A letter to Cambridgeshire County Council's Service Director, Human Resources
24th August 2024
Dear Ms
Atkin,
Your
role in former CFO Chris Malyon’s unlawful £38,000 pay rise and cover-up of undisclosed
non-executive directorship fees in 2016/17 and 2017/18.
I am
addressing this letter to you because you are the sole remaining senior officer
at Cambridgeshire County Council (CCC) who was directly involved in former Chief Finance Officer Chris Malyon’s unlawful £38,000 salary rise in 2017/18.
You may be
aware of the analogous case at Northumberland County Council, where the CEO, Daljit
Lally, received “international allowances” of £40,000/year that were
unlawful because:
a)
They
did not comply with the authority’s pay policy statement under s38 of the
Localism Act, and
b) They
were not authorised by a decision made by the full council
Following a legal opinion by Mr Nigel Giffin KC in May 2022, the s151 Officer had no
alternative but to issue a Section 114 notice on the grounds that the Council or
one of its officers or employees had made a decision which involved the Council
“incurring expenditure which is unlawful”.
You know that
the same applies to Mr Malyon’s £38,000 pay rise in 2017/18. The secret pay rise did not comply with the
authority’s March 2017 Pay Policy Statement (which left Mr Malyon’s salary band
unchanged over the previous year at £95k-£100k - see graph below). In addition, his substantial pay increase over
and above the agreed salary band was not the result of any decision taken by a
properly authorised decision-maker. CCC’s
pay policy statement for 2017/2018 states unambiguously:
There were no amendments to the policy during 2017/18. That is evidenced by the absence of amendment resolutions by the full council after the pay policy statement itself was approved by the full council on 27th March 2017.The real explanation
for Mr Malyon’s unauthorised pay rise in 2017/18, as you know, is that it was
to disguise the fact that he had been benefitting from non-executive
directorship fees (NED) from Cambridge & Counties Bank (CCB, a company 50% owned by CCC), which he had failed
to disclose in the county council’s financial statements he had a statutory
duty to prepare and certify as being true and fair. It is possible Mr Malyon may have stolen up
to or even over £200,000 from local taxpayers in this way as far back as
2013/14 (see p8 below) by the time he was secretly awarded that £38,000 pay
rise, evidently to spare CCC’s blushes.
Senior
council officers, including the current CEO, have been keen to draw a line
under this and other scandals that they were briefed on, that were the subject
of multiple objections to the accounts over several years, and which took BDO
up to six and a half years to produce whitewash statements of reasons
for. But the facts remain that:
a) According
to Counsel's opinion, BDO (and EY) acted contrary to law in failing to thoroughly investigate
the objections they had accepted for consideration under s27(3) of the Local
Audit & Accountability Act 2014, and
b)
CCC
lied to both audit firms, providing them with knowingly false information about
Mr Malyon’s pay rises and other matters that the auditors may have relied on
before producing their whitewash reports.
This scandal
is not going away just because two firms of so-called independent auditors did
their client’s bidding and were complicit in Mr Malyon's alleged abuse of position fraud and/or the subsequent cover-up. Indeed, you may be aware that only last week,
PwC was fined £15 million by the Financial Conduct Authority
for failing to report concerns about one of its clients’ fraudulent
activity. A few months ago, the last government spoke about scaling up the fight against those stealing from the
taxpayer. Since the organisations paid
by Cambridgeshire taxpayers have declined to act, it is therefore absolutely in
the public interest that CCC’s conduct, BDO’s and EY’s conduct, as well as
Cambridgeshire Constabulary’s conduct in relation to this episode be aired in
public and escalated to the highest authorities. Furthermore, the fact that it happened six
and seven years ago does not make it any less serious. On the contrary. Two political administrations under two Chief
Executive Officers have attempted to bury the truth and mislead auditors and
the police for many years. That is a
damning indictment of the corporate and political culture at Cambridgeshire
County Council which, in my opinion, remains institutionally corrupt at the
very top.
In
this letter I shall go through the part you played in covering up Mr Malyon’s
unlawful pay rise. At the end I shall
ask you some questions which I expect you to answer. Your name appears in CCC's Corporate Leadership
Team structure, and even though the word “accountable”
was dropped from it earlier this year, that does not relieve you of the duty to
submit yourself to the scrutiny necessary to ensure you are accountable for
your decisions and actions, as set out in the Nolan
Principles. If I have missed anything in my analysis, I
would be grateful if you could assist me. If
you choose not to reply, the public and the relevant authorities will be
informed. I suggest it would be in your
personal interest to reply, and with candour.
Background
On 11th July 2018, former
County Councillor Mike Mason wrote to BDO audit partner Lisa Blake (née
Clampin) with an objection to CCC’s draft 2017/18 financial statements. CCC Finance was copied in. One part of the objection was about CFO Chris
Malyon’s £38,000 pay rise that year to £143,925. With CCC’s pension contribution on top, Mr
Malyon’s total remuneration rose by £45,792 (36%) over the prior year. There was no formal approval by the full
council for that or those pay rises.
On 26th July 2018, BDO
published its audit
completion report (ISA 260) for presentation to the
Audit & Accounts Committee (A&A) four days later. On page 18 of the report, under the audit
risk labelled “Senior officer remuneration” the auditor wrote:
“The prior year audit identified errors in the disclosure of senior
officer remuneration, including inconsistencies with the applicable guidance, omission of remunerative benefits required for inclusion and
inaccuracy of other remuneration values disclosed.
Disclosures relating to
senior officer remuneration are considered to be material by nature.”
These comments are discussed in more
detail below.
On 6th August 2018, CCC’s
final accounts for 2017/18 were signed off by the CFO and Lisa Blake (at the
time, Lisa Clampin), without disposing of Mr Mason’s objection from four weeks
earlier.
On 9th October 2018,
following a meeting Mr Mason and I had with Lisa Blake, Mr Mason wrote to the
auditor and the CEO (Gillian Beasley), and sent every member of the A&A Committee
(Chairman: Cllr Shellens) a hard copy of the letter and several attachments. One attachment - (Document
F), which Mr Mason and I had prepared, went
into more detail (21 pages) about Mr Malyon’s unlawful 2017/18 pay rise. In it, Mr Mason asked Mrs Beasley to provide
evidence of Mr Malyon’s revised contractual terms and conditions. The CEO ignored his request.
Ten days later, on 19th
October 2018, you produced a document - CM.docx, which contained three embedded
documents. Clearly the council’s
response to Document F, it was handed to BDO to explain Mr Malyon’s pay
rise. As I set out below, it was full of
falsehoods intended to mislead the auditor.
In later years it would mislead another auditor, EY, and also
Cambridgeshire Constabulary’s Specialist Fraud Investigation Team.
Regrettably, BDO, EY, Cambridgeshire
Constabulary, the A&A Committee, Council Leaders and CEOs all appear to be easily
duped, or else they decided to support the false narrative, knowing it to be
false. Whatever the cause of their
inaction, that does not detract from the untruths you wrote in that
document.
On your own admission, you authored
CM.docx, and the two embedded Word documents have your maiden name attached
(Janet Maulder). The first is dated but
unsigned. The second is signed but
undated. The second Word document looks
like this in the original Word format. It seems to have been created in a hurry,
since the pagination is askew, and it is hard to believe you sent that letter
to Mr Malyon, least of all in that state.
Those letters and CM.docx itself put you close to the centre of the cover-up
of the cover-up, if not of the original alleged fraud and corruption. I have no doubt you acted on Mrs Beasley’s,
or perhaps Mr Malyon’s instructions, but again, that is no justification for
producing false evidence, especially given your position as Head of HR. I
believe you knew that what you wrote was incorrect and dishonest.
Mr Mason only saw CM.docx two years
later, after I shared it with him. BDO
did not share it with Mr Mason, contrary to the NAO’s Code of Audit Practice.
Timeline and analysis of a cover-up
According to the NAO’s Code
of Audit Practice, local auditors should use best
endeavours to complete their investigations of objections they have accepted for
consideration within six months (paragraph 5.6). After two years of BDO failing to conclude
its objection into Mr Malyon’s pay rise, I corresponded with the then Chair of the
A&A Committee, Cllr Mike Shellens, about it. By August 2020 he had been ducking and diving
for some time. Unsurprisingly, he failed
to produce any evidence to support the lawfulness of the pay rise, because
there was none. He thus turned to the CEO
for assistance. This email
string contains correspondence between Cllr
Shellens, me, Mrs Beasley and you in August 2020. The emails are untouched apart from my
correcting a minor typo in Cllr Shellens’ email to me in which he also displayed
his ignorance of Greek mythology. The
emails should be read from the bottom up.
Cllr Shellens perhaps did not intend to show
me the entire correspondence, but his unwitting audit trail evidence of
complicity is useful. Mrs Beasley’s
comments about me in her 9th August email for example are not what
one would expect from a CEO with nothing to hide.
In your email to Mrs Beasley on 10th
August 2018, you attached CM.docx, which contained two embedded Word documents,
apparently created by V Robertson and S Greene, and a copy of the Staffing
& Appeals Committee (S&A) minutes
from 8th September 2016.
In CM.docx, which in your email you
admit to preparing, you produced one lie after another that are simplicity
itself to expose.
You created the document on 19th
October 2018. That was ten days after Mr
Mason sent his letter and attachments (including Document F) to Mrs Beasley and
Lisa Blake of BDO.
CM.docx was plainly intended to misinform
BDO. In fact, it is worse than that. Remember, this was more than two months
after BDO had published its unqualified audit opinion on the 2017/18 accounts,
despite the acknowledged risk of fraud and materiality by nature of senior
officers failing to disclose remunerative benefits. By this stage Ms Blake was clearly complicit
with Mrs Beasley’s unlawful and secret decision to award Mr Malyon the pay rise
as a way of covering up his undisclosed NED fees from CCB that the auditor claimed she had identified during the previous audit (see ISA 260 extract
above). Nevertheless, even if Ms Blake
had taken the objection seriously, the most perfunctory checks
on your note’s contents would have revealed the fabrications, as explained
below.
“On 8th
September 2016 Chris was interviewed by Staffing and Appeals Committee and
formally appointed to the Deputy role, for which there is a £10k annual special
responsibility allowance.”
There was no interview, and there was
no £10k annual special responsibility allowance for the Deputy CEO role, at
least not according to the official minutes.
If Ms Blake had bothered to open the minutes of that meeting (which you
embedded in the document), this is what she would have read:
You repeat the lie about the interview
in the first embedded word document, which is unsigned. You begin with the improbable opening
sentence:
“Further to your interview with
Staffing and Appeals Committee on 8th September 2016…”
If there had been an interview, why
was it not mentioned in the minutes?
There is no evidence in the minutes or elsewhere that Mr Malyon even
attended the meeting, and there is no mention of any other candidate. As for the £10,000 allowance, that was not
mentioned in the minutes or in any other public document before or since. You mention it again in that same embedded
document:
“You will receive a Special
Responsibility Allowance of £10,000 per annum, paid monthly, in recognition of
this role.”
On whose authority? Certainly not the full council. Had the role come with a £10,000 allowance,
it should have been reflected in the March 2017 Pay Policy Statement or in an
amendment resolution by the full council, as per the policy (see p1 above). It was not.
You or Mrs Beasley or Mr Malyon concocted the £10k annual allowance
falsehood in 2018, and BDO appeared to accept it without challenge.
“Later
in 2016 the decision was taken to repatriate the Chief Finance Officer post
from LGSS back to CCC, maintaining the responsibility for the professional
finance function.”
Another
lie. In CCC’s 2017/18
Pay Policy Statement, which
was approved by the full council in March 2017, Mr Maylon’s role is still shown
under the LGSS directorate, (Local Government Shared Services) not CCC.
“In
addition, the Council commenced a review of corporate capacity and services
which led to this role taking on responsibility for additional services from
January 2017.”
Lie
number four. At the 8th
September 2016 meeting, immediately before the item on appointing the Deputy
Chief Executive (with no additional pecuniary benefit) was an agenda item called “Review
of the Council’s Senior Leadership Arrangements.” The official
minutes
record:
“The
Committee received a report detailing a proposed review of the senior
leadership structure of the Council. The resignation of the Executive Director:
Children, Families and Adults (CFA) and the current interim arrangements for
the Director of Children’s Services required the review of the CFA Directorate
as a priority.”
There
was no mention of the CFO’s role or responsibilities.
At
the following meeting of the same committee on 27th September, one
agenda item – discussed in private session, was the appointment of an interim
executive director for children, families and adults (Wendi
Ogle-Welbourn). Again, the CFO’s role
was not mentioned in the minutes.
The
December 15th 2016 meeting of the S&A Committee included an
agenda item called “A Confidential Review of the Leadership Structure for Children,
Families and Adults”. But nothing in the
minutes
to that meeting
mentions additional responsibilities for the CFO role. Perhaps I missed something. If so, please
enlighten me.
Looking
further ahead, the 24th January 2017 meeting was dedicated to the
leadership review of the CFA Directorate – not the CFO or Deputy CEO.
The
meeting after that, on 21st March 2017 included the Pay Policy
Statement for the 2017/18 financial year.
As noted above, Mr Malyon was still under the LGSS Directorate, and his
salary band remained unchanged from 2016/17 in spite of his new Deputy CEO
title awarded six months earlier:
The minutes to that meeting contain an interesting
comment:
“A
Member queried the reference in paragraph 4.3 of the Chief Officer Pay Policy
Statement that “The Chief Executive determines the level of increase, if any,
to the published pay rates for Chief Officers…”, as it was the Member’s
recollection that such decisions had previously been brought to the Staffing
and Appeals Committee. It was confirmed that whilst
such decisions had been endorsed by the Committee in the past, there was no
requirement to do so. The
Member suggested that for reasons of transparency and potential conflict of
interest, consideration by the Staffing and Appeals Committee should be
included as part of the process.”
The
remaining S&A meetings during 2017 feature interviews and further
discussion about the leadership of the CFA directorate, but the S&A
Committee remained mute on the CFO’s role.
Throughout
this period, in no meeting of the full council is an amendment resolution to
the pay policy statement even mentioned, let alone a salary rise for the CFO proposed
or approved. Clearly, neither auditor (nor
Cambridgeshire Police’s Specialist Fraud Investigation Team) fact checked anything they were told by
CCC management in relation to Mr Malyon’s pay rise. The auditors exhibited no professional
scepticsm, as
the law requires.
The
first time the S&A Committee met in 2018 was on March 6th to
discuss the 2018/19 Pay Policy Statement, which is found here. This
is how Mr Malyon’s figures had changed:
That Pay Policy Statement was again produced
by the Chief Executive, Gillian Beasley. Her title is on the cover of the corresponding agenda
item document.
All the documents from that meeting can be found here.
In that Appendix 2(a) document, Mr
Malyon’s salary band shot up from £95k- £100k in 2017/18 to £116k- £133k in
2018/19 – an increase of up to 33%.
Members of the S&A Committee were not shown Mr Malyon’s correct 2017/18
pay policy statement salary range for comparison (£95k - £100k). Instead, they were shown a completely false “current
salary range” of £125k-£130k, which made the CFO’s new salary range look perfectly
reasonable. In fact, the mid-point of
the new salary range, at £124.5k was actually lower than the mid-point of the
bogus “current salary range”, at £127.5k. It is therefore hardly surprising that no
member commented on Mr Malyon’s pay rise at that 6th March 2018
meeting – as the minutes
show. They were lied to and deliberately
misled.
Taking
into account the facts that:
a)
No public document exists to substantiate any
salary rise or award of allowances to Mr Malyon during 2016/17 or 2017/18 other
than the two annual pay policy statements (see above), and
b)
there is no evidence in the public record of
the full council ever approving any additional salary rise or allowances in
2016/17 or 2017/18,
the Chief
Executive’s 2018/19 pay policy statement above is, in my opinion, irrefutable evidence of her dishonesty and complicity in covering
up Mr Malyon’s unlawful mid-year pay rise(s) in 2017/18. It also shows her intent to deceive members
of the S&A Committee (and thereafter the full council) into approving Mr
Malyon’s disproportionate pay policy rise in 2018/19 without challenge. I can find no innocent explanation for the entirely false “current salary range” figures, especially since it
was Mrs Beasley herself, only a year earlier, who had set out the correct pay
policy statement review process (see page 1 above).
The
date of Mrs Beasley’s 2018/19 pay policy statement (March 6th 2018)
came well before Mr Mason’s 11th July objection and Document F in
October. That means that in March 2018, Mrs
Beasley was already aware of Mr Malyon benefitting from the CCB NED fees. Instead of disciplining him and/or immediately
dismissing him, the CEO allowed him to keep the undisclosed benefits while she attempted
to sanitise the situation with the falsified, unlawful and retrospective “current
salary range” figures in respect of 2017/18, and the Mr Malyon’s heavily disguised
33% pay rise for 2018/19. She apparently thought she could slip them past elected members and
the public without either noticing. She
was 50% successful in that endeavour.
By
the time Lisa Blake signed her 2017/18 audit opinion on 6th August, with
nothing to report, Ms Blake too was aware of the CFO and Deputy CEO stealing
from the taxpayer.
In
her July 2018 ISA 260 report, Ms Blake’s comment quoted on page 3 above about
identifying the senior officer’s “omission of remunerative benefits” during the prior year audit makes
no logical sense. For, if it were true, why
did she not mention it at the time, during that earlier audit, and why did she not
insist that her client correct the omission in the final 2016/17 accounts? The public record shows that there were no
corrections or adjustments to any senior officer’s salary figures between
the draft and final 2016/17 accounts.
Had they been corrected, the final accounts should have shown £145,885 salary,
allowances etc. for Mr Malyon, £40,000 higher than the £105,885 disclosed in the
2016/17 draft accounts. £40,000 was the
prior year CCB NED fee for Mr Malyon’s services, as acknowledged in footnote 4 of
the senior officer remuneration table on p66 of the 2017/18
audited accounts.
Ms Blake lied in that July 2018 ISA
260 report. Twelve months earlier, she
had no idea about Mr Malyon’s undisclosed NED fee benefits. She only learned about them fifteen days earlier,
when Mr Mason spelled it out in his 11th July objection.
So why did Ms Blake let the cat half out
of the bag by mentioning it at all? One
can only speculate. My guess is that as
at 26th July, only eleven days before the 2017/18 accounts were
signed off, perhaps Ms Blake was undecided whether to reveal the CFO’s dishonesty
in her final audit opinion. If she were
to do that, she would have looked foolish not even mentioning remunerative
benefits in her ISA 260 report. In the
end though, perhaps she was “persuaded” by the CEO and/or CFO into saying
nothing, despite the apparent abuse of position fraud, and despite the acknowledged
materiality by nature of those omitted disclosures, because that is how corrupt
councils and their sometime corrupt auditors operate.
Two
years later, in an unguarded moment in October 2020, Ms Blake admitted to me in
a phone call that the “omission of remunerative
benefits required for inclusion” in her July 2018 ISA 260 report was a
reference to Mr Malyon’s undisclosed NED fees from CCB, which he
effectively stole from the taxpayer at least as far back as 2016/17 (£40,000), and possibly as far
back as 2013/14 (see below). Such
conduct, which is wholly in keeping with Mr Malyon’s track
record for dishonesty and
feathering his own nest (see also here and here), also raises the issue of whether he
concealed those NED fees from HMRC. That
is a separate issue I have taken up elsewhere.
But, armed with the known facts, Ms Blake should have acted in accordance
with ISA
240 (The
Auditor's Responsibilities Relating to Fraud in an Audit of Financial
Statements). She should have alerted
the police. The fact that she did not do
that but instead appeared to collude with Mrs Beasley’s cover-up is one more
testament to her lack of independence and her venality, in my opinion. The toxicity of such information being revealed
publicly perfectly explains CCC’s multiple cover-ups over the last six years,
in which you played a part, and the alleged cover-ups, collusion or staggering incompetence
shown by two so-called independent auditors paid many hundreds of thousands of
pounds of Cambridgeshire taxpayers’ money for their statutory services supposedly
in the public interest.
I did not make a recording of the
phone conversation with Ms Blake, but, as I recently told Chief Constable Nick
Dean and my Member of Parliament, Dr Ian Sollom, I would be happy to state under oath in a
court of law that Ms Blake did admit that to me over the phone in October
2020.
A
series of non-coincidences
Between
November 2013, when Mr Malyon became a non-executive director at CCB, and 2018,
these were the non-executive director fees CCB paid in cash for his services:
CCB's accounting year ends are 31st December, whilst CCC's financial years end on 31st March.
Mr
Malyon therefore may have stolen over £200,000 of taxpayers’ money that should
have gone to CCC before his dishonestly was rewarded with the unlawful £38,000 pay
rise in 2017/18. Together with
subsequent pay rises (see graph on p2 above), that set him up for a
substantially larger pension on his retirement in March 2021.
Cambridgeshire
taxpayers may be paying for this alleged corruption for decades to come.
It is
no coincidence that Mr Malyon’s £38,000 pay rise plus £7,000 pension
contribution increase in 2017/18 comes to slightly more than the £45,000 NED
fee for his services at CCB in 2017/18.
It is no coincidence that after Mr
Mason included Mr Malyon’s pay rise in his 2018 objection to CCC’s accounts,
and BDO accepted it for consideration, it took the firm a further five and a
half years, and much chivvying from CCC’s Chair
of the A&A Committee, from Finance officers (though not Mr
Malyon himself) and the current CEO before BDO finally produced its statement
of reasons in January this year - three years after Mr Malyon’s retirement, and
two and a half years after Mrs Beasley OBE retired. The statement of reasons was predictably a
whitewash. It could not be otherwise,
because to have recorded the truth would have meant BDO admitting Ms Blake had
been wilfully blind or party to the alleged criminal conspiracy and cover-up of
Mr Malyon’s unlawful pay rise in 2017/18 and his undisclosed NED fees in
2016/17 and possibly earlier years.
It is no coincidence therefore that BDO’s
statement of reasons was finally signed off on 29th January this
year not by Lisa Blake, but by Ciaran MacLaughlin, a BDO partner who joined the
firm barely seven
weeks earlier.
It is no coincidence that two days
later, on 31st January 2024, Lisa Blake, BDO’s National Head of
Public Sector Assurance, retired altogether from BDO at the age of 55.
There is one more
non-coincidence. The above-mentioned ISA
260 report in which Ms Blake acknowledged the omission of senior officers’ prior
year remunerative benefits required for inclusion, was dated 26th
July 2018. That is also the date Mr
Malyon tendered his resignation from CCB as a non-executive director, after
four years and eight months in the role.
CCC has never explained why he stepped down. Companies House records Mr Malyon’s
termination as a director on 26th
October 2018, exactly three months later. CCB’s audited accounts state that NEDs may be
terminated by either party upon three months’ written notice:
My questions to you
I mentioned above that I have no doubt
Mrs Beasley or Mr Malyon instructed you to prepare CM.docx and give the note and
perhaps the embedded documents to BDO.
Nevertheless, as head of HR, you did play a part in this scandal that
has rumbled on for six years, and resulted in whitewash reports from BDO, EY
and Cambridgeshire police. So, in the
interests of accountability, I am asking you to answer the following questions:
1)
As
head of HR, even in 2016, when did you first become aware of Mrs Beasley’s concerns about
Mr Malyon benefitting from undisclosed non-executive director fees from CCB?
2)
Do
you have any alternative explanation for Ms Blake’s comments about the omission
of a senior officer’s “remunerative benefits required for inclusion” in
her July 2018 ISA 260 report?
3)
Do
you acknowledge that your statements from CM.docx analysed above are false
statements? If not, please explain the
following contradictions:
a. The S&A minutes of 8th
September 2016 failing to mention Mr Malyon’s interview or any allowance coming
from the Deputy CEO role,
b. The March 2017 pay policy statement
failing to reflect Mr Malyon’s “£10,000 annual special responsibility
allowance”
c. The lack of any evidence in a public
document of a review of corporate capacity concerning the CFO, or regrade etc.
resulting in increased remuneration in 2016/17 or 2017/18,
d. The lack of any evidence in a public
document of any full council approval of any increase in Mr Malyon’s pay in
2016/17 or 2017/18 apart from the two annual pay policy statements.
4)
The
two embedded Word documents were created by two different people. Can you explain why you did not create them? The apparent creation dates were 13th
September 2016 and 16th July 2017 respectively. Were these the true creation dates, or were
the Windows automatic date and time settings on a laptop temporarily overridden
with earlier dates before those documents were created and saved?
In this letter I have gone a little
outside your immediate involvement in the cover-up, because this is for public
consumption and the public needs to have the whole picture. If I have been wrong in any detail above, I
hope you will correct me with facts and evidence. I look forward to receiving your considered
response at your earliest convenience.
Yours sincerely,
Andrew Rowson