Dear candidates,
Double standards in policing?
The Electoral Commission website says this about the role of
Police and Crime Commissioners:
“PCCs aim to cut crime and
deliver an effective and efficient police service within their police force
area. They are elected by the public to hold Chief
Constables and the police force to account on their behalf.”
I am writing to you and your fellow PPC candidates about a
single issue that has dragged on for six years, and where I believe the Chief
Constable and the police force in Cambridgeshire have not been held to
account. It is a matter of profound
public interest, and questions the links between local government and the
police force. How you respond to this
blog will determine which, if any of you I shall vote for on May 2nd. I am placing a copy of this letter on my news
blog because the facts need to be publicly known.
The issue concerns the former Deputy Chief Executive and Chief
Finance Officer at Cambridgeshire County Council, Mr Chris Malyon, at least £40,000
of “undisclosed remunerative benefits”, and his secret, unlawful £38,000
pay rise in 2017 that Cambridgeshire County Council, and its two so-called
independent external auditors (BDO and EY) have covered up and lied about for the
last six years. After a 28-month police
investigation beginning in 2021, Cambridgeshire Constabulary acknowledged the
unlawful conduct, but decided to take no action.
We have all seen that in public life, offenders without influence at the lower end of the pay scale are often punished with the full force of the law, whilst the privileged and well-connected at the top frequently get away with
alleged offenses scot-free. Sometimes
they move on to other public sector posts, protected and supported by senior politicians (even in central government), and with a six-figure
settlement negotiated behind closed doors – a reward for failure. This is especially prevalent in local government.
In 2018, BDO was Cambridgeshire County Council’s external
auditor. In an audit update report to
the council’s Audit & Accounts Committee (A&A) in July that year, (ISA 260 report, p18), the auditor
wrote about senior officer remuneration:
“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.”
That statement is wholly inconsistent with the same auditor’s
statement a year earlier, which only mentioned overstatements in some officers’
pension contributions – nothing about omitted remunerative benefits. For if BDO had identified any such omissions during
the previous year’s audit, why were they not corrected at the time, and why did
the auditor not mention them in the previous year’s report to the A&A
Committee or in any other document, especially given that the auditor acknowledged senior officer pay
disclosures are material by their nature?
Some time later, I asked the BDO audit partner, Lisa Blake,
what the omission of remunerative benefits referred to, and who did they relate
to. She replied that they related to CFO
Chris Malyon’s non-executive directorship fees.
At a later meeting with another Cambridgeshire taxpayer, Ms Blake denied
she had said that, but declined to give an alternative explanation. At the time Mr Malyon was a non-executive
director of two council subsidiary companies – Cambridge and Counties Bank Ltd
(CCB), and This Land Ltd, the council’s loss-making, wholly-owned housing
company that Mr Malyon himself set up in 2016.
CCB’s audited financial statements, which have a December
year end, are published on Companies House. CCB’s accounts for 2016 and 2017 both
show £40,000 non-executive directorship payments, described as “Amounts paid
to third parties in respect of Director’s Services” (pages 56 and 65
respectively for the 2016 and 2017 accounts.)
The 2017 accounts add:
“The amounts
paid to third parties in respect of directors’ services relate to the
non-executive director fees for Chris Malyon (paid to Cambridgeshire County
Council for both 2016 and 2017)”
In the corporate governance section of CCB’s accounts, under
“remuneration policy for non-executive directors”, the bank states that non-executive
director [NED] fees are paid by way of a “cash fee”, because that is how
all self-respecting financial institutions make payments in the twenty first
century.
In both those years, Mr Malyon served on the bank’s Nominations
and Remuneration Committee. In CCB’s earlier
years’ accounts, the members serving on each committee were not named. Mr Malyon joined CCB as a non-executive
director in November 2013, when he became CCC’s Chief Finance Officer.
CCC’s 2017/18 accounts showed a dramatic £38,040 rise (36%)
in the column for Mr Malyon’s “Salary, Fees, Expenses and Allowances”, up
from £105,885 to £143,925 (see below).
Mr Malyon’s rise in pay represented 94% of the total pay rise that year for
the seven featured senior officer roles.
Below the table, unlike the year before, there was a
footnote relating to the CFO:
“The Deputy
Chief Executive and Chief Finance Officer postholder undertakes non-executive
Directorships at
the Cambridge and Counties Bank and This Land Ltd, for which CCC received fixed
contributions of £45k and £20k respectively (2016/17 £40k and £0).
The full remuneration cost for 2017/18 is shown above, along with the
cost to CCC for its share. The Chief Finance Officer became Deputy Chief Executive,
for which an additional salary
amount was payable during 2016/17.”
This footnote and the table above it contain several
misleading false statements. The
remuneration table and the corresponding footnotes were prepared by Mr Malyon, the
CFO. He had a statutory duty to certify
that the accounts he prepared contained “true and fair” figures.
- If Mr Malyon did not benefit from the NED fees, why were they
even mentioned in the notes to the accounts relating to senior officer
remuneration? And why were they not
mentioned in the corresponding notes in previous year’s financial statements,
also prepared by Mr Malyon.
- The table above contains an additional column not included
in the corresponding note in the previous year’s accounts (2016/17): “Cost
of posts to Cambridgeshire County Council”.
The intention was to show where posts shared with Peterborough City
Council and other authorities produced a saving to CCC’s revenue budget. But Mr Malyon’s role was not shared with any
other authority. The disclosed “savings”
against his role were £65,000 and £40,000 for 2017/18 and 2016/17 respectively –
exactly the same as the NED fees from the two subsidiaries that were disclosed for
each year in the footnote.
- Mr Malyon was appointed Deputy Chief Executive at CCC in 2016/17. However, that was a cost saving initiative following the appointment of a shared Chief Executive with Peterborough City Council (Mrs Gillian Beasley). There is not a single official document or authorisation by the full council (as required by law), that mentions any increase in salary, responsibility allowance or any other remuneration associated with the Deputy CEO role. In any event, whether the rise in Mr Malyon’s declared remuneration in 2017/18 had been from a secret pay rise, or simply from including his hitherto concealed NED fee benefits, the full council did not authorise any amendment to the Annual Pay Policy to reflect that increase. The elected members were wholly unaware of that additional £38,040 plus pension contributions paid to Mr Malyon in 2017. That is a clear breach of sections 38 and 39 of the Localism Act 2011. CCC broke the law, and for the last six years officers have consistently lied and fabricated to cover up the breach, whilst the members on the council’s Audit and Accounts Committee studiously looked the other way.
- Had Mr Malyon’s deputy CEO appointment in 2016 come with a pay rise, in addition to being noted in committee meeting documents and/or official minutes (which it was not), the rise would also have shown up in the 2017/18 Pay Policy Statement authorised by the full council at its meeting on 28th March 2017. Instead, that Pay Policy Statement showed the same £95-£100k pay band for Mr Malyon in 2017/18 as in 2016/17.
There is no doubt that the auditor, BDO, was
complicit in the cover-up. That much stems
from BDO’s statement in July 2018 above about the omission of remunerative benefits
being discovered in the prior
year audit (2016/17). BDO’s successor, EY was also complicit in the cover-up
in later years, after the matter was brought to the audit partner’s attention
by local electors. There can be only one
of two possible explanations for that July 2018 statement from BDO:
- Either the auditor lied, and she only discovered Mr Malyon’s
additional undisclosed remunerative benefits (the £45,000 NED fees) during the 2017/18
audit, together with the £40k from 2016/17,
- or, she did discover the first omission during the 2016/17 audit, and management (i.e. Mr Malyon) refused to disclose the additional £40,000 in that year’s accounts, and BDO failed to report on the matter at the time or subsequently
The auditor should have disclosed and reported on the
omitted £40,000 benefits from 2016/17 and the £45,000 from 2017/18 as soon as
she discovered it. It is an implausible
coincidence that Mr Malyon’s total pay rise in 2017/18 (including pension
contributions) over the previous year is £45,794, which is just more
than the declared £45,000 NED fees from CCB that year.
The auditor should then have looked further back to see whether Mr
Malyon had benefitted from similar NED fees in earlier years, which he had also
failed to disclose. Since the NED fees
were remunerative benefits, they were also taxable. The evidence suggests Mr Malyon may also have
been a benefits cheat, since he presumably failed to disclose those benefits on
his annual P11D expense declaration form to HM Revenue and Customs.
Mr Malyon was appointed a non-executive director at CCB inNovember 2013, and NED fees were paid out each year. There is every reason to suspect therefore that
he also benefitted from undisclosed remunerative benefits in the two or three years
before the undisclosed £40,000 in 2016/17, when no mention was made of CCB in CCC’s
accounts (see table below).
In the Related Parties section of CCC’s 2016/17 accounts,
the notes do mention CCB on page 73 of those final financial statements:
“Cambridge and Counties Bank (CCB) specialises in providing lending
and deposit products to UK- based SME’s. Its key products include business
deposits, loans secured on property, secured pension lending and asset finance.
The Council’s Section 151 Officer is Non-executive Director on the Board of CCB
for which CCB pays £40k p.a. to the Council. There was no outstanding balance
at year end.”
But the senior officer remuneration note to the accounts
makes no mention of it in CCC’s 2016/17 published accounts. In accounts prior to 2015/16, CCB and its non-executive
fees paid is not even mentioned in CCC’s financial statements, though they are
in CCB’s financial statements: £35k in 2014, £39k in 2015, £40k in 2016 and
2017, £47k in 2018 (see table below).
They all name Mr Malyon as the NED from CCC.
Companies House filings for CCB record Mr Malyon
resigning his NED position on 26th October 2018, after holding the
position for four years and eleven months.
CCB’s accounts for 2018 explain the remuneration policy for NEDs on p27.
Given the required three months written notice, Mr Malyon
(or CCB) would have had to submit that notice to end his directorship on or
around 26th July 2018. That
is the same date printed on the front page of BDO’s draft ISA 260 audit
completion report in which the auditor remarked on page 18 on the omitted disclosure
of Mr Malyon’s remunerative benefits the year before (though without mentioning
the CFO by name).
That report, relating to Agenda Item 11 at the A&A
Committee meeting held on July 30th 2018 does not sit under Agenda
Item 11 on the webpage, but at the foot of the page, among the “Additional
Meeting Documents”. That means it was
not uploaded to the committee’s webpage in the five clear working days before the
meeting as required, but perhaps only on the day of the meeting. Consequently, members (and the public) would not
have had the chance to read it before the meeting took place. Mr Malyon though would surely have seen the report
several days before the A&A Committee met. It was perhaps that advanced notice that gave him the opportunity to submit his notice to resign his directorship just before the A&A Committee met. The coincidence of the dates no longer
appears coincidental.
In the absence of any documentary evidence to support the
council’s contorted false narrative about Mr Malyon's mid-year, £38k pay rise, the most plausible
explanation is that CCC simply contrived the cock and bull story after the auditor discovered Mr Malyon’s undisclosed NED fees, with BDO (and
later EY) agreeing to play along with the fabrication. Not all so-called independent auditors are
independent.
Mr Malyon’s £38,000 pay rise in 2018 was made public a
few months before the authority declared it would force 1,837 members of
staff to take three days of unpaid leave over the Christmas period. The aim was to make a £900,000 contribution
towards the then £14.6m savings gap in the council’s budget – the budget managed by the CFO, Mr
Malyon. It meant an effective average
pay cut of £490 per person. If one includes
CCC’s pension contributions those 1,837 staff were unwittingly contributing £25
each towards Mr Malyon’s unlawful, (and I maintain fraudulent) pay rise in that
year alone. Cambridgeshire police’s
opinion that it is not in the public interest to pursue this matter may not be shared by some CCC staff.
In 2021, the “Research for Action” team published a
report called: “Democracy denied: audit and accountability failure in local
government”. The report noted that local auditors frequently
dismissed objections from local electors, but then worked behind the scenes
with councils, CIPFA, the NAO, and even central government to address the
issues the objectors had raised. At CCC,
the auditor did not even attempt to address the issue honestly. This council and BDO appear to have agreed
instead to cover it up with the demonstrably false and retrospective narrative of
the deputy CEO’s mid-year pay rise. That may explain why it took BDO five and a half years to produce its whitewash decision notice on the 2018 objection to the accounts from a local elector, who questioned Mr Malyon's unlawful pay rise. The BDO audit partner, Lisa Blake, retired from BDO two days after the decision notice was finally produced. Ms Blake was Head of BDO's Public Sector Assurance Team.
BDO, and CCC’s next external auditor, EY both knew the
facts. They both received formal
objections to the accounts from local electors – in 2018 and again in 2020. Both auditors accepted the objections for
consideration, but then failed to take any action; conduct which in the opinion
of Mr Philip Coppel KC, a leading public law barrister, was contrary to law.
An analogous set of circumstances occurred at Northumberland
County Council in 2022 after it emerged that for several years the Chief Executive
had received unauthorised, annual £40,000 “international allowances”. At that authority, the CFO (s151 officer) acted
responsibly and took legal advice from Mr Nigel Giffin KC, before publishing a Section 114 Notice about that unlawful expenditure. Only an
authority’s s151 officer can issue such a statutory report, which has to be
published and a copy sent to the Secretary of State. At the very least I believe that should have happened
at CCC. But since the s151 officer there
was the sole beneficiary of the unauthorised expenditure, as well as the architect
of the cover-up, that was never likely to happen.
How much has this dishonesty cost local taxpayers?
The table below shows Mr Malyon’s disclosed remuneration in
the eight years leading up to his retirement in 2021, showing the spike in 2017/18
- the year of his bogus, unauthorised, undocumented and allegedly unlawful “pay rise”. Subsequent years built on that substantial rise.
Since his pension package was based on
his final few years’ salary, the overall additional cost to local taxpayers over
the coming decades of his alleged fraudulent conduct is likely to be several
hundred thousand pounds.
By way of comparison, here is the indexed remuneration
(excluding pension contributions) from 2013/14 onwards of the six senior
officers who kept the same job title over the same eight years.
Nobody else comes close to Mr Malyon’s overall pay
increase.
No senior officer in local
government ever receives a 36% pay rise in a single year through honest endeavour.
Cambridgeshire Constabulary’s investigation
In March 2021, and again six weeks later (after receiving
no response), I wrote to Cambridgeshire Chief Constable, Nick Dean, providing some
of the above evidence, and asking for the matter to be investigated for alleged
fraud by abuse of position (Section 4 – Fraud Act 2006).
I was contacted by a Detective Inspector, who I took
through all the evidence in fine detail, providing him with several hard copy and
electronic dossiers of evidence. The investigation
took twenty-eight months. The
DI volunteered no progress updates during that period. At the end, in August 2023, and only after
some chasing, the DI acknowledged the unlawfulness of Mr Malyon’s conduct, but still
appeared unaware that the narrative accounts CCC officers had given him were
demonstrable lies that I had already exposed in my original evidence. He said the police would not be taking the
matter any further. When I asked why
not, he spoke about connections between the police and local government. That is not what I wanted to hear. I was promised a written account and summary of
the investigation in a week or two. That
did not happen. Six months later I wrote
again to the Chief Constable. Shortly
afterwards I did receive a cursory one and a half page letter from the DI, in
which he claimed “no criminal acts were identifiable” and, in his
opinion there were “no allegations which met the criminal standard of proof
with regard to dishonesty. There was insufficient
evidence to pursue the matter”. I
maintain that is objectively untrue on all counts, and that that letter, which
was practically content-free and failed to address any of the substantive and compelling
documentary evidence of fraud and dishonesty, risks bringing the Constabulary
into disrepute. Fraud by abuse of
position is a criminal offense. Indisputable
documentary evidence of a s151 Officer failing to disclose many thousands of
pounds of remunerable benefits, possibly over several years, in the statements
of accounts he was responsible for preparing is not “insufficient evidence
to pursue”, in anybody’s book.
More than ten years ago, Transparency International UK
published a report called “Corruption in UK Local Government: the mounting risks.” At the time, with the Audit Commission being
abolished and several other safeguards removed, the report used real-life
examples to point out the slim chances of the police succeeding in dealing with
corruption in local authorities:
“With the abolition of the Audit Commission
and Standards for England, the potential abolition of Audit Committees within
local authorities, and the downgrading of officials who deal with corruption,
it is unclear who owns the problem both nationally and locally.
Under the new
arrangements in England, the police are the main body with the responsibility
to investigate corruption allegations. Yet this is fraught with difficulties,
such that it is unlikely to work.”
A decade later, it is clearly not working, just as
local audit and local government financial reporting are clearly not working. That partly explains the current existential
crisis in both sectors.
I believe Cambridgeshire Constabulary dropped the investigation
against Mr Malyon for political reasons, rather than for any lack of evidence. The absence of any detail or counter evidence
in the DI’s flimsy letter is especially disappointing.
Past history
Before coming to my question for each of you, it is instructive
to show Mr Malyon’s well-documented conduct at a previous local authority in
2011, two years before CCC saw fit to employ him as its new Chief Finance Officer
in 2013. The episode below bears several
hallmarks that defined his eight years at CCC.
The facts in this 2011 article from Mr Reasonable’s Barnet
blog post are not
in dispute. Mr Malyon’s now abandoned Linkedin
profile shows
him assuming the Assistant Director of Commercial Services post at
Barnet Council in November 2010, three months before the 15th
February 2011 decision date authorising his appointment to that role in the
delegated powers report that had clearly been written by Mr Malyon himself. The timing discrepancy is easily explained by
reference to Barnet Council’s own published payment data. These payments to CCMPS LTD (excl. VAT) taken
from Barnet Council’s payment data include three five-figure payments in February
2011 to Mr Malyon’s sole trader consultancy totalling £37,700.
They were made just nine days after his authorised
appointment.
At the £650/day contract
rate, they represent 58 days of billing – around three months’ worth, with
perhaps a few days off for Christmas and New year.
It is clear that Mr Malyon had agreed in
advance with the council’s Commercial Director (and possibly with the Chief
Finance Officer too) to invoice three months’ worth of historical work at the
contractor rate immediately his new role was authorised.
For the twelve months to February 2011 he had
been a salaried officer at the authority, and presumably was paid monthly through
the council’s payroll.
It is not known whether he was
paid twice over for those three months.
Shortly after Mr Reasonable’s blog appeared, payments to
CCMPS disappeared from Barnet Council’s published payment data. That is because on 23rd May 2011, Mr
Malyon signed another contract, this time with Hays Specialist Recruitment Ltd,
to continue performing exactly the same role, at the same £650 daily rate. This is a poor quality photocopy
of the signature page from that May 2011 contract. Mr Malyon’s signature is easily identifiable
and is identical to the CFO’s signature that graced CCC’s audited financial statements
between 2013/14 and 2019/20.
Why the second contract with Hays, especially since CCMPS Ltd was already passing itself off as a recruitment agency? That way, Mr Malyon’s individual payments
would no longer be visible in the payment data.
They would instead be concealed within payments to other temps and
contractors supplied by Hays. The fact
that going through another agency increased the cost by the amount
of Hays’ agency fee percentage would no doubt be considered by Barnet's new Assistant Director of Commercial Assurance to be excellent value for money for local taxpayers. Mr Malyon was never
investigated over his conduct at Barnet.
At CCC he was never investigated in connection with several other
financial scandals, all of which have been covered up by the former CEO, and the Audit &
Accounts Committee, and/or by the external auditors.
If elected, how will you hold Cambridgeshire Constabulary
to account?
Three years ago the Metropolitan Police was labelled
institutionally corrupt in the independent inquiry into the murder of private detective Daniel Morgan. Its Commissioner, Cressida Dick was
personally censured for obstruction.
Last year, Baroness Casey's Review into the standards of behaviour and internal culture of the same police force found it to institutionally racist, misogynistic and homophobic. Twenty-four years earlier, the Philip Lawrence Inquiry by Sir William Macpherson mentioned "institutional racism" 52 times. Nothing changed in all that time.
Police authorities, like councils
or external auditors, are not immune from getting things wrong, or from having
a rotten corporate culture. Any
institution will get more things wrong when there is insufficient effective scrutiny. It is understandable and right that PCCs do
not directly get involved in police operations, but that is not to say that police
evidence, or lack of it, cannot be challenged, as has happened at the Met. I maintain that the response I received from
the Cambridgeshire Constabulary had no supporting evidence, disregarded the mountains
of clear and compelling documentary evidence I provided back in 2021 and since.
It is the PCC’s role to hold the Chief
Constable and the police authority to account, though sometimes, as at the
Metropolitan Police, that does not work as it should.
Cambridgeshire Constabulary is not the Metropolitan
Police. Nonetheless, public confidence
in the police generally is at an all-time low, and this long drawn-out affair,
if left unaddressed, will do nothing to help the people of Cambridgeshire have
the confidence they need in their local police force, in my opinion.
My question to each of you is, will you agree to meet with
me before May 2nd to discuss this episode and propose a way to hold the
Chief Constable and Cambridgeshire’s police force to account?
I look forward to hearing from you.
Yours sincerely,
Andrew Rowson
