mayor Lutfur Rahman a clean bill of health.
Nothing to be seen here, you pesky journalists and opposition councillors; run along now.
How he had managed to go through the books and processes of the council is such a short space of time, I have no idea. He must be superhuman.
And so confident was he of his thorough investigation, he took to Facebook as the Panorama programme was airing on Monday night.
The man he is chatting to is Mark Hynes, the director of law at Lambeth Council, who, significantly, is the President of the Lawyers in Local Government. So a heavy hitter. I’m not sure he’ll be most impressed about Meic’s privacy settings.
So what we learn is that Mark Hynes is shocked by Panorama’s findings. “Where were all the officers?” he asks. “..it would seem that the Bengalis through the mayor and cabinet are doing what they want.”
I’m not sure “the Bengalis” is a term he’d like to use again. And I think the headhunters will knock no more about him moving to LBTH.
But Meic doesn’t pick him up on his use of language. Instead he berates Mark for taking a view. In fact, Meic goes further: He offers his expert political analysis. “The mayor’s support will be galvanised by their unfair coverage….chances of a free fair and credible election diminished by an unnecessarily contentious rehash of longstanding unproven allegations!”
Remember, Meic had just watched a programme proving a dubious relationship between the Mayor and Channel S. Meic thought there were Chinese walls in place surrounding Mohammed Jubair’s work for the broadcaster and as a mayoral media adviser.
So in Meic’s view, Lutfur is not the Bad Mayor, but a good guy. Clean bill of health.
Part of his job, of course, is to be impartial on many matters, and to retain the trust of members and officers. He may just have lost that. They almost yearn for the return of his predecessor Isabella Freeman. I’m not sure he can hang around too much longer.
That’ll give him time to scour the pages of Private Eye (for articles about himself.)
Trial by Jeory 