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Posted by: John Brace | 16th July 2013

Wirral Council (15th July) Grant Thornton confirms whistleblower’s concerns about Wirral Council’s business grants program

Grant Thornton confirms whistleblower’s concerns about Wirral Council’s business grants program

In answer to a question of Mr. Hobro at last night’s Council meeting, Cllr Davies agreed to publish the Executive Summary of Grant Thornton’s report into their investigation into the BIG (Business Investment Grants) issue (which can be viewed by clicking on the link).

Although the names of the six companies are anonymised (referred to as BIG1 to BIG6), the executive summary does recommend whether Wirral Council should consider whether it should claw back the grant to the company referred to in the executive summary as BIG6 and consider whether it should refer BIG6’s application to the police.

Curiously the executive summary also states at the start “subject to an exemption under section 30 of the Freedom of Information Act”, which considering the Chief Executive’s statement at the same meeting that information relating to the departure of two Department of Adult Social Services officers can’t be published as it’s subject to an FOI exemption is highly curious and seems inconsistent.

As stated in the Executive Summary “This draft summary should be read in conjunction with a more detailed draft report, dated 5 June 2013”. Unfortunately this draft report is the one Wirral Council won’t release, giving the reasons stated above. Certainly the comments made by Grant Thornton and its recommendations vindicate the concerns raised by whistleblower Nigel Hobro.


Responses

  1. John, the report covers just the random sample of 6 cases I got to look at before the files were spirited away ( on orders of Invest Wirral). Heaven help us should the sample be extended because then it would not be £120,000 of public money plus £9,000 fees at stake but most likely £600,000.

    Be aware readers that these anomalies were evident to myself within a space of hours so why it took 13 months for CIPFA accountants at Invest Wirral to come up with nothing is beyond me. Grant Thornton explained to me that this investigation was simple and it was over for them within the space between 14th December and 24th December 2012.

    • As Invest Wirral is so closely related to Wirral Council, I would suggest that politics and reputation management had something to do with their inability to find anything…

      • Correction – the cipfa accountants were from WBC Counter Fraud! However senior accountants from other WBC departments were involved in the screening process and at the Panel. I am informed that due diligence was delegated from Invest Wirral to Regeneration officers Diane Bradbury and Peter Wright. By due diligence was meant checking the accuracy of cash flows and projections, testing the project by the Cabinet criteria and performing Companies House checks.

        The latter is the process I went through rapidly but nevertheless the weak comment made to myself by one CIPFA Counter Fraud officer, “that you are cleverer than most” will not wash for the anomalies were easily understood. Perhaps the answer lies with inappropriately putting a person in charge of screening, who is recorded as writing on a start-up budget “Why is the Projected Profit and Loss not the same as the cashflow?”, and “Why is the Capital introduced not on the Profit and Loss?” even after 5 years of “monitoring” the start up program.

        • >”Why is the Projected Profit and Loss not the same as the cashflow?”

          It makes you wonder whether the person writing that understood what those terms meant as they’re very different.

          >“Why is the Capital introduced not on the Profit and Loss?”

          *sighs* because it goes on the cashflow statement, not profit and loss, you’d think people working in local government with the Revenue and Capital budgets would understand these concepts!

          It also makes me wonder if the mistakes made on assessing the grant applications where because someone looked at the profit and loss projections rather than the cashflow statements as a way of assessing the solvency of the company.

          • WBC deploys the response that the firms continued to trade bar one. If that were the excuse then why bother writing the detailed Cabinet rules; setting up an advisor and paying them £1,500 + vat per application to mentor applicants; incurring overheads from Regeneration department to apply due diligence and wasting the time of up to five members of a Panel to meet monthly. It was all a waste of resources for WBC might as well have had lottery tickets given out to businesses with 40-60 prizes of £20,000.

            • Well wasn’t the money for the Business Investment Grants funded through an external grant, therefore Wirral Council could claim those costs back when making the grant claim as “management costs”?

              The truth is that all stages where a decision was made, Cabinet, panel etc were relying on assurances that due diligence had already been carried out on the applications.

              It reminds me of this story where they knew they were about to award a contract to a contractor to do a lot of work on West Kirby Marine Lake (£750k worth), yet didn’t tell the body making the decision about their concerns about the solvency of the contractor they were recommending.

              To quote from the article “But according to the auditor’s report, Wirral council officers had an external credit report in January 2009 “that highlighted significant financial concerns in respect of the original contractor and stated there was a very high likelihood of business failure”.
              However, they still recommended the council’s ruling cabinet award the contract to the company.”

              When things like that happen they wonder if the left hand at Wirral Council bothers talking to the right hand…

  2. For myself I cannot fail to remark that where there are no criteria practised ,WBC is laying down the pavement for a wide avenue over which the horse, Cronyism, leading the carriage, Corruption, may promenade openly in full daylight with neither fear nor shame.

    It is difficult to prove corruption and that is why the observance of the criteria is so important, Caesar’s wife MUST be seen to be above suspicion.

    Cllr Davies’s ill advised comment at the Council meeting that his constituents did not give a fig for these scandals must be challenged. Many wirral residents have never had the scandals exposed to them, certainly not the BIG fund.

    • Well here are some statistics on this story. The Executive Summary was downloaded a dozen times yesterday and twice today. Since writing it yesterday it has been viewed at least forty-three times (possibly up to a hundred times through people viewing it on the homepage).

      Admittedly I don’t know if those twenty to fifty people reading it happen to be constituents of Cllr Phil Davies (and whether they’d care enough to write to him if they were). However I will point to four of the seven principles of public life that seem to apply here.

      Objectivity – in carrying out public business, including making public appointments, awarding contracts, or recommending individuals for rewards and benefits, holders of public office should make choices on merit.

      Accountability – holders of public office are accountable for their decisions and actions to the public and must submit themselves to whatever scrutiny is appropriate to their office.

      Openness – holders of public office should be as open as possible about all the decisions and actions that they take. They should give reasons for their decisions and restrict information only when the wider public interest clearly demands.

      Even if Cllr Phil Davies is not getting a dozen emails daily from his residents about the Business Investment Grant issues, it’s still in the public interest that the public’s money is spent properly. He’s the Cabinet Member for Finance, therefore it’s his role to be democratically accountable to the public for such matters.

      As to the media coverage, generally the press will concentrate on the stories that matter to the greater numbers of their readership in order to increase their circulation.

  3. Why ever is the report not downloadable from the WBC website? Why ever is there no press release on the WBC website?

    • That relates to Cllr Phil Davies’ answer which I’ve provided a transcript of here.

    • I understand that multiple copies of the Executive Summary have been downloaded from this site for which circulation again we are all indebted to John Brace. The Summary is not downloadable from the WBC site, and Where Cllr Davies refers in his answer to a Press Release there has not been any such release. A Media statement was issued to editors of newspapers only and the Council has not seen fit to publish its Statement. Thereby it is done to myself to let readers see it.

      After publishing this I will go on to explode the weak apologia contained in italics in the Executive Summary which Grant Thornton explicitly does not corroborate as also will I destroy the same in the media statement. I use strong words as when confronted as I and Mr Griffiths have been, by obfuscation and delay, it is galling to observe the Authority attempting to minimise its confession.

      MEDIA STATEMENT FROM WIRRAL COUNCIL
      1.7.13

      BIG report

      Following concerns raised regarding grant applications relating to the BIG fund, the Council conducted an internal audit. As the Council was not satisfied with the robustness of the internal audit procedures at the time, and has since taken a number of steps to strengthen this area of the organisation, the Leader of the Council ordered an external investigation into the matter and appointed Grant Thornton.

      Grant Thornton’s reports found no malpractice by council officers. However a number of recommendations were made to the Council including:

      • Reviewing the criteria the Council uses to consider grant and similar applications to avoid ambiguities in the corresponding criteria where possible; and
      • Ensuring that where panels are used to review applications, the panellists are given written terms of reference.

      A report outlining these recommendations will go to Audit and Risk Management Committee in September.

      Issues raised in the BIG report over the nature of one of the grant requests has been referred to the Police to consider an investigation so any queries relating to this should be put to them.

      Leader of Wirral Council, Councillor Phil Davies said: “It is well documented that due to concerns about the robustness of the Council’s internal audit function I ordered the external audit of the BIG fund. It was vital that these concerns were investigated and reported on robustly.

      “This Council takes the concerns raised seriously and I would like to thank those people who came forward on this issue.

      “I am also pleased to note that with the exception of one, all companies that received BIG funding are still trading – creating jobs and contributing to the local economy.

      Chief Executive Graham Burgess said: “The outcome of the report showed a commitment to transparency by the council and did highlight some areas in which we should improve our procedures.

      “The Council is going through a period of transformation and has demonstrated real improvement and these recommendations are being taken forward and acted upon as part of our drive to improve further.”

      Notes to Editors:

      The Council has published a summary of the Grant Thornton report into BIG funding. This summary does not name or identify the businesses involved. As there is no suggestion of any potential wrong doing by any company except in one case and this has been reported to the police.

      As stated at point 1.21 in the Grant Thornton report, Enterprise Solutions have not provided documentation as requested and as agreed to at point 1.20.

      The ISUS fund was an initiative of the then Northwest Development Agency (NWDA) that was administered and monitored by their contractor A4E. The ISUS fund was intended to provide intensive start of support to SMEs.

      The BIG Fund was a Wirral Council Initiative to provide small grants to SMEs for the purposes of job creation. Elements of the provision of assessment and advice services in relation to the award of these grants and the ISUS grants were contracted to an external supplier Enterprise Solutions – trading locally as Wirral Biz

      Ends

      For further information contact Sally Dunbar, Press and PR, Tel: 0151 691 8591, sallydunbar@wirral.gov.uk

  4. Is is possible to add an Invest Wirral category? It would be interesting to see if anyone leaves any comments in that Department.

    • Yes I’ve tagged it as Invest Wirral and have added an Invest Wirral category.

    • I met with Mrs Basnett last week where she gave a convincing answer regarding her innocence of these particular shenanigans.

      Essentially the due diligence was performed by Mrs Bradbury from Regeneration department, now left WBC employ.

  5. Here we are discussing the errors and omissions of WBC regeneration Department, winners of Local Government Association Innovation awards, if you enjoy irony. However note that the subcontractor wirralbiz or Enterprise Solutions (NW) ltd stymied the investigation by refusing access to their files on pretext they had not ever signed the Service Level Agreement to provide support to claimants. The SLA/contract was for £50,000 which bought 1,000 hours each client being entitled to 30 hours on their case.

    If 6 files had each 30 hours on them how come they arrived to the Panel with serious anomalies? The Lockwoods budget would have taken myself with consultation some 3-5 hours so where did rest of time go?

    We have yet to read any report on the ISUS and Working Neighbourhoods program though we know it has been referred to the police.

  6. The chevrons encapsulate WBC’s apologia contained in the Executive Summary

    <>

    The question here is how given the published accounts, the management accounts with loss of £60,000, the explanations re worthless £1.2m investment, did not due diligence prevent the grant going through? Secondly how does it take WBC Counter Fraud 13 months to come up with a report so “unfit for Purpose” that WBC executives suppress it?

    • If I remember correctly Grant Thornton (previously the Audit Commission) have to sign off on a lot of their external grants from other government departments and sometimes make minor adjustments up or down.

      I presume (despite their name counter fraud) that their main work would be areas of fraud outside this area (for example abuse of the Council Tax single person discount etc)…

      • Counter Fraud John examined flows of money within the Council as for example Expenses claims , the control over cash at Metro Catering, use ogf mobile phones.Thereby either no-one was responsible for oversight of work program contracts or it was Counter Fraud , a sub-set of internal audit. Now they have never disclaiomed responsability and it is to a Garym Lambert of Counter Fraud that I am to provide further information re abuse of the BIG fund or ISUS/Working Neighbourhoods

  7. […] Wirral Council (15th July) Grant Thornton confirms whistleblower’s concerns about Wirral Counc… (johnbrace.com) […]

  8. […] is to do with Nigel Hobro’s question to Cllr Phil Davies at the last Council meeting and the Grant Thornton report into the Business Investment Grants program. The end of Cllr Phil Davies’ answer to Mr. Hobro was “Errm however if it turns out […]


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