THOUSANDS of pounds in payments to Caerphilly council’s chief officers to ‘buy out’ their entitlements to essential car use and annual leave allowances – and the decisions that led to them – were unlawful, a damning report concludes today.

Inadequacies and failings throughout the process that led to the payments being agreed are laid bare in a public interest report issued by Wales Audit Office (WAO) auditor Anthony Barrett.

It reveals that the deals were approved by those who stood to gain from them, and the proposals and decisions were not made known to councillors, or published.

The council must meet next month to consider what action to take – and its Plaid Cymru group leader is calling for the money to be repaid, with resort to legal action if necessary

The report reveals that at the time the decision was made to award buy-out payments, only the council had the power to take decisions regarding such payments to the chief executive.

The latter had delegated powers to make such decisions regarding other chief officers, but there is no clear record of how the decision was made, and by whom. Mr Barrett’s report also concludes:

l It is clear the decision was not taken by a formally constituted members’ body, making the decision in respect of the chief executive, and any payments made to him, unlawful.

lEach chief officer had a pecuniary or personal interest in the decision, but due to the lack of a formally recorded decision, there are no records of declarations of interest, which again makes the decisions and payments unlawful.

lThe decision was also unauthorised and unlawful, along with the payments, because it was not publicised in line with the council’s constitution.

It was revealed during the summer that 40 senior officers received payments averaging more than £2,500 each for buying out their essential car users’ allowance. The total was more than £102,000.

The buy-out of additional annual leave cost close to £116,000, with the overall buy-out payment sum reaching £218,563.

The process was undertaken to harmonise terms and conditions for council staff, and based on paying the equivalent of three years’ worth of each allowance, where officers were entitled to it under existing terms and conditions. Payments were made in April 2012.

Mr Barrett’s report says buy-out proposals were discussed at an informal corporate management meeting in January of that year, attended by the chief executive and other senior officers. There was no agenda and no formal minutes were taken.

Two of those present subsequently told the WAO it was agreed that the chief executive would talk to the council leader about the proposals, but the report says it is evident no such consultation took place.

It concludes: “There is a lack of clarity over who made the decision to proceed with the buy-outs, although it is clear that it was not a member decision .”

Mr Barrett raises “significant concerns” over issues such as a lack of documentation recording the formal decision over buy-out offers, and lack of clarity on how the decision was made and by whom.

He also criticises failures to publish the decision, and to consider and deal appropriately with conflicts of interest.

The council must now consider the report at a full meeting in the next month, and must decide whether it is required to take action, and whether the recommendations are accepted.

lThe £218,563 in buy-outs are part of a total of £488,927 of unlawful payments given to senior officials at the council, detailed in its financial accounts for 2012/13 by Mr Barrett.

'Decisions were unlawful'

CAERPHILLY council was Plaid Cymru-led when the buy-outs were decided, and councillor Colin Mann, current party group leader in the council, said the report makes it clear the democratic process had been thwarted in an "utterly unacceptable" way.

"As the report clearly states, no reports were ever given to me or my colleagues by officers. Nothing went to cabinet, scrutiny committees or full council," he said.

"It makes it clear that any payments made to the chief executive could only be authorised by the council - they were not.

"The public will no doubt ask whether the people who were primarily responsible for this unlawful decision and breach of trust should ever again be allowed to hold public office. Anyone who holds public office has a duty to ensure public money is spent properly for the benefit of the public.

"The council now has to consider the issue of money paid unlawfully being repaid to the council. Surely, it is not acceptable for anyone to keep money that has been obtained in this manner.

"The public will expect the council to recover, by legal means if necessary, money that was unlawfully paid to officers.

"I want to make it perfectly clear that I am not saying that everyone who received these payments was aware of the true circumstances surrounding this. Quite possibly very few officers knew how this had been done. At the same time all the fall-out from this matter now has to be resolved.

"As a Cabinet member at the time, my working relationship with officers was based on one of trust. I feel councillors have been let down badly and the trust that existed has been severely strained, if not broken altogether."

He called for a special audit of the council's affairs to find out if other payments have been made that ignored standing orders and financial regulations.

'Changes already made' - interim boss

STUART Rosser, interim chief executive of Caerphilly Council, welcomed the report and acknowledged that errors had been made by council officers.

He stressed that the finding of unlawfulness was initially reported to the council in September, with an interim internal report provided last month, and today's report will enable it to take the matter further through internal investigations.

"It should be noted that the council voluntarily referred the matter to the auditors for investigation in April 2013," said Mr Rosser.

"Residents can be assured the council has already taken steps to address the areas of concern identified.

"(It) has been working very closely with the Wales Audit Office over recent months to address concerns about its governance arrangements, and has introduced a number of improvements to ensure processes are much more robust."

The Assembly's public accounts committee will consider the auditor's report as part of its wider inquiry into senior management pay in the Welsh public sector.

Its chairman Darren Millar AM called the findings "deeply concerning."

“With front line services under threat and valuable staff facing the prospect either of losing their jobs or long term pay freezes, senior managers in the public sector should all be leading by example. Sadly it appears that, at Caerphilly county borough council, this has not been the case," he said.