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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.

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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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I keep being asked what’s the latest with the PwC report that Eric Pickles was due to announce in the Commons last week.

The answer is that it’s all a bit unclear.

I’m told Tower Hamlets council, with a certain “coup de theatre“, dumped a whole load of new documents on the PwC auditors at the very last minute of the report’s preparation (and five months after the investigation started).

This has caused something of a delay.

Parallel to this is another potentially interesting little conundrum. At the end of August, High Court Judge Sir Kenneth Parker declined an application from the council for a judicial review of the decision to send in the auditors in the first place.

In his written ruling, he used the word “hopeless” to describe one of the council’s arguments. He firmly rejected the other grounds as well. His ruling is here:

3 - Tower Hamlets Judicial Review Judgement

3a - Tower Hamlets Judicial Review Judgement

However, as The Wharf reported in September, the council was undeterred and applied for an oral hearing before another judge.

This has been granted and a date has been fixed for next month.

Here’s the question I’ve asked…Surely it would be illogical to publish the report ahead of that judicial review? If the court rules in favour of the council, ie it rules it was unlawful to send in PwC, then surely that would mean the report itself was unlawful in some way?

Put it another way: what would be the point of the JR hearing if by that time Eric Pickles had already published the report? Would that hearing then be obsolete in practical terms? If the report was so damning that Eric determined intervention was necessary, could that intervention then take place if the JR rules his original decision was unlawful.

He’d be in a bit of a pickle, and embarrassed politically.

Wouldn’t the council’s lawyers want to apply for an injunction on publication of the report prior to the JR hearing? Camp Lutfur Rahman is keeping quiet on the matter.

Sources in Eric’s Department for Communities and Local Government, meanwhile, say the two issues are separate. But I do wonder whether they might wait until after the JR.

Maybe one of the learned readers out there can help?

As for the Election Court petition, that is still going ahead. I’m being told by town hall sources it’s likely to happen in January, although the venue is still unconfirmed. It’s quite possible it won’t take place at the town hall in Mulberry Place after all, but at another building that can accommodate an accompanying media and public circus.

York Hall, the famous boxing venue in Bethnal Green, might be one (very appropriate) option.

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My apologies for being relatively quiet over the past few weeks. Normal service will resume pretty soon.

In the meantime, here’s an update on the PwC report.

Earlier this week, Jim Fitzpatrick asked Eric Pickles in the Commons for an update.

Jim Fitzpatrick: The Secretary of State commissioned PricewaterhouseCoopers to conduct an examination of the finances of Tower Hamlets council. Tower Hamlets council will be paying for that audit. Will the Secretary of State update us on how long it will be before the auditors report?

Eric Pickles: We are talking in terms of a matter of days. I understand that the consultants have finished their report, but the facts will have to be checked with Tower Hamlets, and only when that process has been completed will I be briefed on it. I shall then have to make a “minded” statement, because Tower Hamlets will obviously have the right to respond before I make a final statement to the House.

Actually, Eric “misspoke” slightly when he said a “matter of days”.

The Department for Communities and Local Government has just issued a statement detailing the next steps.

As the council’s head of paid service, Steve Halsey, announced to staff this week, PwC’s team of up to 25 inspectors have now “withdrawn” from the town hall.

Their fieldwork was completed on September 8. They are now into the fact-checking phase. This means extracts of the facts contained in PwC’s draft report are being sent to interviewees (ie Mayor Lutfur Rahman and officers etc) for fact-checking.

It is expected this process will take 10 working days. Responses and comments will have to be returned to PwC by September 25.

The report might then have to be amended; while this phase has in theory no time limits, it’s unlikely to take more than two weeks. The report will then be sent to both Eric Pickles and the council.

Pickles will then consider what action, if any, he will take. He’ll probably make his decision within 24 hours before issuing a statement to the Commons. The PwC report will also be published at that point.

It is expected this statement and publication will take place in the week beginning October 13.

What actions might Eric take? Well, certain “direct functions” might be removed from the council and instead placed under the direct control of the Secretary of State, or independent commissioners appointed by him.

In other words, special measures. This might well be the grants or procurement processes, for example…but that’s purely my speculation.

Many in Tower Hamlets, including within Lutfur’s camp, believe Eric will at least impose a new council chief executive and relieve the clearly overworked Stephen Halsey from his head of paid services duties.

Camp Lutfur, and some senior Labour figures, also doubt whether the PwC report will, beyond installing a new chief executive role, contain anything more than a few rapped knuckles over processes.

This language tends to downplay the importance of following “processes” in local government spending decisions…

Jim Fitzpatrick and Lutfur’s team are also openly worried and critical of the potential £1million cost of the PwC report. As things currently stand, those costs will be charged directly to Tower Hamlets taxpayers.

It is inconceivable this will happen in reality. If the report finds governance failures, it will surely be sensible politically for Eric to announce that Whitehall will pick up the tab: why should innocent Tower Hamlets taxpayers face the double-whammy of suffering poor governance AND the cost of detecting them?

Meanwhile, Lutfur seems to be carrying on oblivious. Over last few weeks he’s been concerned with the important matter of choosing his next chauffeured car.

Nine days ago, this Volvo V60 Estate D6 AWD Plug-in Hybrid 5dr (Price £49,975) was seen in his town hall parking spot.

Mayor car[1]

A Toyota Prius hybrid (as I predicted here in May) has also been seen in that space.

A council spokesman said:

We are currently exploring  a range of transport options to assist the Mayor in his duties. As part of this process the more efficient and environmentally-friendly hybrid cars are being considered as a potential option.  

A car is necessary because the Mayor seeks to maximise his accessibility to the electorate by going to them rather than requiring them to come to the Town Hall. 

Most recently the Mayor trialled a more environmentally-friendly Volvo hybrid D6 for three days, at zero cost to the taxpayer.

But when I asked what other cars he’d tried out, Takki Sulaiman’s press office told me to submit a Freedom of Information request.

Which says something about attitudes towards openness and what they consider the “best value” for taxpayers’ money.

PS.. Sadly, I wasn’t at last night’s full council meeting, which didn’t fail to live down to its usual standards. Lutfur and his Tower Hamlets First party staged a walkout rather than debate why the council has spent money applying for a judicial review on DCLG’s decision to send in PwC. All councillors were apparently told by interim monitoring officer Meic Sullivan-Gould they risked jail should they breach the Contempt of Court Act in debating the issue.

The East London Advertiser’s Mike Brooke has the full story.

And here is the full text of DCLG’s statement today:

Update 11 September 2014

Inspection of the London Borough of Tower Hamlets: concluding stages

In April inspectors from PricewaterhouseCoopers were asked to look into serious allegations of governance failure, poor financial management and fraud.

PwC have now substantially completed their inspection fieldwork and are in the process of producing their report.

PwC has today (Thursday 11 September) sent certain factual information, which they may include in their full report, to Tower Hamlets Council for fact-checking.

Where individuals have given information in interviews which may be referred to in the report, PwC will also be sending relevant information to that individual by the end of the week.

The council and individuals receiving this information will have 10 working days to comment to PwC on its factual accuracy.

All this information has been provided by PwC on a strictly confidential basis solely for the purpose of this fact-checking exercise.

From Thursday 25 September PwC will be considering all the comments received, and finalising their inspection report, which must include any matters identified where the council has not complied with its statutory best value duty.

As required by statute once PwC has finalised its full report, it will then send a copy of that report to the Secretary of State and to Tower Hamlets Council.

Once the Secretary of State has received the report, he will give it careful consideration. Subsequently, in due course, he intends to exercise his statutory power to publish the report, and to make any statement he considers appropriate to Parliament.

If the Secretary of State is satisfied that Tower Hamlets Council is failing to comply with its best value duty, he may exercise his powers of statutory intervention. Statutory intervention may take a number of forms including directing a council to take any action that the Secretary of State considers necessary or expedient to secure its compliance with the best value duty, or directing that certain parts of the council’s functions be undertaken by the Secretary of State or by a person – for example a commissioner – appointed by him for that purpose.

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