As the crisis hit leader of
Northumberland County Council, Peter Jackson and his silent sidekick, Cllr
Richard Wearmouth prepare for one of the biggest political 'heists' in the County history by bringing down the curtain on Arch, we think there are some
things residents need to know. The irony is that this is possibly the biggest
waste of taxpayers cash and in the same scale as the decision to remove the
core strategy.
This information is in plain
sight and it's part of a jigsaw which Tories on the council don't want
residents to see.
The sad thing is they are
aided and abetted by professional officers who have spectacularly failed in
their role as impartial guardians of the interests of residents across
Northumberland.
The Tory approach to Arch is
a case to point. Their whole approach is to distract journalists and residents alike. They've spent hundreds of thousands of pounds of your money to create an illusion.
Their illusion leads to
confusion and it also involves collusion.
Their illusion is that Arch
was a criminal enterprise. The reality was in its last year under the Labour
administration, it passed £9.4m back to the council to offset Tory cuts which
are so apparent this year.
The confusion is that
official reports generated by the authority which are withheld from scrutiny
and deliberately 'spun' neatly leads to collusion between senior officers,
chairs of committee's and Tories on the executive like Cllr Nick Oliver, Arch
Chair Richard Wearmouth, Cllr Hill, the former recruitment consultant and Cllr
Wayne Daley, a director on Arch and the Cabinet member for Education who so
visibly screwed up the 2 tier plan in the west. So when Cllr Hill Audit committee says Arch paid no dividend ever back to the council what was the £9.4m in the company accounts? That was an example of an official council report to 'spin', a political talking point Cllr Hill created. That's unlawful by the way.
They've presented a view of Arch which is criminally skewed using taxpayers cash to do it. They've used taxpayers cash to create a political story. This is where we hear the cry 'where's the evidence?'
This is a company which complied with the Companies Act 2006, with relevant tax legislation, was signed off by numerous auditors on its accounts each year, was signed off by the council's auditors and accurately assessed its risks each month until 'year zero' when Cllr Jackson put the 'heist' into operation. So why wasn't this picked up before 'year zero'? By the same auditors who are in place now? All very good questions which haven't been answered?
Arch complied with law year
after year until Jackson's 'year zero' apparently. Funny that isn't it? Its
accounts and its actions were overseen by directors. These directors include
Cllr Peter Jackson, the Tory leader of the council. Jackson never raised a
single concern as a board member preferring to make unsubstantiated allegations
to serve his political ends.
You may say that's what
politicians do but he was a company director who should comply with company law
shouldn't they? After all Cllr Jackson is a director in over a dozen other
companies.It's noticeable that Jackson has never acted this way towards Greenshields Agri PLC, or Agricultural Management (Haddington) Ltd, or PA Jackson Ltd, or Grainco Ltd, or Meldon Village Storage and Drying Ltd, or Alan Jackson (Westcotes) Ltd, or Tynegrain Agriculture Ltd. It begs the question that Cllr Jackson should know what he can and can't do as a director yet he just doesn't care. It's like the current discussion over Borderlands which he's parachuted into. We think its a great idea and definitely something Northumberland should be at the forefront of. Yet once again, there is no declaration of interests given he owns over 5,000 acres according to his own biography on both sides of the Scottish Borders. Not declaring his interests is unlawful by the way.
So why do the Tories hate Arch so much and why was Jackson mounting an attack on a company he was a director of? If he was so dead set against it, why didn't he resign before he inherited a council owned company?
Since May 2017, they've
mounted a campaign to undermine the company which has reduced the value of the
company and has resulted in a secret firesale which has seen taxpayer assets
sold at a loss, without any scrutiny and no risk assessed to the taxpayer.
When
they took over Arch was worth circa £320m and now they are selling off
companies the council already owns through its single share. The company was
worth circa £320m and you're getting a dividend of £4.2m? Compare that with the
last dividend of the company to the taxpayer of £9.4m and you're entitled to
ask, where's the money going? The company will pay no further dividends to the
shareholder i.e. you, the resident. The company will borrow £275m over the next
four years despite Jackson and Wearmouth attacking the previous administration
over lending money to Arch at a profit. Why the U-turn? Where will the
companies profits go in the future if it makes any?
None of this has been
discussed, debated or scrutinised by anyone other than Tory placemen (we say
placemen because there is no women on the board of Arch) which would also
presumably include Lib Dem Jeff Reid who has always claimed an affinity to the
company since it was he who set it up. It's an irony that the lack of
transparency is seeing the taxpayer sold short.
Why don't the Tories and
senior council officers like the CEO, under pressure, Daljit Lally answer
questions about Arch and its decisions since May 2017? Why were they so keen to
create a single party board on Arch using trumped up 'allegations' which have
disappeared like a puff of smoke after their intended negative publicity? Why
haven't the Tories investigated prejudicial interests when they have been
brought to their attention? Why haven't senior officers and internal audit
investigated serious allegations against the company? Why is the sell off of
Arch assets not transparent?
Why is there no scrutiny of this process which is the
single biggest exercise undertaken by the Tory administration and why does
Audit Committee not investigate the myriad of allegations which will be set out
in the 'Notes to the Editor' section after this introduction?
We're not saying every
allegation or question is true or right but there are reasonable questions that
arise out of the actions of Arch, its non-actions, and the actions of the
council and Tory politicians.
They should be investigated
independently.
Before any decision is taken
what to do with Arch, we think residents deserve answers to the questions and
they deserve them transparently and without the usual desecration of the facts
by a Tory administration which is now the definition of the 'swamp'.
Notes To Editors
Actions that require actions before the decision to
scrap Arch is decided by a party which doesn't even have an overall majority on
the council.
1.
The decision to
set up Arch was taken by Full Council. Why is the decision to scrap Arch being
taken by a small cabal of Tory politicians on the executive?
2.
An anonymous
letter 'whistleblowing' about potentially unlawful acts by the council
especially about the removal of the core strategy was sent in Dec 2017. This
has been investigated by Internal Audit and the report is being withheld by the
CEO Ms Lally. The letter also included the following passage which has not been
investigated "Arch CPJ (Cllr Peter Jackson) considered ARCH to be
too successful with the benefits that the company clearly accrued to NCC being
identified with the competence of the previous regimes leadership and
management and not his. CPJ set up a scheme to report members to the police on
trumped up accusations made to politically sympathetic individuals on the
constabulary. It is not what we should do to our fellow councillors".
Why has this serious allegation not been investigated when other
allegations in the anonymous letter have been investigated especially when the
CEO and senior management of Arch have been made aware of evidence which
corroborates elements of the accusations? We think this should be investigated
by Northumbria Police and if it's not why not?
3.
The Tories
started their 'strategic review of Arch' on 9 May 2017 despite not taking
control of the company officially at the AGM on 21 June 2017. During this time
they halted all decisions and work even though they did not have a legal right
to do so. For example, they halted the move from County Hall which then halted
the Galliford Try contract for Portland Park worth £32.5m. They halted the
Piper's Place development in Bedlington on the same day. To do this, they and
senior officers such as Ms Lally ignored a letter sent on 15 May 2017 from a
majority of directors of Arch to halt any review or decisions until they
assumed authority on 21st June. They entered into a negotiation and made
decisions to change the Portland Park contract by paying Galliford Try a sum of
at least £7.5m. Was this lawful? We think they had no legal right to do this
either under the Companies Act 2006 or the companies Articles of Memorandums
which were adopted in Feb 2014. This is a matter for the external auditor EY
and given he has already expressed value for money concerns over decisions like
this, we urge the Tories to have this allegation investigated again by
Northumbria Police. £7.5m or more taxpayers money has been unlawfully spent
without proper authorisation and against the instructions of the then directors
and there is a question why this has not been properly investigated?
4.
Prior to the Arch
AGM on 21st June 2017, why did an Arch director send a congratulatory email to
the former Chair of Arch admitting 'politics can be brutal' but
congratulating the former chair for his commitment and work? After this email,
the company went on to make false claims about the former chair of Arch and
dragged his name through the gutter on the basis of conjecture and spin. We've
noted that the Director who sent this email has kept his distance from the
unlawful actions but we're reminding him that silence is complicity.
5.
We've been
regularly reminded how bad the governance at Arch under the previous
administration. In fact, that is the key allegations against the company under
the previous administration. That is despite adopting rules put forward by Deloitte
in 2014 and that's despite not a squeak from Cllr Jackson who sat on the board,
receiving confidential papers from the company week in, week out. There is no
record of Cllr Jackson raising any concerns at a board meeting or as chair of
Arch audit which he also undertook. We've been told since July 2017, the Tories
have new governance rules but where are they? They've not been discussed at
Arch Board meetings (the minutes of these meetings are being FOI'd because
transparent Arch don't publish them), they're not available on the website and
they've not been circulated to elected members nor seemingly Audit committee of
the council which has regularly stressed how important governance is. So where
are the governance rules? How have the Tories been winding this company up,
selling off Arch assets, making decisions etc?
6.
Cllr Jackson and
Wearmouth, the Chair have many potential conflicts of interests. They are
directors of over 50 companies combined. Where is the transparent register of
interests? For example, Cllr Wearmouth authorised an investigation into a local
company which he decided had a link to MP Ian Lavery. The solar panel company
which lost over 20 jobs because of Wearmouth's investigation into 'procurement
concerns' is in the same business as dozens of Wearmouth's own companies. Has
he declared an interest?
7.
Cllr Jackson is a
director of 15 businesses according to Companies House. A proportion of them
listed are Arch linked but those that aren't (they were listed previously in
this article) have the same accountant and tax advisor (even the Isle of Man
listed Greenshields Agri) GWA based in Berwick. A great local company which
happens to rent office space in a purpose built building in Walkergate in
Berwick. Cllr Jackson has never once declared that interest even though it is
financial and it benefits him. So why hasn't he declared that interest despite
Cllr Wearmouth spending taxpayers money on standards complaints against other
directors? This information was in the records of Arch so why hasn't the Tory
investigation or witchunt unearthed this information? Or the information like a
report from Arch Housing about an event in Dec 2016 attended by a Tory donor in
Northumberland where he stated 'Arch would be scrapped because it was stopping
the private sector from growing'? Or the board meeting of 14 Feb 2017 where a
decision was taken on the basis of the Tory manifesto (which is a political
document published by Cllr Peter Jackson a director of Arch) to decide whether
Jackson was acting in breach of the Companies Act 2006 and the Standards Code
of Conduct in the council? Why has none of this information been 'unearthed' by
the Tory appointed private sector consultant?
8.
We think the Tory
witchunt has cost taxpayers cold hard cash. Not just appointing consultants,
never ending audits or expensive 'show trials' in the press and through council
committee's but by playing politics with a company that's whole rationale was
to make a profit to invest in public services. Here's the first exhibit from
the redacted part of the Arch Board minutes 25 May 2018 point 10.4.5 (this is
the bit you weren't supposed to see) "The Development Director
stated that the partner had become
increasingly frustrated at the headlines about Arch’s
level of senior management governance, it’s desire to only invest in projects within
Northumberland area and not to take forward
executive homes. The Hodgson’s
expressed concern at the potential
negative impact on their
brand and reputation, and in addition to the above particularly citing the
suspension of the previous FD, a named Director
within the JV Co, and discovering this
via reports
in the media as opposed to formally from
Arch Development Projects. They formally wrote to Arch to outline their
issues and that they did not wish to proceed with the project in its current
structure, citing reasons outlined above". In
their desperation to smear, they didn't even let their partner know about
'serious governance issues'. This is followed by exhibit 2 which is from a
Business Forum in Northumberland representing hundreds of businesses. They
state "Arch. The negative press, inuendo and lack of detail emanating
from the transition to Advance Northumberland has clearly had an effect on the
consultation. The apparent quoted ‘49 lines of police investigations’ for over
a year with no news or updates have clearly impacted the interest in engaging
with the consultation. As such, many believe the withdrawal of the Core
Strategy to be political. This combined with the fact that Northumberland has
had no ‘Strategy Plan’ since local government reorganisation has clearly had a
negative impact wrt engagement". The
consultation referred to is the core strategy or the new Local Plan as Cllr
Jackson calls it.
9.
Another point to consider prior to the dissolution of Arch is
which members of the Cabinet possess 'conflicts of interest' and should not be
allowed to vote on the Arch issue? In the Tory manifesto they state "4.
Investing in all our county" - "We don't think the council's highly
centralised 'arms length' development body Arch is not working. That is why we
will scrap it". Apart from the manifesto commitment actually saying Arch
is working, we're convinced that's not what they really meant and was a slip of
Cllr Jackson's pen. This is a serious legal issue. How can a director of a
company threaten to scrap a company without breaching the Companies Act? So
directors have a duty to act within their powers (section 171 of 2006 Act),
they have a duty to promote the success of the company (section 172), a duty to
exercise independent judgement (section 173), a duty to exercise reasonable
care, skill and diligence (section 174), a duty to avoid conflicts of
interests, (section 175) which focuses on 'relationships and positions'
rather than transactions and arrangements, for example as a client of GWA and a
Director of Arch when the company, Arch negotiated a prolonged partnership with
GWA for the Walkergate Offices. There is a duty not to accept benefits from
third parties (section 176) and the duty in the 2006 Act to 'declare interest
in proposed transaction or arrangement' (Section 177). Cllr Jackson's interests
were prejudicial according to the opinion of the previous company legal
secretary who has been replaced by Ward Hadaway. Why did Cllr Jackson not answer
the correspondence sent by the former Chair of Arch (who has been praised by a
current director and Tory cabinet member) on 16 Feb 2017?
10.
The prejudicial interests that are currently being displayed are
'political'. As a director stated on 21 June 'all politics aside' and
they lead directly to the advice tabled on the Board Meeting 14 Feb 2017. There
is a contention that the current board are breaching Section 172 of the 2006
Act along with Section 173 as they are not demonstrably exercising independent
judgement in the various investigations and decisions which are being
undertaken. The decision and action to sell off assets like the Jarrow Network
Centre, the Durham Workspace at Pity Me and Seaham Workshops to name but a few
have serious value for money implications. We have significant concerns about
these sales and the sales that have already happened because they are neither
transparent and the external auditor has expressed his own concern over the
'value for money' requirement that must be established under law.
11.
We also have concerns over the recruitment process in Arch, the
tender process for services, the use of contractors without tender such as
Crosland Consulting who are being used across the council. So far, Crosland
Consulting have cost the taxpayer over £80,000. Another example is the extended
use of EY as a contractor and as the company External Auditor. EY is also being
used to give the company tax advice which the Arch board agreed to pay an
initial payment of £250,000 with an understanding that it would be
significantly more. There are huge tax issues attendant with the scrapping of
Arch yet they are described away in the Cabinet report for Tuesday 23 Oct in
single sentences. We're seeing words not figures and we would like to see what the
tax liability is for the Tory decision to scrap Arch. Why can't we see the tax
liability? The recruitment process is not transparent. Yet another example is
the appointment of Ward Hadaway. No procurement process undertaken? Why get rid
of Eversheds? There's no reference to this in Board minutes so where was the
decision taken? During the Tory witchunt, the Tories picked out a couple of
individuals yet they have employed Alison Joynson on the least transparent
appointment process we've seen. It has been dubbed by others as the FOL process
and it's in operation across the authority. Joynson was also a director in a
business with her husband involved in selling equipment for industrial estates
which is an area where Arch is dominant in Northumberland. Another consultant
brought in by Arch was Ken Dunbar who was Cllr Jackson's CEO at Castle Morpeth.
Mr Dunbar also set up a company to do a piece of work for Active Northumberland
which was used as way for Cllr Homer (a future leader maybe?) to get in on the act
to smear the previous administration. That cost the taxpayer £26,600 and that
figure had to be prised from the steely grip of the information czars in Arch
and the council. Talk about a secret council. Going back to EY, they've also
picked up hundreds of thousands of pounds (rumoured to be £360,000 or more) for
carrying out 'additional audits' to identify so called illegal spending. Given
there is no criminal police investigation after one year then that looks like
an extravagant decision doesn't it? Where was the evidence to launch these
'fishing expeditions'? Simply not liking people isn't enough we think you'd all
agree but that's what seems to be the reasoning behind the witchunt.
12.
The company accounts were signed off by Cllr Richard Wearmouth
last year. They were Labour's accounts and they identified a £5.5m profit, the
company made a charitable donation to Active Northumberland of £1m, increased
the shareholders funds by £6.6m to £60.1m (remember that Shareholder is you),
saw turnover double, with gross profit more than doubling, created over 400
jobs and paid the council £9.4m which was then available to support council
services and jobs. We can see why Labour is proud of that record. But now Cllr
Wearmouth refuses to release this years accounts for the first full year under
his 'ownership' which would allow residents and the opposition to hold him
accountable for his actions. Why won't he release the new accounts before they
scrap Arch? What have they got to hide? Will they massage the figures with the
proceeds of their secret firesale?
What the Tories are doing is 'risky' but its risky without any
oversight apart from a politically prejudiced executive and a CEO who put her
own mate into Arch to oversee the destruction and industrial waste of taxpayers
money.
The Tories have no visible risk assessment process which has been
independently audited apart from a non-transparent process that we think must
exist as EY have identified a 'significant value for money risk' during the
winding up of Arch. That clearly requires transparency now and public scrutiny
which would be afforded by the release of the company accounts to some degree.
The accounts have been signed off since May yet it is nearly 6 months that they
have been withheld. In this article we've asked around 40 reasonable questions
which have arisen from actions under taken by Arch and its political and
council management. That's about £8m per question and we think it's reasonable
that these questions are answered because continued stonewalling and
obstruction will cost the taxpayer millions.
There is no transparency over the process to dismantle Arch from
the Tory manifesto commitment which created a 'Red Risk' to the company in Jan
2017 to Oct 2018.
This is the tip of a very large iceberg to accompany the 'core
strategy legal action' iceberg and the Tories led by Cllr Jackson and Wearmouth
are sailing the good ship Northumberland Taxpayer towards them because they
have no concept of decency or public interest. They have a warped view of
politics and local government. This article intention is to remind them that
this is not their plaything. The council needs a new direction away from
'icebergs' and towards land.
To take the metaphor of the iceberg and Titanic further, the
Cabinet will make a decision on 23 Oct to sink Arch and our advice to them is
'be careful', this is a legal and far reaching decision, you haven't answered
the '40 questions' and you don't want to end up like the band on the Titanic do
you?
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