To answer the following questions from members of the public, received in accordance with Procedure Rule 10:-
i. from Mr H Alexander of Hambledon
“In relation to the fraud that occurred in April 2014, 19 senior Conservative councillors knew of the fraud. Knowledge of the fraud was deliberately kept from all junior Conservative councillors, all Ukip councillors and all Independent councillors. The fraud was not reported in the 2013/14 Annual Financial Statements as a post balance sheet event and nor was it disclosed in the 2014/15 Annual Financial Statements, the year in which it occurred.
The Waverley Members’ Code of Conduct (“the Code”) requires that its members behave with Openness, Accountability and Integrity. This behaviour is also required of those in public life under Section 28 of the Localism Act 2011 (“the Act”). There is prima facie evidence that these requirements of the Code and the Act have been breached by the 19 senior Conservative councillors as follows:
1. Openness – by concealing the fraud from other councillors and all residents, and not disclosing it in the Annual Financials Statements, the 19 Conservative councillors have clearly breached this aspect of the Code and the Act; 2. Accountability – by concealing the fraud, the 19 Conservative councillors have prevented themselves from being held to account for their actions; 3. Integrity – the 19 Conservative councillors have shown a lack of integrity by concealing the fraud from opposition councillors. This lack of integrity is particularly serious given there was a Borough election in May 2015 and, by concealing the fraud, the Conservatives enhanced their electoral prospects.
In view of the fact that: 1. there is prima facie evidence that Councillors have broken both the Code of Conduct and the Localism Act 2011, and 2. The breach of the Code and the Act was extensive, with 19 Conservative councillors implicated, and 3. the breach of the Code and the Act has been sustained for a long period of time (more than 20 months), will the Council be ordering a full, independent and transparent investigation into the 19 councillors conduct?”
ii. from Mr Jerry Hyman of Farnham
Mr Mayor. Waverley has issued a "Concluding Statement" regarding the £233,000 fraud incident. However, important questions remain regarding how the matter was dealt with.
Under the heading of ”Matters relating to fraud” requiring communication, Grant Thornton’s Audit Findings Report for 2013-14 stated that, “We have previously discussed the risk of fraud with the Audit Committee and been made aware of an external fraud affecting the Council in April 2014.” No other information was provided.
As Members are no doubt aware, Waverley deals with numerous external fraud incidents, mostly relating to benefits fraud. Any backbencher or member of the public would assume the matter to have been of no public interest, because the nature, extent and significance of the fraud incident was completely hidden. With hindsight, many might say that it rather looks like a cover-up.
Indeed, last year’s 2014-15 Audit Findings Report states at page 15 that “We have previously discussed the risk of fraud with the Audit Committee. We have not been made aware of any incidents in the period”. That statement by the Auditor is clearly false.
Furthermore, at page 22 the Report, under the heading of ‘Financial Control’, the Auditor adds, “Our review of Internal Audit's reports identified that no significant issues were identified in respect of your key financial systems …”, and it goes on to say that, “We have identified strong arrangements in place to ensure robust financial governance”. In the circumstances, such statements by the Auditor would appear to be quite inappropriate.
Mr Mayor, there is a clear need to instil a culture of accountability and transparency at Waverley, in order that such falsehoods in the Council’s and the Auditors’ reports do not occur. What effective action could Members and the public take to ensure that standards are improved as necessary? Thank you.”
[NB. Questions from members of the public express personal views of the questioners and Waverley does not endorse any statements in any way and they do not reflect the views of Waverley Borough Council].
Minutes:
The following questions were received from members of the public in accordance with Procedure Rule 10:
i. from Mr H Alexander of Hambledon
“In relation to the fraud that occurred in April 2014, 19 senior Conservative councillors knew of the fraud. Knowledge of the fraud was deliberately kept from all junior Conservative councillors, all Ukip councillors and all Independent councillors. The fraud was not reported in the 2013/14 Annual Financial Statements as a post balance sheet event and nor was it disclosed in the 2014/15 Annual Financial Statements, the year in which it occurred.
The Waverley Members’ Code of Conduct (“the Code”) requires that its members behave with Openness, Accountability and Integrity. This behaviour is also required of those in public life under Section 28 of the Localism Act 2011 (“the Act”). There is prima facie evidence that these requirements of the Code and the Act have been breached by the 19 senior Conservative councillors as follows:
1. Openness – by concealing the fraud from other councillors and all residents, and not disclosing it in the Annual Financials Statements, the 19 Conservative councillors have clearly breached this aspect of the Code and the Act; 2. Accountability – by concealing the fraud, the 19 Conservative councillors have prevented themselves from being held to account for their actions; 3. Integrity – the 19 Conservative councillors have shown a lack of integrity by concealing the fraud from opposition councillors. This lack of integrity is particularly serious given there was a Borough election in May 2015 and, by concealing the fraud, the Conservatives enhanced their electoral prospects.
In view of the fact that: 1. there is prima facie evidence that Councillors have broken both the Code of Conduct and the Localism Act 2011, and 2. The breach of the Code and the Act was extensive, with 19 Conservative councillors implicated, and 3. the breach of the Code and the Act has been sustained for a long period of time (more than 20 months), will the Council be ordering a full, independent and transparent investigation into the 19 councillors conduct?”
The Deputy Leader of the Council replied:-
“Thank you for the question about the fraud committed against the Council in April 2014.
I am satisfied that members acted properly and followed officer, legal and Police advice. Waverley has now publicised details of this matter as there is no longer a risk of undermining the Police investigation and the trial of the perpetrator of the fraud. Accordingly Waverley has issued a full media release on the circumstances and this was published on the Council’s website.
The Council’s Monitoring Officer has started investigating the allegations you have made about Member Conduct, and it would not be appropriate for me to comment on these at this stage.”
ii. from Mr Jerry Hyman of Farnham
“Mr Mayor. Waverley has issued a "Concluding Statement" regarding the £233,000 fraud incident. However, important questions remain regarding how the matter was dealt with.
Under the heading of “Matters relating to fraud” requiring communication, Grant Thornton’s Audit Findings Report for 2013-14 stated that, “We have previously discussed the risk of fraud with the Audit Committee and been made aware of an external fraud affecting the Council in April 2014.” No other information was provided.
As Members are no doubt aware, Waverley deals with numerous external fraud incidents, mostly relating to benefits fraud. Any backbencher or member of the public would assume the matter to have been of no public interest, because the nature, extent and significance of the fraud incident was completely hidden. With hindsight, many might say that it rather looks like a cover-up.
Indeed, last year’s 2014-15 Audit Findings Report states at page 15 that “We have previously discussed the risk of fraud with the Audit Committee. We have not been made aware of any incidents in the period”. That statement by the Auditor is clearly false.
Furthermore, at page 22 the Report, under the heading of ‘Financial Control’, the Auditor adds, “Our review of Internal Audit's reports identified that no significant issues were identified in respect of your key financial systems …”, and it goes on to say that, “We have identified strong arrangements in place to ensure robust financial governance”. In the circumstances, such statements by the Auditor would appear to be quite inappropriate.
Mr Mayor, there is a clear need to instil a culture of accountability and transparency at Waverley, in order that such falsehoods in the Council’s and the Auditors’ reports do not occur. What effective action could Members and the public take to ensure that standards are improved as necessary? Thank you.”
The Deputy Leader of the Council replied:-
“Thank you for your further question on the matter of the fraud. I do not accept that there has been any ‘cover-up’, or false or inappropriate statements by the Council’s external auditor, Grant Thornton, who are a leading international accountancy and audit firm.
I have covered much of the question already in my answer to Mr Alexander but in conclusion I am satisfied that appropriate action has been taken in response to this incident and that the Audit Committee has been closely monitoring this matter.”
At the conclusion of the response to the second question, it was moved in accordance with Procedure Rule 10.8 that the matter be referred to the Executive for further consideration. Upon being put to the vote, this proposal was LOST.