Alleged senior officer fraud, corruption and six-year cover-up at Cambridgeshire County Council

A letter to Cambridgeshire County Council's Service Director, Human Resources

24^th 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 27^th 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 11^th 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 26^th 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 6^th 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 9^th 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 19^th 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 9^th August email for example are not what one would expect from a CEO with nothing to hide.

In your email to Mrs Beasley on 10^th 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 8^th 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 19^th 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 8^th 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 8^th 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 8^th 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 27^th 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 15^th 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 24^th January 2017 meeting was dedicated to the leadership review of the CFA Directorate – not the CFO or Deputy CEO.

The meeting after that, on 21^st 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 6^th 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 6^th 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 6^th 2018) came well before Mr Mason’s 11^th 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 6^th 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 11^th 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 26^th 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 31^st December, whilst CCC's financial years end on 31^st 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 29^th 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 31^st 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 26^th 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 26^th 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 8^th 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 13^th September 2016 and 16^th 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

A chink of light on This Land Ltd's concealed administration expenses

A freedom of information request made to This Land Ltd on 12^th July 2024 requested information about the missing admin expenses categories from the company’s 2022/23 accounts, representing £1.462m (see earlier blog on this subject here).

This Land Ltd is Cambridgeshire County Council (CCC)'s wholly owned housing subsidiary company.  This Land responded on 8^th August – one working day before the statutory deadline.  The response can be found here.  The company did provide the missing categories (see table below), and did provide copies of four external audit invoices totalling £95,000 + VAT from RSM UK Audit LLP (after the auditor agreed a £5k reduction).

But it did not provide the remainder of the requested information – namely the invoices or other information supporting the £1.462m worth of expenses that were not included in This Land’s Note 6 to the 2022/23 accounts, as identified above, plus the £833,032 remaining legal and professional fees.  This Land also did not explain why it did not provide those remaining invoices etc in its response.

A request for an internal review has therefore now been submitted to This Land, asking for the missing information.  Of particular interest is the £163,364 credit for the “Sundry” expenses category (reference N).

The FOI response does confirm that all £100k of declared audit expenses in 2022/23 (£95k after the reduction) were charged by This Land’s external auditor RSM UK Audit LLP.  However, that is not the total audit cost for This Land’s operations.

At the 27^th January 2022 meeting of CCC’s Strategy and Resources Committee, a shareholder review of This Land Ltd by independent consultancy Avison Young UK Ltd (formerly GVA Grimley Ltd) was presented. 

In that report, paragraph 2.12 on page 8 states:

“To ensure governance and terms of references are being met, following a request from CCC in 2021, an independent auditor was appointed in June 2021 to provide internal audit services for a three-year term. It is our understanding that two internal audits have recently concluded but these were not ready for review and we have therefore been unable to comment on independent reports.”

It is not clear whether This Land Ltd, or its shareholder, CCC is paying for those internal audit reports.  If the former, then those costs should be within one of the other categories above (possibly “Legal and professional fees”).  If not, CCC itself may have been paying for This Land’s internal audit expenses since June 2021, which would raise the question whether that could be regarded as CCC providing unfair state aid to its so-called arm’s length subsidiary.

The answer to that question, and This Land’s response to the request for the missing invoices will be reported on this blog in due course.

An open letter to Cambridgeshire County Council's Monitoring Officer

 

6th  August 2024

Dear Ms Duncan,

I read your recent report on council owned companies’ governance, and listened to the agenda item discussion at the 17^th August meeting of the Assets & Procurement Committee, including your presentation of the report.

I have some comments on governance of two council-owned subsidiaries: Cambridge and Counties Bank Ltd, and This Land Ltd.  I also have something to say about your own conduct, as Monitoring Officer, in denying the public their statutory inspection rights under s26 of the Local Audit & Accountability Act 2014 – also in relation to This Land Ltd.  The time-honoured inspection rights should be the public’s opportunity to play their own important role in governance and scrutiny at their local authority.  Especially when the council itself and its auditors fail to do their jobs properly in this regard, it is essential for interested parties, and local electors in particular, not to be obstructed by council officers and thus prevented from performing their important work.  I address this in more detail below.

Cambridge and Counties Bank Ltd.

The table of subsidiary companies in paragraph 3.2 of your report does not include Cambridge & Counties Bank Ltd, in which the Cambridgeshire Local Government Pension Fund holds a 50% share currently valued at £69.7 million.  Strictly speaking, the pension fund is a different entity to the County Council.  However, as the draft 2023/24 pension fund accounts point out in Note 25 (Related Party Transactions):

The Cambridgeshire County Council Pension Fund is administered by Cambridgeshire County Council. Consequently, there is a strong relationship between the Council and the Fund. The Council incurred costs of £3.4m (2022-23: £2.9m) in relation to the administration of the Fund and was subsequently reimbursed by the Fund for these expenses. The Council is also the single largest employer of members of the Pension Fund and contributed £35.2m, excluding Local Education Authority schools, to the Fund in 2023-24 (2022-23: £31.7m). At 31 March 2024 there was £4.4m (31 March 2023: £7.1m) due to the Fund by the Council.

In addition, on Companies House, CCB’s Certificateof Incorporation shows Cambridgeshire County Council and Trinity Hall College each owning one of the two issued shares, giving the County Council 50% ownership. 

CCB’s latest audited accounts for the year ending 31 Dec 2023 clarify the ownership question in Note 34:

The same Note 25 to the pension fund accounts states (under the Governance sub-section), that CCC has a Pension Fund Committee on which elected members serve, and a Board of Employer body, on which the following serve: Cllr Sharp, Cllr Boden, and Lee Phanco. 

Note 25 also includes a paragraph on Cambridge and Counties Bank Ltd:

The Fund is joint owner, along with Trinity Hall, Cambridge, of Cambridge and Counties Bank (CCB). The Fund has no controlling interest in the Bank and it is included within the Fund’s financial statements as a minority interest. Each shareholder is entitled to appoint one shareholder Non-Executive Director to the Board of CCB. The Fund is represented by an external party to the Pension Fund (See Note 5).

But, if the pension fund has no controlling interest in the Bank even though it owns 50% of the shares, then does the same apply to Trinity Hall, which holds the other 50% of the shares?  Who then controls the Bank? 

In the Related Parties Note to CCB’s accounts however, CCC and Trinity Hall are described as “controlling parties”:

Although each shareholder is entitled to appoint one shareholder Non-Executive Director (NED) to CCB’s board, it would appear that CCC currently does not have a NED at CCB.  Former CCC CFO Chris Malyon served as a NED between November 2013 and October 2018.  He was replaced by Richard Perry (CCC Pension Fund) between February 2019 and March 2022.  But there has been no apparent NED from the CCC shareholder since then – at least not according to Companies House.  This is reflected in the sums paid in respect of Directors’ services.  From a peak of £53,000 NED fees paid to CCC in 2021, in the last two years, the sums paid to CCC have dropped to £13k and zero (see above).  Trinity Hall has not sought payments for its NEDs since 2015 (£9k).

It is therefore legitimate to ask what governance, if any, does CCC exercise over its £69.7m investment in CCB (an unlisted bank with minimal external regulation), especially in light of the council’s acknowledged “less than optimal governance” of its subsidiaries.  Perhaps this is an example of the patchiness of governance reporting that you mentioned.

CCC is clearly the de facto and de jure owner of the 50% share in CCB, yet CCB is omitted from the list of subsidiaries in the report, in which CCC holds a 25% share or more.  It seems doubtful that the Pension Fund Committee has taken on, or would take on the oversight and scrutiny role for council-owned companies now proposed for the new sub-committee.  Lastly, with apparently no NED from CCC or its pension fund serving on the board or on any committee at CCB for over two years, it is not clear how CCC would even be capable of performing that role today.

My questions to you therefore are:

a)       Can you explain why CCB was omitted from the list of council companies in your report?

b)      Was it an oversight that will now be corrected?

c)       How does CCC intend to effect proper governance and scrutiny over its interest in CCB with no NED currently in place, and therefore with limited channels of communication or information?

As Monitoring Officer, you should already know that CCC’s relationship with CCB is already the subject of one of the council’s most shameful corruption and cover-up scandals of recent years.  As noted above, former CFO Chris Malyon was a non-executive director at CCB between November 2013 and October 2018.  While in that role, CCB “officially” paid CCC up to £253,000 in cash in the form of non-executive director fees for Mr Malyon’s services.  However, in 2018, auditor BDO referred to some of those payments as the “omission of remunerative benefits required for inclusion” in CCC’s financial statements.  Lisa Blake later confided to me that the omissions related to Mr Malyon’s NED fees (see here, p18).  In other words, the payments went to Mr Malyon, rather than to CCC, but he failed to declare them.  In his role as s151 Officer, Mr Malyon had a statutory duty to prepare and certify the annual financial statements as true and fair.  After Ms Blake stumbled across these irregularities, she lied about them and covered them up, as did her successor, EY audit partner Mark Hodgson, the two other statutory officers (CEO Gillian Beasley and Monitoring Officer Fiona McMillan, and the Chairman of the Audit & Accounts Committee (former Cllr Mike Shellens).  It is not yet known whether the then leader of the Council, Cllr Steve Count, knew about the alleged frauds (including possibly personal tax fraud), or whether he was party to the multiple cover-ups. 

One such cover-up was an unlawful £38,000, mid-year, secret pay rise the CEO claimed to have awarded Mr Malyon in 2017/18, but which was never proposed, debated, or approved by the Staffing and Appeals Committee or the full council, was not shown in CCC’s 2017/18 pay policy statement, and for which there is zero official supporting documentation.  See here for analogous unlawful payments that resulted in a s114 Notice at Northumberland County Council.  

The current CEO, Dr Stephen Moir, knows the full facts because I personally briefed him on them in September 2022.  He has taken no action.  This episode will shortly be exposed in an upcoming blog.

 

This Land Ltd

In presenting your report to the Assets and Procurement Committee, you cited recent guidance to councils on good governance of council-owned companies.   Some of the errors made in relation to CCC’s most prominent failed company – This Land Ltd - should not have needed formal guidance.  They were down to a lack of common sense or a willingness to challenge by members.

For example, in May 2016, when the former CFO, Chris Malyon, and former Monitoring Officer, Quentin Baker proposed setting up the company that was later renamed This Land Ltd, the official minutes record the following exchange:

A Member asked, on the basis of forecasts already undertaken on borrowing, repayments and income streams, how long it would be until there was net income. Officers advised that they did not expect the HDV [Housing Development Vehicle] to make a profit for some time, maybe even for decades, although the income for the Council would be realised straight away. Much depended on the shape and length of the development pipeline.

Nevertheless, under the Chairmanship of the disgraced former deputy council leader, Roger Hickford, members of the Commercial and Investment Committee voted unanimously to request that the Director of Law and Governance incorporate the company, without a detailed business case, without public consultation (as required under s3 of the Local Government Act 1999), and without even putting the matter before the full council.  Cllr Chris Boden is the sole remaining CCC member who served on that committee.  The company, under its initial name of Cambridgeshire Housing and Investment Company Ltd (CHIC) was incorporated three weeks later, with the Monitoring Officer and the CFO taking the two director roles.

For all but nine of the next fifty months, Mr Malyon was This Land’s effective finance director and CCC’s CFO, representing a glaring conflict of interests, that members ignored.  In his council role, Mr Malyon had a perverse incentive to maximise CCC’s commercial loans to This Land Ltd, since that would maximise the net interest return for the council to use as revenue, and so compensate for the CFO’s inability to balance the books.  That device of borrowing for yield and turning capital into revenue (since outlawed by central government) was the main reason behind the two statutory officers’ plan to create the housing development vehicle in the first place, as the original May 2016 report makes clear.  The race to lend This Land up to £115 million before the company was ready to purchase land on which to build and sell houses for profit, was the single biggest factor behind This Land’s failure and its £38m losses up to March 31 2023.  Members on the Commercial and Investment Committee, and the Audit & Accounts Committee remained blind to the facts and deaf to repeated warnings until it was too late.

 

My requests for information under s26 of the Local Audit & Accountability Act 2014

I wrote to you on 2^nd July this year, asking you to compel finance officers to provide me with the documents and records I had been denied by the Head of Finance after requesting them under s26 of the Local Audit & Accountability Act 2014.  As in previous annual inspections, the Head of Finance again gave an incorrect and ignorant excuse for refusing me the information.  I explained to you, as I did to him, that the legislation states that all documents, records etc. relating to the accounting records to which the audit relates are within scope of the statutory public inspection.  That includes the draft accounts and other documents and accounting records of This Land Ltd, all of which come within scope of the audit because This Land forms part of the Group Accounts, which is audited by the external auditor.  Indeed, during the 2021/22 audit, EY pretended to investigate the recoverability or otherwise of the council’s outstanding £113.8m loan to This Land Ltd.

I pointed out in my letter that under Schedule 7 of the Act, the auditor may issue public interest reports or written recommendations on any matter coming to his notice relating to the authority or an entity connected with the authority, which evidently includes This Land.

Furthermore, in This Land’s Articles of Association, paragraph 53.1 reads:

“The Shareholder shall have the right on giving to the Company reasonable advance notice, during normal business hours to inspect the books and records of the Company.”

Finally, This Land Ltd and its associated companies are public authorities, and are obliged to respond to Freedom of Information requests.  This Land Ltd is listed on the FOI website whatdotheyknow.com.

There is therefore no excuse for CCC not to provide me with the information I requested.  And yet you have so far failed to respond to my letter except with a rude and disrespectful email acknowledging my request.  All the evidence points to CCC Finance wishing to conceal aspects of This Land’s operations that the authority does not want the public to see.  It does now appear that you – the Director of Legal and Governance, and Monitoring Officer, may be party to the concealment.  That is not a good look.

One very good reason for interested parties and local electors to inspect all these documents and records is to assist the auditor in his work, including submitting objections to the accounts to the auditor by the statutory deadline.  Your failure to respond to my letter and to ensure that I received the requested information is a disgrace.

The Local Government Information Unit gives this summary for the Monitoring Officer’s role:

A Monitoring Officer is the statutory officer responsible for the legal governance of a local authority in much the same way that a section 151 officer is responsible for a council’s finances. The majority of the role is set out under section 5 of the 1989 Local Government and Housing Act. They have a legal duty to ensure councils fulfil statutory obligations and apply their codes of conduct. This includes investigating and reporting on anything the authority does that has the potential to be an illegal action or any action that might count as maladministration.

Year after year, CCC Finance routinely denies interested parties their statutory inspection rights for no good reason.  It is part of your job to stop that from happening.  You have failed to do so, and because the accounts inspection period is now over, and with it the deadline for submitting objections to the auditors, my objection this year was again deficient in that it lacked vital information that would have been helpful to the auditor.  The information I was denied this year included a copy of This Land’s draft accounts, and the supporting invoices and other documents for the company’s administrative expenses, millions of pounds of which have been concealed from the public in every published set of This Land’s accounts to date.  All that information is already held by, or is easily accessible to CCC.

I therefore consider it hypocritical to say the least, for you to present a report to elected members about good governance and scrutiny, whilst conspicuously failing in your own legal governance responsibilities, and denying the public their ability to hold the council to account.

It is now over a month since I wrote to you with my request.  Even though this year’s deadline for submitting objections has passed, I still demand the information I requested.  Given that delay, I believe it is eminently reasonable for you to ensure I receive that information without delay, namely:

·         This Land Ltd’s draft 2023/24 accounts, in full,

·         the requested This Land administration expenses information for 2023/24, and

·         the requested sale and purchase of property information relating to This Land covering 2023/24.

within the next ten working days – so by August 19^th.  Should I not receive all that information by then, I shall submit a formal complaint to the Solicitors Regulation Authority, and take whatever other escalation action I consider appropriate.

Your conduct to date seems to reflect the complacent and arrogant corporate culture that has existed at CCC for too long, and that has contributed in no small measure to the current financial mess.  I note from CCC’s latest draft financial statements, that including employer’s National Insurance contributions, your services during 2023/24 cost local taxpayers £160,143.  The three statutory officers together cost taxpayers £585,212 in 2023/24.  None of you is doing your job properly, and all of you have been working against the public interest in many respects.  You need to understand that you are public servants, and that you work for us.  Rudeness and disrespect towards the public are unacceptable.

I therefore look forward to receiving the information I requested a month ago, and for your benefit, and the benefit of the other officers and members included in this email, I am including this link to the seven principles of public life, more commonly known as the Nolan Principles, which are too often ignored by some senior officers and members at CCC.

Yours sincerely,

Andrew Rowson

PS. I am copying this as an open letter on my blog.

An open letter to the candidates for the post of Cambridgeshire and Peterborough Police and Crime Commissioner

 

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 2^nd.  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 28^th 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:

1. 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,
2. 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 26^th 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 26^th 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 30^th 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 15^th 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 23^rd 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 2^nd 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