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east end life

Bundles of East End Life left in the rain at the Bow distribution depot in 2012 (copyright Ted Jeory)

Is the end in sight for East End Life? It’s been predicted many times before.

But last Friday, Eric Pickles’s Department for Communities and Local Government quietly announced its latest move against 11 councils which continue to publish freesheets more regularly than the Government would like.

Not surprisingly, Tower Hamlets council’s weekly version–which has been the prototype for so many others, which costs far more than the council claims, and which drains vital funds from frontline services–is one of the top targets.

Ministers have given the council until October 9 to respond to their demands the paper should be published no more than four times a year. After that, the department will consider legal action.

Let’s quietly note that the deadline comes the week before Eric Pickles is due to stand up in the Commons and announce the outcome of, and any action arising from, the PwC report into ‘best value’ spending at Mulberry Place. East End Life was part of PwC’s remit.

The letter sent out by DCLG last week is scathing. It says Tower Hamlets is failing to abide by the local government Publicity Code. The council strongly contests this and claims East End Life is popular and serves a public interest. The council says EEL reaches hard-to-reach groups.

DCLG, on the other hand, maintains there are other ways of communicating with such groups and notes the council’s own boasts that broadband access in the borough has risen to 85 per cent.

The government also wants a “flourishing…independent and politically free local media” and argues East End Life works against that. It effectively says East End Life is biased towards Mayor Lutfur Rahman (as it was to the former Labour administration until October 2010).

It says other councils manage perfectly well with quarterly news-sheets, and were there to be any special circumstances in Tower Hamlets, these would justify no more than a couple of extra “special editions” in any year.

The London boroughs of Enfield, Greenwich, Hackney, Hillingdon, Lambeth, Newham and Waltham Forest, as well as Luton, Medway and North Somerset councils have received similar letters.

This is what Local Minister Kris Hopkins says:

Frequent town hall freesheets are not only a waste of taxpayers’ money but they undermine the free press. Localism needs robust and independent scrutiny by the press and public.

Councillors and political parties are free to campaign and put out political literature but they should not do so using taxpayers’ money.

This is the eleventh hour for 11 councils who we consider are clearly flouting the Publicity Code. They have all now been given written notice that we are prepared to take further action, should it be necessary, against any council that undermines local democracy – whatever the political colour.

And here are some extracts of the letter to Tower Hamlets council, the full copy of which I’ve attached below:

The basis of the Secretary of State’s proposal 

Information available to the Secretary of State indicates that the London Borough of Tower Hamlets does not attach sufficient importance to ensuring the lawfulness of its publicity. In January 2013 Ofcom concluded that an advertisement, showing the Mayor associated with the house building programme in the borough, was a political advertisement rather than a public service announcement and so breached section 321(3)(g) of the Communications Act 2003 and the UK Code of Broadcast Advertising. The Secretary of State is not aware of any subsequent acceptance by the London Borough of Tower Hamlets of the unlawfulness of this publicity or any firm public commitment of the Council to ensure the lawfulness of all its future publicity and accordingly is proposing the Direction above in relation to the specified provision on lawfulness. 

The balance which, with the approval of Parliament, the Publicity Code strikes is that the newssheets etc. of principal local authorities should be published no more frequently than quarterly. Moreover the Secretary of State recognises that the great majority of councils already publish their newssheets no more frequently than quarterly, notwithstanding the wide range of groups that display protected characteristics in the areas of many councils. 

Officials from the London Borough of Tower Hamlets wrote to the Secretary of State arguing that following a review of ‘East End Life’ in 2011, the publication was redesigned, TV listings were removed and the publication was made shorter. They also argue that ‘East End Life’ is the most cost effective solution as the weekly publication aims to run on a net-nil budget.

The Council notes that cost effectiveness in one of the seven principles in the Publicity Code, and that advice taken by the Council in 2011 and a finding by the then District Auditor indicated that the decision to proceed with weekly publication was lawful and justified having regard to the provisions of the Publicity Code. The Secretary of State’s provisional view is that these arguments do not sufficiently outweigh the case for as far as practicable maintaining an environment as conducive as possible to the flourishing of an independent and politically free local media, which is an essential element of any effectively operating local democracy. 

The London Borough of Tower Hamlets has not drawn to the Secretary of State’s attention any other special circumstances that could justify a departure from the frequency recommendations of the Publicity Code nor is the Secretary of State aware of such circumstances. Moreover, in any event, the Secretary of State considers it likely that were there to be any such circumstances, these would only justify one or two extra ‘special’ editions each year.

Public sector equality duty 

In considering the impact of any direction on the London Borough of Tower Hamlets’ public sector equality duty, the Secretary of State has noted that the Council consider that a printed weekly newsletter is “particularly important amongst those seeking work, older white residents and BME residents”.

The Council also state that there is reliance upon ‘East End Life’ by “key demographic subgroups in the Council’s area which, if there was no weekly publication, would otherwise have limited access to relevant information”. The Secretary of State also notes that the Council state that broadband access in Tower Hamlets has increased to 85 per cent and that the Council “would willingly negotiate a manageable timescale for transition to digital delivery”. 

The Secretary of State recognises it may be the case, as the London Borough of Tower Hamlets have commented, that some groups in the community that display particular protected characteristics, such as age, disability or religion/belief will less readily be able to obtain the information currently circulated in ‘East End Life’ and hence all other things being equal could be adversely impacted.

However, the Secretary of State believes that it is open to a council having such protected groups to effectively communicate as necessary with them about the services and other matters which are the responsibility of the council without publishing newssheets more frequently than quarterly.

The Secretary of State recognises that the great majority of councils already publish their newssheets no more frequently than quarterly, notwithstanding the wide range of groups that display protected characteristics in the areas of many councils.

Moreover, even if there is an adverse impact the Secretary of State’s provisional view is that the proposed Direction would be justified because of the Government’s overriding policy of maintaining across the whole country an environment that is conducive as possible to the flourishing of the independent and politically free local media. Such media is an essential element of any effectively operating local democracy and hence the pursuit of this policy is a high priority.

DCLG explains that publicity by local authorities should:

  • be lawful
  • be cost effective
  • be objective
  • be even-handed
  • be appropriate
  • have regard to equality and diversity
  • be issued with care during periods of heightened sensitivity

It does not inhibit publicity produced by political parties or councillors at their own expense.

And it says, “On appropriate publicity the Code states that:

Where local authorities do commission or publish newsletters, news-sheets or similar communications, they should not issue them more frequently than quarterly, apart from parish councils which should not issue them more frequently than monthly.

Here’s the DCLG letter to the council’s head of paid service, Steve Halsey.

And here are some more pictures of council waste:

East End Life

Copyright Ted Jeory

East End Life

Copyright Ted Jeory

East End Life

Copyright Ted Jeory

East End Life

Copyright Ted Jeory

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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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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:

Interviews Interviews2

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.

 

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SEE UPDATE BELOW FOR EXTRA LETTER FROM PwC to DCLG

You’ll probably have heard by now (as I predicted here eight days ago) that Tower Hamlets council is filing for a High Court judicial review of Eric Pickles’ decision to send in PwC to inspect their accounts.

They announced their move yesterday, the day after Eric stood up in the Commons to tell MPs the council had caused a “considerable delay” in the inspection by failing to provide documents.

The full grounds for the council’s court action aren’t (as far as I’m aware) yet publicly available. Lutfur Rahman’s team (advised and encouraged by interim/consultant monitoring officer Meic Sullivan-Gould) believe they have a good case, although they haven’t yet laid it out.

The writ will become publicly available soon enough, but all we have to go on at the moment is a letter written by the Mayor to Eric Pickles yesterday. And that seems to focus on the costs of the audit, which the Government has estimated at about £1million.

That £1million will be borne by Tower Hamlets council, presumably regardless of the outcome.

So you can see there is a game of very high stakes poker here…and it’s not just limited to the politicians. Remember who wrote to the council’s Macavity Cat head of paid service Stephen Halsey in the first place? Answer…Sir Bob Kerslake, who is not only the permanent secretary in the Department for Communities and Local Government, but also the Head of the Civil Service itself.

If LexLutfur/Super Rahman wins, both Eric and Sir Bob will have some pretty serious explaining to do to Parliament. Which is partly why the DCLG said it would “robustly” contest the judicial review yesterday. Another simpler reason might be, of course, that Sir Bob strongly believes the decision was correct.

That said, I thought it would be useful to highlight here in one place all the publicly available correspondence on this issue.

Here are the letters from April 4 from Sir Bob to Halsey and from the DCLG’s Helen Edwards (in charge of the Localism section) to Will Kenyon, the partner at PwC:

bob kerslake, tower hamlets BK to SH 4 April2 PWC - Appoint finalPWC - Appoint final2These letters outline the scope. They say DCLG has received documents suggesting poor governance and suggesting possible fraud. They say PwC has had an initial review and further investigations are recommended. They say a file has been passed to the police and that the Panorama programme on March 31 has also raised further concerns. They say the inspection’s scope will relate to grants, transfers of fixed assets, the council’s publicity, and the way the council enters into contracts.

On the file to the police. We know the Met announced in May that it found “no new credible evidence of fraud”. But those files in DCLG’s possession did contain evidence of possible fraud in relation to the council’s dealings with the Brady Youth Forum. We also know that the council was aware of that alleged fraud in January (following a report by internal auditors Deloitte) but that was only reported to the police TWO months later AFTER Panorama started asking the council questions about it. It’s a good bet that PwC are asking why.

On the Panorama programme. I’m not sure Sir Bob is right to say that Panorama in its broadcast alleged “possible fraud”. It didn’t mention fraud at all. It questioned Lutfur’s governance.

On the scope of the audit, the areas look fairly clear to me, although I can see why the council might be arguing vagueness in relation to the way into enters into contracts. That said, without the keys to those doors, PwC would be pretty hampered.

On costs. Sir Bob tells the council it must pay PwC’s “reasonable fees”. Reasonable is a term loved by judges and lawyers and it means what it is. PwC isn’t allowed to lengthen the investigation merely to inflate its fees. And would it be reasonable to (as the council suggests) place a cap on PwC’s costs? PwC will go where the evidence takes them so this might well explain the frustration felt by council officers at having to produce yet more files as well as overseeing the “excellent” everyday services the council carries out.

Which brings us to the next set of letters.

*UPDATE: Thanks to Mark Baynes of the Love Wapping blog for highlighting this next letter, which I missed from the original post here. It’s a letter from Will Kenyon at PwC to Paul Rowsell, a senior director at the DCLG. In it, Mr Kenyon outlines the delays and gives examples of missing information. It’s a very useful insight into the kinds of questions being asked and paperwork sought. It’s a mind-numbing task and helps explain why auditors are paid so well… . One of the questions appears to relate to an advert placed with five Bengali TV stations, including Channel S, which was later censured by broadcasting regulator Ofcom.

 

140630_-_PwC_to_PR_final

140630_-_PwC_to_PR_final2

140630_-_PwC_to_PR_final3

140630_-_PwC_to_PR_final4

[No doubt, the auditors will also have come across this other example of procurement in Takki Sulaiman’s communications department, ie when in 2012 a botched deal to put up banners of the Mayor was given to Fortuna Associates, a consultancy run by Chris Payne who had a few months earlier been a mate of Takki’s as the head of advertising for East End Life.] /END UPDATE.

Here’s the letter from Paul Rowsell at DCLG to Stephen Halsey on Monday, June 30.

140630_-_Paul_Rowsell_to_SH_-_final_Page_1

140630_-_Paul_Rowsell_to_SH_-_final_Page_2

This expresses disappointment at the delays caused by the council. It also uses some alarmingly strong language about “material” affects on the “future circumstances at Tower Hamlets council? Is this a first indication/warning that some central government intervention and control is being planned? (The Mr Holme referred to is Chris Holme, the director of finance at the council.)

And this is Lutfur’s letter to Eric Pickles in response yesterday:

Letter to Rt Hon Eric Pickles - 1 July 2014_Page_1

Letter to Rt Hon Eric Pickles - 1 July 2014_Page_2

Just as Eric Pickles may have tried to make some political capital out of the delay to the audit in the Commons on Monday (by triggering suggestions the council was withholding documents, when the reality could well be they just can’t find them quickly enough, or they don’t exist), Lutfur, too, goes down that route.

From his letter we learn there has been a series of other unpublished letters in which the council has been complaining about justification, scope and costs. The great champion of public scrutiny and transparency that is Tower Hamlets council and its mayor say DCLG hasn’t been transparent and that it has failed to answer questions. I think that may have caused one or two ironic giggles at DCLG.

However, on the substance…Lutfur is entitled to ask about costs and cost controls. It would seem unfair if Tower Hamlets council taxpayers were to pick up the tab for any failed governance by its politicians and officers, or none at all. If the PwC report gives a clean bill of health, then surely there must be a clawback from Whitehall. If the report is damning, Pickles would be wise to say DCLG is picking up the tab as he installs emergency measures at the council. Either way, the residents in “one of the most deprived communities” in the UK (as Lutfur says) should not be penalised.

I’m also puzzled why Lutfur has been persuaded to insert into his letter absurd references to “10 million” items of data requested by the PwC. It sounds like a cheap line concocted by interim officers and communication chiefs. Maybe someone should FoI how they calculated 10 million and how long that exercise took them. As Cllr Andrew Wood, an accountant, pointed out here yesterday:

As a qualified acceptant who has been audited many times by PWC, I agree the 10 million separate data items is complete rubbish. There might be one request to provide all invoices paid by the council over the last year which might generate one spreadsheet with millions of cells but downloading it from any normal system only takes maybe a few hours or maybe an overnight batch run.

Takki and co may think this is a headline grabbing line for some press outlets, but it makes the council and the mayor look stupid.

As for what happens next…the council’s writ will be lodged and heard before a judge imminently.

And in the meantime, DCLG will continue its contingency planning. One thought: Tower Hamlets council is still without a chief executive; if the PwC report does come back with major failings, it would seem a perfect opportunity for him to install one. The last time he did that was in 2011 when he approved no-nonsense Jo Miller to run failing Doncaster Council.

Granted, there were much bigger service failures at Doncaster but there were similar dysfunctional politics to Tower Hamlets. Jo is highly regarded in Whitehall and many think she has turned the council around. When her job is done there, might Tower Hamlets be her next challenge?

 

 

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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.

Last week, I revealed that PwC had asked Eric Pickles’ Department for Communities and Local Government for another month to file their emergency report on transparency and governance.

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?”

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England may be out of the World Cup but the summer agony is set to continue for Tower Hamlets council and its residents.

I understand that PricewaterhouseCoopers, the auditors ordered in by Eric Pickles in the wake of the Panorama programme on March 31, have asked for another month to write their report.

They were due to file it with the Department for Communities and Local Government by June 30, but that has now been delayed until the end of July.

That might well be because they have so much more work than at first realised, or because they just need more time to reflect and analyse their findings: they’ve been inundated with information, that’s for sure.

Mayor Lutfur Rahman told BBC London radio’s Eddie Nestor last week:

I don’t believe they will find any serious irregularity in any of our governance, our financial structures or the way we run the council.

If there is any issue here, of course we will look at it and try to learn from it and try to improve on it, but don’t forget, if he was looking for fraud, he will find no fraud.

This seems an implicit acceptance the auditors will find something. Team Lutfur say that’s inevitable: put in a team of highly skilled auditors into any borough for a concentrated period of time and murky details will surface, they say. It’s just a question of seriousness.

I wonder how the council will react. I wonder whether they might even resort to their favourite tactic of hiring expensive barristers and contemplate a judicial review of the decision in the High Court.

Personally, I don’t think the auditors will find any outright fraud (on the whole, they have a good team of senior officers in Tower Hamlets) and certainly the Panorama team never made that allegation. There’s an element of ‘creating goalposts’ within the Lutfur spin camp on this.

I also think there’s an acceptance within his team that they got things wrong in the past four years on the questions of transparency and governance. Lutfur says in his fascinating interview with Eddie Nestor that he has no idea why Tower Hamlets attracts so much bad press. Well, he didn’t really help himself on the questions of perception and appearance, did he? The chauffeured Merc, the prominent associations with rogues and criminals like Shiraj Haque (I’ll be kind and say ‘the former’) and Mohammed Mahee Ferdhaus Jalil (twice the latter), the failure to answer questions in council, the failure to attend hustings etc etc.

He has a much bigger group of councillors to manage this time as well and hopefully they will ensure these matters are addressed. He’ll probably enjoy the challenge.

Here’s the interview with Eddie Nestor: it’s 20 minutes but certainly worth a listen.

As for the council’s commitment to transparency, I leave you with this FOI response they gave me yesterday. I’d asked for all invoices supplied by the Champollion, the expert PR outfit they hired to counter the Panorama programme.

Here are the invoices they supplied:

Here’s the explanation:

In terms of the Champollion contract the Council officers took the view in late January 2014 that in order to ensure the position of the council was clearly represented to the production company and the commissioning organisation, specialist media advice was required.

The in-house media team did not have specialist knowledge about the operation and application of the BBC’s editorial guidelines and were already occupied in managing an existing workload.

A brief was produced and a Record of Corporate Directed Action (RCDA) was signed by all relevant officers to consider the procurement issues involved. Given the short timeframe and the specialist nature of the advice required a longlist of specialist PR firms was identified. Four companies were then invited to apply after receiving a brief and invited to interview.

Section 36 (2)(b)(i) has been applied to the financial elements of both contract and internal discussion between officers on the basis that their disclosure would inhibit the imparting or commissioning of advice subject to the public interest test and information relating to financial and business affairs which could prejudice the Council achieving its obligation to obtain best consideration from the use of its resources and the best value from the procurement process. 

Section 36(2)(c) has been applied to elements of the Champollion contract as the brief point 4 (a specific requirement concerns seeking strategic or tactical advice from the contractor) and point 8 (dealings with the BBC) and this forms part of the internal thinking space of the Council which if it were to be released would prejudice the effective conduct of public affairs. The Council needs to be able to examine the options. 

Bollocks.

 

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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.

http://www.towerhamlets.gov.uk/news__events/setting_the_record_straight/panorama/new_statement_-_bbc_panorama.aspx

Our statements on the matter over the last two weeks can be found here-

http://www.towerhamlets.gov.uk/news__events/setting_the_record_straight/panorama.aspx

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.

At that point Interim Monitoring Officer Meic Sullivan-Gould (who was by this time convinced Lutfur was a ‘good guy’) began to take over.

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.

I called Andrew Gilligan to let him know. He blogged about it last night.

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.

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