This Land Ltd's latest Business Plan is confidential

By Andrew Rowson

This Land Ltd's 2023-24 audited accounts

On 7th January 2025, the latest consolidated accounts of This Land Ltd, Cambridgeshire County Council's (CCC) wholly owned housing development company, were published on Companies House.  The record-breaking comprehensive loss for the year to March 2024 was £11.89 million, taking the company's total losses to £50.23 million in its first eight years' of trading.

This Land's total losses are now more than double the company's entire historical revenue from selling houses (£25.04 million).

Selling houses or selling land?

Developing land and selling houses was what This Land was set up to do in 2016.  This is what the Chief Finance Officer wrote then in the 10-page prospectus for the company that became This Land Ltd:

"In view of CCC’s land holdings, and the currently extremely buoyant economic conditions for housing development, there is an opportunity for CCC to develop its own land rather than sell it. Simply selling sites for others to develop, and profit from, is no longer an option for CCC. The scale of the financial challenges facing CCC requires that it has to review every opportunity available to it in order to create an on-going revenue stream that can mitigate the reduction in the services that it otherwise would have to make. ...The vision is to transform CCC from being a seller of sites to being a developer of sites."

However, because the company was unsuccessful at selling houses or turning a profit, following the government's 2020 ban on councils borrowing for yield, it began selling its own mortgaged land to property developers so that it could afford to pay its shareholder the interest on its existing loans.  The property developers presumably profited, whilst This Land's losses continued to grow.  In the first four accounting periods in which it made any sales, This Land's revenue from selling sites has been more than three times higher than the £25m revenue from selling houses.

 

In progressively selling the land it had purchased with borrowed money, but without repaying the loans to CCC, the company's land security against those borrowings fell from 85% in December 2018, to 22% in March 2024. 

In August 2024, CCC agreed to lend This Land a further £5.9m (plus £400k of equity).  Today This Land's land security represents barely 21% of  its liabilities towards its shareholder, CCC.

This Land is still unable to pay the loan interest

A previous post noted that as at last October (2024-25, period 7), CCC was forecasting a £5.77m shortfall in the loan interest receivable from This Land over the current financial year, on account of its cash flow problems.  A month later (period 8), the forecast shortfall rose to £6.27m), or 101% of the net income from This Land that the authority relies on to balance its revenue budget.  The net budget is the difference between the interest CCC pays to the Public Works Loan Board (PWLB) for borrowing the money it lent on to This Land, and the higher commercial rate loan interest income it should receive from This Land (a prime example of the outlawed practice of borrowing for yield).  Going over 100% means CCC is currently anticipating that this financial year, This Land will not even be able to pay it the £2.374m needed to cover the council's own loan interest payments to the PWLB (see here, p5). 

If the above trend continues until March 2025, and This Land cannot pay any of the loan interest CCC depends on to provide frontline services to the public, then the authority will need to find up to £8.57m worth of savings elsewhere, or be forced to make service cuts (pothole repairs?) in order to balance its budget for the financial year.

For how much longer can This Land survive?

Apart from repaying a few, smaller, short term loans to CCC, This Land's sporadic repayments to date have been for loan interest only.  The loan repayment schedule, set out on page 19 of This Land Finance Ltd's latest audited accounts, show when the loan principal amounts are due to be repaid. 

 The £5.9m loan agreed last July (behind closed doors) is due to be repaid in February 2026.

Taking all the above information into account, if This Land Ltd is not to default on repaying the loan principal total of £120m on time, it will need an immediate turnaround from making annual losses of nearly £12m, to making annual profits of £30m on average between now and January 2029, and to convert all of those profits into cash.  If one assumes This Land will break even in 2024-25 (however unlikely that may be), then the profits the company will need to make going forward to repay those loans just in time look like this:

How will This Land Ltd accomplish this task?

All the signs are that This Land is once again running out of cash.  CCC's loan to the company last year appears to have been unlawful - breaching the government's 2020 ban on councils borrowing primarily for yield, and also breaching the 2021 amendments to the CIPFA Prudential Code, which made it clear that:

 "borrowing for debt-for-yield investment is not permissible under the Prudential Code". 

True to form, CCC has concealed the report recommending that loan, asserting that it is confidential.  And so it appears that the purpose of the loan may have been to help This Land pay CCC the interest on its existing loans, thus initiating another vicious cycle.  Bridgewater hedge fund founder Ray Dalio put it this way in a recent article:

"When you get to the point that you have to borrow money to service the debt and interest rates are rising, so that debt service payments rise, so you need to borrow more money to pay them, you’re in what the markets call a death spiral."

However, the growing adverse forecast variances (see above) in This Land's loan interest payments to CCC suggest that the latest loan may already have been spent on other more urgent outgoings so that there was little or none left to pay CCC the loan interest. 

Where is the 2024 Business Plan?

This Land Ltd published annual business plans for 2022 and 2023.  They were both public documents.  Both contained wholly unreliable future cashflow forecasts, and so gave no reassurance that This Land would be able to service its existing debt and repay the nine-figure loans by their maturity dates.  The 2023 business plan for example promised:

"Our cashflow modelling confirms the repayment of all loans and interest by 2029" 

Just twelve months later, This Land requested, and received, a further loan of £5.9m from its shareholder. 

CCC officers promised councillors that This Land's latest business plan (logically the 2024 plan), would  arrive in November 2024, then in December.  In January's agenda papers for the Strategy, Resources and Performance Committee, This Land's business plan (the year is no longer specified), was promised "in the Spring of 2025".  It is an important document because it should explain how the company intends to turn its fortunes around so dramatically.  Local taxpayers are entitled to know.

The agenda contents document for the inaugural meeting of CCC's Shareholder Sub-Committee, to be held on 29th January 2025, announces that members will discuss the long-anticipated This Land Ltd Business Plan.  According to a report written by the Monitoring Officer in July 2024,  the Sub-Committee's duties are to include approving the business plans of council-owned companies.  But if this is indeed This Land's 2024 Business Plan, there seems little point in approving, or even not approving it in January 2025.

Committed to open government?

Unlike its two predecessors, the latest Business Plan is deemed confidential.  No explanation is given other than that...

"it would not be in the public interest for this information to be disclosed." 

The agenda contents document states that the press and public are to be excluded from the meeting before This Land's business plan is discussed.  Members serving on the Sub-Committee cannot already have conducted a public interest test (as required by law) to determine whether to release the document, because their first meeting has not yet taken place.  As with the loan decision last July, council officers and elected members seem determined to breach the rules and conceal vital information from the public.  That is how CCC frequently conducts its business.  At the foot of the same agenda contents document, the committee clerk apparently thought it appropriate to add: 

"The County Council is committed to open government and members of the public are welcome to attend Committee meetings. It supports the principle of transparency and encourages filming, recording and taking photographs at meetings that are open to the public." 

CCC's evident intent to keep the latest business plan from the public cannot but heighten taxpayers' concerns that This Land Ltd still lacks a credible plan to extricate itself from its debt-induced death spiral.  If/when the company collapses, possibly bringing down the County Council with it, it will be long-suffering local taxpayers who will pay for CCC's incompetence and lack of effective governance since 2016 in the form of much higher council tax and service cuts.

For the record, the councillors on CCC's new Shareholder Sub-Committee who have the authority and the duty in the public interest to publish This Land's latest Business Plan on 29th January and support the principle of transparency by holding the agenda item 5 discussion in the open are:

Cllr David Ambrose Smith,

Cllr John Gowing,

Cllr Ros Hathorn,

Cllr Elisa Meschini,

Cllr Edna Murphy. 

 

Would you lend £6.3 million to this company?

By Andrew Rowson

How Cambridgeshire County Council concealed key investment information from the public and its own councillors

On 9th July 2024, Cambridgeshire County Council's (CCC) Strategy, Resources and Performance Committee (SRP) met.  The last item on the agenda was a discussion about a report entitled: "This Land - Monitoring and Financing".  The report is not available for the public to see, because the committee chair (Cllr Lucy Nethsingha) asserted that the item was confidential and that "it would not be in the public interest for this information to be disclosed."  The committee did not conduct a public interest test (as the law requires), before it resolved to exclude the press and public so it could discuss the report behind closed doors.

Three months later, at the October meeting of the same committee, it emerged that the July report had contained a recommendation that CCC make "prudential borrowing" of a further £6.3m - presumably from the Public Works Loan Board (PWLB) to lend on at a much higher commercial rate to its failing housing development company This Land Ltd, thus adding to the latter's outstanding £113.8m debt to its sole shareholder. 

When the company later renamed This Land Ltd (TLL) came into being in 2016, its raison d’être was primarily to allow CCC to exploit the PWLB's preferential low interest rates offered to councils and make up to £6.2 million potential net revenue annually by lending on to its subsidiary housing company.  The company would purchase land from the council, build houses on it, and eventually sell the houses at a profit and pay dividends to CCC.

In the May 2016 "Outline business case" for setting up the housing company, (aka "Housing Development Vehicle" - HDV): CCC's CFO explained to members of the Commercial & Investment Committee why he wanted the authority to set up a housing development company, when it had no in-house knowledge or commercial experience in that risky business sector:

"Simply selling sites for others to develop, and profit from, is no longer an option for CCC. The scale of the financial challenges facing CCC requires that it has to review every opportunity available to it in order to create an on-going revenue stream that can mitigate the reduction in the services that it otherwise would have to make... The vision is to transform CCC from being a seller of sites to being a developer of sites."

He went on to reveal the cunning plan for "making money out of nothing" from the interest rate differential : 

"The nature of housing developments is that there is a significant time lag from the point at which sites are identified until the point that a revenue stream is created. One way of ensuring that revenue is received by CCC much earlier in this cycle is for CCC to establish a market loan to the HDV . The HDV needs to borrow at market rates in order to avoid state aid regulations, but CCC can borrow at far more competitive rates from the Public Works Loan Board and take the margin on the loan into CCC’s revenue account. CCC will therefore gain approximately 3.0 to 3.5% on everything it lends to the HDV from the point at which the loan is made, not when sales or rents start to be received by the HDV. This will mean that the HDV will be making substantial losses for many years. This is not of concern as this will be within the financial model and long-term business plan of the HDV.”

There are two major problems with the above model that its architect and the members who voted unanimously for it appear to have overlooked:

1) the net revenue helping CCC to provide its frontline services only materialises if the HDV can generate business profits from its operations from which to pay CCC the steep loan interest.  If it keeps making losses, it defaults on the loan repayments unless it can take out additional loans from CCC just to pay the interest - thus creating an ever larger debt that becomes increasingly unrepayable. 

2) Four years ago, to nobody's surprise, the last government banned the practice of councils borrowing for yield, and borrowing to fund commercial investments, because so many were abusing the rules.  A year later, revisions to the CIPFA Prudential Code underlined that councils borrowing primarily for yield was imprudent, and therefore unlawful.

"No borrowing to fund commercial investments"

The unambiguity of that unlawfulness was set out in a learned article published in Local Government Lawyer in December 2021 by Dr Paul Feild, and clearly aimed at council monitoring officers.  It was titled: "Why the revised Prudential Code matters to monitoring officers"

TLL has not made a profit in its first nine years since incorporation.  Losses up to March 2023 totalled £38.3 million.  The 2016 promise of making substantial losses for many years has thus been honoured.  In that time, TLL completed just 78 homes, effectively a £492,000 comprehensive loss for each home.

When the long anticipated borrowing for yield ban was introduced, because TLL was already making large seven figure annual losses, it had to find a new source of funding to pay its loan interest to CCC.  It came up with the idea of selling land it had purchased from CCC with borrowed money, so developers could once again take all the profits.  Since developers knew CCC was desperate to sell, it became a buyer's market, and This Land has made nothing but losses on selling land just as it has done selling houses.  Between January 2020 and March 2023, This Land sold £53.4 million worth of mortgaged land.

Selling the mortaged land, but keeping the cash proceeds

A singular feature of these sales of mortgaged land is that This Land did not repay CCC the outstanding mortgage principal, a luxury not extended to other commercial companies or domestic mortgage holders.  In the last three sets of accounts, This Land's long term liabilities have remained static at £113,824,500. 

For some reason not explained to local taxpayers, CCC allowed its subsidiary to do this, even though it meant the loans became increasing unsecured, and therefore risky, with each passing year.  By March 2023 - the balance sheet date of TLL's latest available published accounts, CCC's land security against its subsidiary being unable to repay its loans had fallen to £43,528,491.  In other words, nearly 62% of the outstanding £113,824,500 loans were unsecured against land assets.  Following the most recent loan that committee members agreed in July, that percentage has risen to nearly 64%.

So, for the last four years, TLL has been steadily cannibalising itself to pay the loan interest that is essential for CCC to fill the holes in its revenue budgets.  How long can TLL afford to do this before it runs out of available land it is having to sell to professional housing developers simply to stay afloat?  The signals are not encouraging.

Integrated finance monitoring reports

The same SRP committee that secretly agreed the £6.3m loan last July receives periodic finance monitoring reports from the Executive Director of Resources and Finance, Mr Michael Hudson.  Within those reports is a table - "Appendix 1a - Finances & Resources Detailed Financial Information".  That appendix shows forecast year-end variances during the year, and actual variances at the year-end itself for each service area within Finances and Resources, and for the individual services within each service area.

This Land is one of six services within the "Investment Activity" service area.  The table below from Appendix 1a shows Investment Activity as at March 2024, the end of the 2023/24 financial year.  The actual variance at year-end was a favourable (credit) figure, meaning the net revenue of £6.292m was £159k higher than the budgeted £6.133m revenue for that year.

The ten finance monitoring reports that preceded the July 2024 committee meeting, and the two reports since the July 2024 meeting all show the same granular, service-level budget and forecast information for each service area in the Appendix 1a report.

Now you see it, now you don't

But the Appendix 1a table presented to members at the July 9th 2024 meeting of the SRP committee was different. 

In that table, all the other service areas show the budget and forecast information for each individual service.  But Investment Activity alone shows no detail lines, just the single total for all six services, including This Land.

Furthermore, as early as period 2 (May 2024), the Executive Director of Resources and Finance was already forecasting a sizeable adverse (debit) variance of £1.169 million for its six investments over the new financial year.

Which of the six services shown in the first table above is responsible for the bulk of that adverse forecast variance?  The public and the committee members have not been told, unless members were given the missing detail in the closed session discussion on This Land Monitoring and Financing.   Since we now know that at that same meeting, the committee voted in secret to lend This Land a further £6.3 million, it would have been useful for them and for the public to know at the time whether any of the £1.169m worth of bad news was connected with This Land's ability to pay its loan interest on the existing £113.8m in the current financial year.  

The truth emerged only after the October and December meetings, in which the Appendix 1a table reverts to disclosing all the service-level information, including for Investment Activity.

Investment Activity up to period 5 (August 2024) looks like this:  

This Land's adverse £3.2 million forecast variance is larger than the total for Investment Activity, because of the offsetting favourable variance from Collective Investment Funds.

The same is true in the period 7 report below (October 2024), which includes variances as at period 6 in the left hand column.  This Land's adverse variance forecast for the year has grown to £5.77 million, again appreciably higher than the total, thanks to the two favourable variances in the last two lines. 

It therefore seems reasonable to assume that back in period 2, This Land's adverse forecast may also have been at least as high as the £1.169m total for Investment Activity.  If so, as a percentage of This Land's net revenue budget of £6.191m, it would equate to a 19% adverse variance.

Putting this information together produces this graph.  

The above graph begs the question: why did CCC Finance not predict the full scale of This Land's annual forecast variance back in period 2, when it must have been clear there was a large problem.  What communication does it have with This Land's finance team?  It looks as though each month CCC finance officers were surprised that the forecast annual shortfall had grown substantially.  This must say something about CCC's governance and scrutiny of its wholly owned subsidiary.

A second, and perhaps more serious question, is why did Mr Hudson produce finance monitoring reports for period 2, and present them to the SRP Committee for its 9th July meeting, with all the detailed This Land information removed?  It cannot be accidental.  That was the same meeting in which the report on This Land Monitoring and Financing - presumably written by Mr Hudson - recommended the additional £6.3m loan.  It looks very much as if by July last year,  the Finance team including Mr Hudson already knew that This Land was experiencing severe cash flow difficulties and would struggle to pay the existing loan interest.  So they hid the evidence.  What rational lender in those circumstances puts his head in the sand and lends a failing company millions more?

In the December meeting of the SRP Committee, when the published annual forecast variance was 93% and £5.774m, that figure represented 77% of CCC's entire forecast variance for the year.  Yet the Head of Finance's presentation of the period 7 Finance Monitoring Reports, and the members comments in the ensuing discussion never once mentioned This Land.  There is no mention of This Land either in the official minutes of that meeting.

 Where is the 2024 annual business plan?  Where are the published accounts?

For the past few years, This Land has been asked to produce an annual business plan.  The 2023 plan was presented to members in July 2023.  The finance monitoring reports for period 5 at the 31st October meeting of SRP Committee promised that:

"The council is due to receive the annual business plan from This Land in November"

That evidently did not happen.  On a different page, in a different table, the same report states:

"This Land Business Plan continues to be reviewed and will be brought back to SR&P committee in December."

That did not happen either.  The December report (Annex A) on period 7 promises the business plan, but only mentions "by year-end".  Is it referring to the financial year-end, which would be 31st March 2025?:

"Pressures in the Finance & Resources directorate relate primarily to lower than expected income from the council’s investments, particular in its wholly owned housing company This Land. It is prudent to forecast a pressure in this area, as by year-end the current position of the company will be clearer following the submission of its full business plan and its subsequent review by the council. This may necessitate support to the company or a further earmarked reserve provision by the council, otherwise this forecast overspend will be unwound."

The SRP Committee's next meeting is scheduled for 28th January 2025.  The newly formed Shareholder Sub-Committee, which has the responsibility of approving the business plans of CCC's subsidiary companies, meets for the first time on 29th January 2025.  If This Land's 2024 Business Plan does arrive by the end of this month, it is unclear what value any approval, or even non-approval by either committee would have, given that the 2024/25 financial year end will only be two months away by then.

In every This Land business plan to date, the cashflow forecasts have been completely wrong.  The 2023 business plan for example boasted that the company would not need any more cash injection until 2029.  Twelve months later, This Land was lent another £6.3 million - presumably an unsecured loan.  It would appear that the allegedly unlawful purpose, yet again, is to enable This Land to pay the £8.5m loan interest for 2024/25 to CCC before the end of the financial year.  If so, it would be exactly the scenario the last government and the CIPFA Code tried to avoid with the borrowing for yield ban.  Audit firm Grant Thornton produced a recent Report in the Public Interest for its client - Woking Borough Council, which fell into the same trap as CCC.  Grant Thornton explained it this way:

"Large sums which the Council made to the companies were advanced in the knowledge that they would be used to enable the companies to pay the Council the interest they owed on their existing loans, to maintain day-to-day operations. In some instances, these were revolving loans, and their application resulted in increased borrowing by the Council. These were essentially revenue payments, yet it is clear from statutory guidance, including The Chartered Institute of Public Finance and Accountancy (CIPFA’s) Prudential Code for capital finance in local authorities, that over the medium term debt will only be used for a capital purpose. Although interest costs may be capitalised during the construction phase of projects, loans were made to companies which were not engaged in construction."

Grant Thornton's report shows that while in some respects, Woking's reckless excess was on a different scale to CCC, there are still many similarities, not least the conduct of the senior management team at the time, which in Woking's case have all been replaced:

"The senior management team of the Council was made up of the former Chief Executive, the former Deputy Chief Executive, the former Monitoring Officer and the former s151 Officer. The complementary knowledge, experience, powers and duties of each of the former senior officers should, between them, have been sufficient to have in place arrangements to safeguard the interests of the Council and ensure that its finances were managed prudently, and that all its actions were lawful. Each member of this team should have been able to challenge the others if actions were proposed which would contravene the laws and regulations under which each operates or damage the interests of the Council."

At CCC, why did the Monitoring Officer approve the £6.3m loan last July?  Why did the Executive Director of Resources and Finance conceal important information about This Land's financial and cashflow positions last year from elected members?  Why is the response to This Land's worsening financial position always to throw more taxpayer money at it, rather than consider winding it up before the losses become even greater?  Is it not currently trading whilst effectively insolvent?  And why has CCC's Chief Executive Officer, Dr Stephen Moir (who attended the 9th July 2024 meeting) not challenged the behaviour of the two other statutory officers whom he appointed?  Does he too think that in spite of all the evidence to date, This Land will soon begin making super massive profits and will repay all the interest and £120m of loan principal between now and January 2029?

At the time of writing there is no sign of This Land's 2024 business plan, and its accounts for 2023/24 are now overdue on Companies House.  With elected members also asleep at the wheel, what is it going to take to make someone in authority do the right thing?

Is Cambridgeshire Constabulary institutionally corrupt?

By Andrew Rowson

Background.  Is there any accountability in Cambridgeshire?

Recent posts on this site (here and here) have reported on Cambridgeshire County Council’s (CCC) concerted cover-up of an alleged six-figure benefits fraud by a former Chief Finance Officer.  For up to five years, Mr Chris Malyon personally benefitted from non-executive directorship fees (NED) paid in cash by council subsidiary Cambridge and Counties Bank Ltd, that should have gone to the County Council.  Mr Malyon, who was a non-executive director at the bank between November 2013 and October 2018, repeatedly failed to disclose those taxable benefits in the council’s financial statements.  In his capacity as CFO, he had a statutory obligation to prepare the accounts and to certify them as “true and fair”.  It is possible, indeed more likely than not, that CCC, as his employer, also failed to declare his NED fee benefits in the annual P11D forms it submitted to HMRC to confirm that its employees were paying the correct tax. 

Mr Malyon tendered his resignation from his NED role at Cambridge and Counties Bank on the same date (26^th September 2018) that auditor BDO noted the “omission of remunerative benefits required for inclusion” in its audit completion report (p18)  presented to CCC’s Audit & Accounts Committee.  The audit partner, Lisa Blake, later admitted to me that the above comment in the report did refer to Mr Malyon’s NED fees.  But she did nothing to expose the alleged fraud, in breach of her duties under International Standard on Auditing (UK) 240 (The auditor’s responsibilities relating to fraud in an audit of financial statements - ISA 240).

Both BDO and subsequently Ernst & Young (EY) colluded with the county council in covering up the undeclared benefit fraud, the possible tax fraud and Mr Malyon’s unlawful pay rise in 2017/18 that the Chief Executive Officer (CEO) fabricated to disguise that year’s undisclosed £45,000 NED fee from the bank, as reported on this site.

Seeing both audit firms’ determination to bury the story, in April 2021 I submitted a complaint to Cambridgeshire Constabulary on the matter.  For more than two years, the police also failed to investigate properly.  In particular they failed to challenge CCC’s demonstrably false documents from 2018.  In August 2023, the lead detective inspector announced he was dropping the investigation, but he failed to produce any coherent evidence supporting his decision.  In March this year, the same officer forged a letter, claiming he had written it seven months earlier.  Last month, Cambridgeshire Constabulary’s unaccountable Chief Constable defended his dishonest officer and stated that he would not pursue the matter any further.

The letter below is addressed to Mr Darryl Preston, Cambridgeshire and Peterborough’s Police and Crime Commissioner.

20^th September 2024

Dear Mr Preston,

Is Cambridgeshire Constabulary institutionally corrupt?

In April and May this year I wrote to you about an abortive police fraud investigation lasting over two years, led by a DCI at Cambridgeshire Constabulary.  I asked to meet with you.   In the first letter I went into some detail about how the officer leading the investigation had relied on objectively false documents provided by Cambridgeshire County Council (CCC) that I had shown him were false over two years earlier.

On 24^th May I received a response from Mr Jack Hudson, the Deputy CEO & Director of Governance and Compliance at your office.  Mr Hudson advised me to address my complaint to the Chief Constable, who is responsible for police operational matters.  I accept that was the correct response at the time.  He also wrote that he had forwarded my letters to the Constabulary’s Complaints Review Team (CRT), who would contact me.  I have had no contact from the CRT.

on 18^th August, I wrote a long and detailed letter to Chief Constable Dean, again setting out the key facts and evidence showing how the officer leading the inquiry had ignored irrefutable documentary evidence that comprehensively contradicted the false documents he had relied on.  I also explained how the officer, DCI Rowe, had forged a letter and tried to pass it off as one he had written seven months earlier (see “The final straw” from p14).  I believe that was gross misconduct that demanded prompt and severe action by the Chief Constable.

I copied my letter to my MP and also to Baroness Taylor of Stevenage, Under-Secretary of State at MHCLG with an accompanying letter about the comprehensive six-year cover-up of the alleged fraud by CCC and two audit firms who had colluded with the local authority to bury the scandal. 

I received a disgraceful response on 3^rd September from Chief Constable Dean’s PA, which included an absolute untruth:

“I’m afraid the Chief Constable does not have anything to add to what Detective Chief Inspector Rowe has already relayed to you. We understand that in addition to correspondence from him, he has also visited you to explain the Constabulary’s position on this.”

 

The reference to an additional visit from DCI Rowe was 100% incorrect, as I immediately stated in my response that same day.    I have had no reply from the Chief Constable or from anyone else at the Constabulary since then.  As to “explaining the Constabulary’s position on this”, you, and the wider public need to know what actually took place.  At a virtual Microsoft Teams meeting with DI Rowe (as he then was) last August (not at any subsequent visit to my home), I pointed out for the third of fourth time that the documents CCC had produced in September 2018, (and on which DI Rowe had based his entire investigation) were false and unsupported by any real events or public documents (here and here).  At that point DI Rowe pivoted, and “explained” that I needed to understand that the police had very close links with local government.  The public already knows that.  But that is no justification for the police also to cover up alleged six-figure fraud and corruption by CCC’s former CFO, Chris Malyon, and former CEO, Gillian Beasley.  As I say, unless this is put right we will continue to pay for those fraudulent acts for decades to come in Mr Malyon’s over-inflated pension.  Many holders of public office are implicated, including those who are still determined to cover up the truth.  I include in that list: CCC’s Head of HR Janet Atkin, Council Leader Lucy Nethsingha, Chair of the Audit & Accounts Committee, Cllr Graham Wilson, CEO Dr Stephen Moir, Monitoring Officer, Emma Duncan, and S151 Officer Michael Hudson.  That is not even an exhaustive list of those who knew the facts but did nothing.  Others outside the council who knew and did nothing include the external auditor, Lisa Blake - formerly of BDO, BDO’s Head of Audit and Assurance, Scott Knight, and Mark Hodgson from EY, as I have documented publicly on several occasions.

I believe there can be one of only two explanations for the Chief Constable’s unaccountably rude reply on 3^rd September.  Either:

a)       He did not read my letter, and simply instructed his PA to send the do-nothing response, or

b)      He did read the letter, did see the evidence of DCI Rowe’s gross incompetence and misconduct over his forged letter, but decided to cover it up.

The Chief Constable’s reference to a subsequent imaginary visit from DCI Rowe suggests that the second explanation above is the more likely.  In any event, his response was wholly unacceptable in a number of ways.  It was a breach of his obligations under the Nolan Principles, and a breach of his obligations under the police’s  ethical policing principles and the Guidance for professional and ethical behaviour in policing.

As I mentioned in my first letter to Chief Constable Dean, in today’s Britain it is no longer a surprise for the public to learn that a police authority has been branded institutionally corrupt, racist, misogynistic or homophobic by a reputable public figure.  When I wrote about corruption to the Chief Constable, and accompanied it with indisputable facts, I hoped he would do everything in his power to reassure me, with solid, credible rebuttal evidence, that that was not the case.  Alternatively, if he did acknowledge DCI Rowe’s poor conduct and considered it exceptional, and unrepresentative of his force, I would have expected him to act responsibly and take immediate action to defend the reputation of the public body he leads.  In my opinion, putting aside the facts of the alleged fraud at CCC, any police officer who is found to have lied to a member of the public and forged documents should be summarily dismissed at the very least.

But Chief Constable Dean did neither.  Instead, his response via his PA confirmed my worst fears about the prevailing corporate culture at Cambridgeshire Constabulary, which invariably comes from the top.

 

Everyone is doing it

Last year, the Financial Reporting Council fined KPMG £30m for its misconduct in respect of its Carillion audits, including forgery - the fabrication of documents using dates months before the documents were actually created.  Deloitte, another big-four audit firm, was caught doing the same thing in Canada.  Last year it was fined $1.59m.  There seems to be no limit to the ethical misconduct some auditors today are prepared to sink to.  I have also caught out another county council (West Sussex CC) back-dating documents.  The public expects much higher standards of behaviour from the police.

Yet forgery is precisely what DCI Rowe did with the two-page letter he claimed to have written in the space of five minutes on 24^th August 2023, when in fact he wrote it seven months later, as I demonstrated in last month’s letter to Chief Constable Dean.

I took Mr Jack Hudson’s advice from his letter in May and addressed my concerns directly to the Chief Constable, who was clearly not interested.  There is no point in my going to the Complaints Review Team now, for three very good reasons:

1)      CRT failed to contact me following Mr Hudson’s letter in May,

2)      CRT reports to the Chief Constable, which means it is unlikely they would challenge him, and

3)      Police complaints procedures, as at many other large organisations, have a notoriously poor reputation for objectivity.

I have therefore exhausted my complaint to the Chief Constable, and found his response to be inadequate, indeed, disgraceful.

 

Two-tier policing

DCI Rowe clearly lied about his forged letter.  The lie and the forgery alone invalidate his “investigation”, which in any event was based on Ms Atkin’s false documents.  Cambridgeshire Constabulary is thus not qualified and is evidently far too closely connected to Cambridgeshire County Council to undertake a new investigation into Mr Malyon’s undeclared non-executive director fees and his unlawful 36% pay rise in 2017/18.  I am now taking the matter up my MP, to whom I am forwarding this letter.

There remains the question of ethical standards at Cambridgeshire Constabulary.  When you accepted the office of PCC in May, you signed an oath, and made a commitment to abide by your own Code of Conduct,  which specifically states on page 4:

“The PCC pledges to lead policing for the people and therefore the PCC is not only responsible for their own ethical standards, but for the standards of those in their office and those of the Chief Constable.”

I have shown that the ethical standards of DCI Rowe and Chief Constable Dean fall woefully short of the Nolan Principles, below the police’s own code of ethics, and well below the standard Cambridgeshire taxpayers are entitled to expect. 

It is important to be clear about what it going on here.  It is called two-tier policing, and it is nothing new.  In Britain, when a relatively junior council officer steals from the taxpayer, there is a good chance he/she will be prosecuted and punished with the full force of the law.  But if you are at the top, especially if you hold one of the three statutory offices at a county council, and you steal much larger sums of public money, there is every chance the political establishment will protect you, and even reward you with a six-figure pay-out if you are so toxic you have to be moved on.  I have seen it time and time again.  It is wholly unacceptable.

Taxpayers’ money that funds the police, including Chief Constable Dean’s £178,912 salary (£12,000 higher than the Prime Minister’s), is there to protect the public from criminals, including privileged, white-collar criminals, not to cover up and bury alleged crime committed by senior public servants.

In light of events, I am asking to meet with you to discuss how you will reassure the public that Cambridgeshire Constabulary is not institutionally corrupt, and how it can demonstrate that it is not too close to the County Council. To be clear, I am not asking you to interfere with the operational independence of police officers.  We are some way beyond that now.  I wish to talk with you about the ethical standards of senior police officers – a completely different matter that is a core part of your official responsibilities.

I look forward to hearing from you at your earliest convenience.

Yours sincerely,

Andrew Rowson

They cannot both be correct

By Andrew Rowson

 

Under the Nolan Principles, among other things, public servants are required to be honest and accountable:

“Holders of public office are accountable to the public for their decisions and actions and must submit themselves to the scrutiny necessary to ensure this.”

Accountability is apparently not a requirement at Cambridgeshire County Council (CCC), at least not among some senior officers and elected members.

In a recent post on this site, the authority’s Head of Human Resources, Janet Atkin, was asked to comment on documents she prepared in October 2018 for audit firm BDO.  Those documents contain entirely false information that demonstrably contradicts the public record of real events and other public documents.  In the three weeks since then, there has been no response.

That post centred around a meeting of the Staffing and Appeals Committee held on 8th September 2016.  As chance would have it, CCC’s current leader, Cllr Lucy Nethsingha, attended that meeting as a substitute. 

The official minutes do not record whether the vote was unanimous, but Cllr Nethsingha was among the members who resolved to appoint Mr Chris Malyon to the post of Deputy Chief Executive, adding that title to his Chief Finance Officer role.

The leader too was contacted on 27^th August this year and asked for her recollection of the meeting.  It is important because the approved minutes - the council’s official record of the meeting - make no mention of an interview.  Ms Atkin twice referred to an interview in her documents.  Instead, the minutes only mention a report, which was not made public.  The minutes do not mention a “£10,000 special responsibility allowance”, though Ms Atkin mentions it twice in her documents.  No allowance or any other additional remunerative benefit for Mr Malyon (on top of the amount in the annual pay policy statement) was ever put to the full council for its approval, either in 2016/17 or in any other year.  The council’s own pay policy requires full council approval for any amendment to senior officer pay.  The council thus breached its own written pay policy, and Ms Atkin tried to cover that up with the confidential documents she prepared for BDO, presumably on the instructions of then CEO, Gillian Beasley (see previous post).

The Director of HR's documents and the minutes of that September 2016 committee meeting are irreconcilable.  Both accounts cannot be correct.  If Ms Atkin lied and misled the auditors with incorrect information they later relied on (however stupidly) when considering an objection to the accounts, why is she still in her post?  Alternatively, if the official minutes of that meeting were materially incorrect because they omitted key details about a senior officer's unlawful pay increase, why has that not been investigated?  Like Ms Atkin, the council leader has failed to respond, even to say that it was a long time ago and she cannot recall what took place.  By failing to respond, Cllr Nethsingha has also declined to be accountable,  That makes her party to the cover-up.  Even that is no longer surprising at CCC, since the CEO, Dr Stephen Moir, has written to some elected members, instructing them not to engage with certain members of the public, including, in one case, one of their own constituents.

According to the Director of Human Resources, as the earlier post explained, the secret £10,000 "allowance" was just one component of Mr Malyon’s unapproved £38,000 pay rise and £7,000 additional pension contribution from CCC in 2017/18.  The other component, an implausible, undocumented, unconstitutional, and unapproved CFO regrade, (applied retrospectively), was also set out in Ms Atkin’s CM.docx document that was given to BDO in September 2018.  It was never given to the full council or any committee, and does not exist as a public document.  According to Ms Atkin, it was those two components that explained Mr Malyon’s overall £45,000 remuneration increase in 2017/18.  £45,000 was the exact sum of the non-executive directorship fee (NED) for Mr Malyon’s services at Cambridge and Counties Bank (CCB) in the same year.  The £40,000 fee for his services the previous year (2016/17) at the same 50% owned subsidiary of CCC was the figure BDO auditor Lisa Blake referred to (and later admitted to) in her July 2018 comment about the “omission of remunerative benefits required for inclusion”.  

It is not difficult to see how Mr Malyon managed to pocket those NED fees without declaring them for up to five years.  CCB is 50% owned by CCC, but that ownership is delegated to its Pension Fund.  The Pension Fund’s draft accounts for 2023/24 state:

“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.”

The external party does not seem to be concerned with governance or scrutiny.

For the 17^th July 2024 meeting of CCC’s Assets and Procurement Committee, the Monitoring Officer, Emma Duncan, presented a report on the governance of council owned companies where the council’s holding is 25% or above.  The table of five companies meeting that criterion did not include Cambridge and Counties Bank.  On 6^th August I wrote to the Monitoring Officer asking why CCB was missing from the list and how CCC manages the governance and scrutiny functions of its 50% holding.  Ms Duncan has not responded.

Returning to Mr Mason’s objection and the demonstrably false information in the Head of HR’s documents, in the five and a half years it took BDO to consider Mr Mason’s 2018 objection, BDO audit partner Lisa Blake had to use her professional judgement and professional scepticism.  She had to assess the incontrovertible, fully referenced documentary evidence presented in Mr Mason's objection and in the October 2018 revised Document F on the one hand, and on the other, Ms Atkin’s transparent lies in her CM.docx and embedded documents, that were wholly unsupported by any public document.  True to form, BDO dismissed Mr Mason’s evidence, and swallowed the lies.  That is because BDO’s Lisa Blake was complicit in the cover-up from 2017/18, and because BDO plainly did not want to do the right thing and acknowledge that its client’s CEO and CFO were involved in alleged abuse of position fraud.  Similar wilful blindness is not unheard of in the audit industry.

After five and a half years, and two days before Lisa Blake stepped down from BDO altogether, this is what the replacement partner, Mr Ciaran MacLaughlin wrote in the January 2024 statement of reasons, a document which, according to BDO’s Head of Audit and Assurance, Mr Scott Knight, spent well over a year being reviewed not only by BDO’s lawyers, but also by Public Sector Audit Appointments Ltd, the company  that appointed BDO and EY to be CCC’s external auditors:

As Document F from 2018 and last month’s letter to the Head of HR show only too clearly, BDO was 100% wrong, and complicit in the cover-up since:

·      There was no due process, and there were no lawful mid-year salary increases in 2016/17 for the Deputy CEO role, or in 2017/18 for Mr Malyon’s CFO role.  There was only Ms Atkin’s dishonest CM.docx document, produced on Mrs Beasley’s instructions, which BDO accepted uncritically.

·       The £45,000 overall increase in Mr Malyon’s remuneration in 2017/18 (£38k + £7k) was the laundered £45,000 NED fee from Cambridge and Counties Bank, as Lisa Blake herself later admitted to me, and as she had already mentioned in her comments about the senior officer’s omitted remunerative benefits.  There is no other documentation to explain that £38k+£7k rise because the March 2017 pay policy statement left Mr Malyon’s pay band unchanged at £95-£100k, and there was no subsequent pay policy statement amendment during 2017/18.

 

The charge sheet

“The simplest way to combat misinformation is with the truth.”

Taylor Swift

Mr Mason and I have been spelling out these truths for the last six years, but the political establishment has gone to extreme lengths to lie, deny the truth, and work against the public interest, evidently because it is embarrassing,  and because all the parties involved appear to be corrupt.  It is time to go public with these accusations.  They are not new and have been made publicly at CCC and to the auditors, and to the Deputy Prime Minister.  It is time to make them more public still.  If I am wrong, then I would expect to receive letters threatening legal action from the parties below.  There have been none to date.  If after this post, there is still no response from the lawyers, then readers will be able to draw their own conclusions.

 

CCC

The two protagonists: Mr Malyon and former CEO Gillian Beasley both retired on generous taxpayer-funded pensions two years before BDO produced its statements of reasons earlier this year.  The charges remain that Mr Malyon stole five-figure, or more likely six-figure taxpayers’ money in total over several years in the form of NED fees from CCB, which should have gone to CCC.  When she discovered this, or when she decided she needed to do something, the CEO laundered the 2017/18 NED fee (£45k) into an unlawful pay rise for her CFO.  Just before the start of the following financial year, in March 2018 Mrs Beasley tried to cover her tracks by dishonestly raising Mr Malyon’s 2017/18 “current salary range” by £30,000 in order to make his effective 33% pay policy statement increase for 2018/19 look more reasonable (see Janet Atkin letter).

CCC’s current CEO, Dr Stephen Moir, the council leader, Cllr Lucy Nethsingha, the deputy leader, Cllr Elisa Meschini, and the Chair of the Audit and Accounts Committee, Cllr Graham Wilson, are all well aware of the facts surrounding Mr Malyon’s unlawful pay rise and other matters, since they were all given briefings by me and/or Mr Mason in 2021 and 2022.  Cllr Nethsingha’s current silence over her recollection of Mr Malyon’s unlawful pay rise is unacceptable conduct in a council leader.

“Honesty, no matter how difficult, is a vital part of maintaining high standards in public life and the confidence of the public.  Holders of public office acting in the public’s name must live up to this important principle in the day-to-day operation of their duties, and own up when things go wrong.”

Jane Ramsey – Committee on Standards in Public Life

 

BDO

Even if BDO’s lawyers were unaware of Mr Malyon’s undeclared NED fees over at least two years, and possibly up to five years (which seems unlikely), they could not have been unaware of the unlawfulness of Mr Malyon’s £38k+£7k pay rise.  That is because of the high profile, analogous case in 2022 of Northumberland CC’s former CEO DaljitLally’s unapproved, and therefore unlawful “international expenses” of £40,000/yr over several years, which resulted in that authority’s Section 151 officer taking advice from Counsel, and issuing a s114 notice  (unlawful expenditure – s114 and s114A, Local Government Finance Act 1988).  I allege that BDO’s lawyers knew the facts, but did nothing.  If they did not know, they were lied to and misled by Lisa Blake.

In February 2023, Mr Scott Knight, BDO’s Head of Audit and Assurance, publicly took ownership for completing BDO’s much delayed investigations into Mr Mason’s two objections from 2017 and 2018, which included Mr Malyon’s undisclosed NED fees and unlawful pay rise, and the nine figure false accounting of City Deal grants.  He promised the statements of reasons in “a matter of a few weeks, rather than anything longer than that”.  In the end, it took a further 51 weeks before Mr Mason received his two statements of reasons, a delay twice as long as the Code of Audit Practice recommends for local auditors to consider an objection from the start.  I submit that it is not remotely credible that Mr Knight was unaware of the true facts.  He too did nothing to stop the cover-up of the facts relating to Mr Malyon’s undisclosed NED fees and unlawful £38k pay rise - or indeed of BDO's insistence that the false accounting of City Deal grant revenue complied with the CIPFA Code.

  

Public Sector Audit Appointments (PSAA)

The PSAA is a wholly-owned subsidiary of the Local Government Association (LGA) – a declared political organisation.  PSAA had no excuse for not knowing, or for dismissing the fact that Mr Malyon’s unauthorised 36% mid-year pay rise in 2017/18 was unlawful.  It should not have approved BDO’s statements of reasons.  As with Mr Knight, if the PSAA was unaware of Mr Malyon’s undisclosed benefits from NED fees in the years up to and including 2017/18, it was lied to and misled by BDO and CCC.

When Mr Knight appeared before CCC’s Audit and Accounts Committee in February 2023, the LGA’s Chief Executive was Mr Mark Lloyd.  Before moving to the LGA in 2015, Mr Lloyd was the CEO and Head of Paid Service at Cambridgeshire County Council.  He was the authority’s CEO in 2013 when Mr Malyon was appointed CFO, notwithstanding the latter’ well-known track record for dishonesty at Barnet Council just two years earlier.

I have no evidence to suggest that Mr Lloyd’s unexpected and sudden resignation from the LGA last October, with immediate effect, which produced a five-month vacuum at the top, had anything to do with Mr Malyon’s NED fees, his unlawful cover-up pay rise, or the serial false accounting of City Deal government grants instigated by Mr Malyon and BDO’s Lisa Blake in 2017.

Conclusion

This post began with a reference to the Nolan Principles, introduced by the Committee on Standards in Public Life in 1995.

Nearly thirty years later, in March this year, the same Committee announced an open consultation on accountability within public bodies, which it has noticed sometimes falls short of what the public deserves:

“In recent years we have seen several examples of major failures within public institutions, where it seems that opportunities were missed to address issues before they escalated. We are asking, when things go wrong in public bodies, why does it take so long for problems to be recognised and the leadership to respond appropriately and, most importantly, what needs to change?”

The Committee is expected to publish its findings in the spring of 2025.

Cambridgeshire County Council and the agencies it works with provide a clear case study illustrating one way in which problems are brushed aside for extended periods, and where leadership fails to respond appropriately.

The mechanism for unaccountability at CCC vis-à-vis the Malyon issue is quite straightforward.  Former CEO Gillian Beasley presumably discovered that Mr Malyon had been benefitting from the CCB NED fees and not disclosing them in the accounts at some stage in 2017/18, before Mr Malyon prepared that year’s draft financial statements.  Instead of disciplining her CFO, she covered it up.  She allowed him to prepare the draft accounts in which that year’s £45,000 NED fee from CCB was presented as a bona fide salary increase.  As head of paid service, she was responsible for that.  In fact, Mr Malyon’s footnote 4 to the senior officer’s remuneration table in those accounts presented the entire £38k pay rise plus £7k pension contribution as a consequence of his Deputy CEO appointment the previous year, from which  the records show no additional financial benefit was due.

4. The Deputy Chief Executive and Chief Finance Officer postholder undertakes non-executive directorships at The Cambridge and Counties Bank and This Land Limited, 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.

It was only after Mr Mason’s and my first meeting with Lisa Blake on 11^th October 2018, and Mr Mason sending copies of the revised Document F to the auditor, the CEO and all members of the Audit & Accounts Committee, that Mrs Beasley instructed her Head of HR, Janet Atkin, to produce the false narrative in CM.docx and send it to BDO on the afternoon of 19^th October 2018, just a few days later.  She probably knew that Lisa Blake would do her bidding and collude with the cover-up over Mr Malyon’s dishonesty, which ultimately cost local taxpayers many hundreds of thousands of pounds.

As noted on multiple occasions in last month’s letter to Janet Atkin and elsewhere, BDO duly ignored the irrefutable documentary evidence Mr Mason provided that comprehensively disproves CCC’s multiple false and contradictory narratives.  The so-called independent auditor showed no independence or professional integrity, and no professional scepticism.  Instead, the firm dragged out the objection for five and a half years, until well after Mrs Beasley and Mr Malyon had safely retired, before producing two wholly dishonest statements of reasons, from which CCC’s lies about Mr Malyon’s salary rise are reproduced above.

Thereafter, at the 6^th February meeting of the Audit & Accounts Committee this year, CCC’s current CEO, Dr Stephen Moir, who was well aware of the true facts, publicly defended his dishonest and corrupt officers with these disgraceful words:

“What I do want to place on record is, mindful of the individual officers who have had this particular series of issues hanging over them for some considerable time, is to place on record my thanks to them for their resilience, professionalism and tenacity in the face of what has been an unacceptably long period  of concern, challenge and frankly, as we have heard, unjustifiable criticism.”

Thus a corrupt council and its corrupt auditor, backed by lawyers and the PSAA, even today, are working dishonestly and against the public interest to cover up chronic and serious failures at one public institution that is entrusted with spending well over a billion pounds of public money annually.

Mr Knight has yet to reply to my two letters to him regarding his firm’s conduct on the City Deal false accounting and Mr Malyon’s unlawful pay rise.  I am still awaiting replies from Ms Atkin and Cllr Nethsingha about their respective roles in the Malyon scandal and cover-up.  As for the three statutory officers at CCC: the CEO, the s151 Officer, (Mr Michael Hudson) and Monitoring Officer (Ms Emma Duncan), several letters to them in recent weeks have all gone unanswered.  Cambridgeshire County Council has become an accountability-free zone.

“If you are a public office holder, you are expected to lead by example, and also to call out poor ethical behaviour wherever you find it.  If a leader lives up to the principles, promotes and prioritises high standards of ethical behaviour, the institution will follow.” 

  Monisha Shar – Committee on Standards in Public Life

A second letter to BDO's Head of Audit and Assurance

Background

In July 2023, this site published a series of articles explaining how Cambridgeshire County Council (CCC), aided and abetted by its then auditor, BDO, falsified successive annual statements of accounts by an aggregate total of £218 million over five years by asserting that central government's City Deal grants had no conditions attached to them, and therefore that the grant income should be recognised up to four years before the grants even became receivable.  

Those false, and I maintain, fraudulent financial statements overstated CCC's usable reserves by up to 87% at a time when the authority was borrowing heavily from the Public Works Loan Board (PWLB) to lend over £100 million to its failing housing development subsidiary - This Land Ltd.  The erroneous frontloading of grant revenue breached the fundamental accounting principle of accrual accounting, which is stipulated under the CIPFA Code of Practice and International Financial Reporting Standards (IFRS).  Local authorities are required to comply with both sets of standards in preparing their financial statements.

This site published details of the false accounting in a series of posts last July, beginning here.  The audit trail of BDO's direct involvement in falsifying the accounts is set out here.

The false accounting continued throughout the five years of the first City Deal agreement (5 annual grants of £20m) up to 2019/20, even after BDO's term ended and EY's appointment as CCC's external auditor in 2018/19.  EY and CCC maintained the false accounting of City Deal grants up to the first year of the second City Deal agreement (5 x £40m annual grants) in 2020/21, overstating revenue and reserves by £160 million in that year alone.  However, the authority and EY performed a swift U-turn to correct the nine figure overstatement shortly after it was exposed in Private Eye magazine.  In the three financial years since 2020/21, CCC and EY have maintained the correct accrual accounting treatment for City Deal grants.

Having corrected the 2020/21 accounts, CCC and EY should have made prior period corrections in that same financial year for all five previous years of false accounting, as required under International Accounting Standards 8 (IAS 8) "Changes in Accounting Estimates and Errors".  The idea behind IAS 8, and a requirement of the CIPFA Code, is that councils choose the correct accounting policies and apply them consistently.  Council Chief Finance Officers are required to make a statement to that effect in each year's published financial statements.  In failing to make the material prior year corrections, CCC's CFO has therefore materially misled all users of CCC's accounts (including lenders and central government) for the last four financial years.

In 2018, Mr Mike Mason, a former Cambridgeshire County Councillor, submitted an objection to the accounts in connection with the false accounting of City Deal grants that year.  BDO took five and a half years to consider that objection, only producing a statement of reasons in January this year, which asserted that the grant revenue frontloading treatment was correct, despite EY coming to the opposite (and correct) conclusion in 2022.

In July this year, I wrote to Mr Scott Knight, BDO's Head of Audit and Assurance, challenging his firm's insistence on defending the false accounting of City Deal grants between 2015/16 and 2019/20.  Mr Knight did not respond, so on 6th September I wrote to him again on the same subject, and also on the subject of the unlawful £38,000 pay rise awarded to CCC's former Chief Finance Officer, Mr Chris Malyon, in 2017/18.  The same (now retired) BDO audit partner, Ms Lisa Blake, was complicit in both the City Deal false accounting and in Mr Malyon's unlawful pay rise and associated cover-ups.  Mr Malyon's unlawful pay rise, which was designed to cover up substantial undeclared remunerative benefits, is the subject of a previous post on this site, dated 24th August. 

My second letter to Mr Scott Knight is reproduced below.

6^th September 2024

Dear Mr Knight,

Will BDO’s culture of “systematic dishonesty” now change?

I wrote to you at the end of July about the £218m worth of aggregate false accounting in Cambridgeshire County Council’s (CCC) financial statements between 2015/16 and 2019/20.  The false accounting was the direct result of former BDO audit partner Lisa Blake lying about City Deal, which comprised discrete annual grants of £20m and not a single £100m grant, lying about the absence of grant conditions, and lying about what the CIPFA Code stipulates.  I have attached that earlier letter with this one.  Those consequential lies first appeared in BDO’s September 2017 ISA 260 report.  The key passage was:

“We concluded that the grant income awarded to the Council in relation to the City Deal in 2015/16 (£100m, to be paid in 5 annual instalments of £20m) did not have any conditions attached regarding its use. The Code requires that grants should be recognised immediately as income unless any conditions have not been met. In the absence of such conditions, the grant should have been recognised in full in the year the grant was awarded.”

You did not reply to my letter, in which I asked you, as BDO’s National Head of Audit and Assurance, what you understood by the term “accruals accounting”, which is what the CIPFA Code and IFRS stipulate for recognising grants and all other income and expenditure.  Lisa Blake apparently did not understand it.

I did however have a response last week from the Deputy Prime Minister’s Office, (see Appendix below).  It is reassuring that the new government fully recognises how thoroughly broken the local audit regime is, and that Cambridgeshire County Council and BDO are now firmly on its radar as two dysfunctional organisations.

Another matter BDO covered up for many years was CCC former Chief Finance Officer Chris Malyon’s theft of taxpayers’ money in the form of non-executive directorship (NED) fees from CCC’s 50% owned subsidiary company, Cambridge and Counties Bank Ltd.  Mr Malyon failed to disclose those remunerative benefits in the accounts he prepared and certified as true and fair for seven years.  In that time he may have stolen over £200,000 of taxpayers’ money before Lisa Blake colluded with CCC in disguising the 2017/18 NED fees (£45,000) as a mid-year, £38,000 retrospective pay rise plus £7,000 pension contribution.

I recently set out the key details of the alleged fraud and cover-up in a letter to CCC’s serving Head of Human Resources, Janet Atkin, who played a key-role in the original 2018 cover-up.  The letter is posted on my blog and can be found here.  Ms Blake knew about Mr Malyon’s thieving, because she admitted it to me.  She was also well aware of, indeed complicit in his bogus 2017/18 pay rise, which was a clumsy attempt to cover up for the recently discovered undeclared NED fees. That unlawful and fraudulent pay rise paved the way for Mr Malyon to receive a substantially larger pension than he was entitled to on his retirement in 2021.  Local taxpayers are paying for that.  I again draw your attention to the role of CCC’s former CEO, Gillian Beasley OBE, who was responsible for awarding Mr Malyon the unlawful pay rise, and who deliberately inserted materially false and inflated “current salary range” figures into her March 2018 pay policy statement for the CFO’s role.  I explain this in the letter to Ms Atkin, pointing out that those higher figures were designed to deceive elected members into unwittingly approving an effective 33% pay-rise for the CFO in 2018/19 and to smooth over his unlawful, unauthorised 36% pay-rise the year before.  There is no doubt that BDO and CCC share the same culture of systematic dishonesty, whose objective is to deny local taxpayers the transparency and accountability they are entitled to receive from the local audit process.

I shall publish this letter on my blog and discuss it with my Member of Parliament.  I shall also keep central government apprised of whether BDO intends to continue covering up this auditor-assisted corruption, or whether, under Mr Shaw’s new leadership next month, the firm wishes to show some accountability and responsibility towards Cambridgeshire’s taxpayers, who have paid out hundreds of thousands of pounds since 2015/16 for audit opinions and statements of reasons that are not worth the paper they are written on.  Local taxpayers and other users of the accounts have been disrespected and materially misled by BDO for the last eight years.  It is also worth noting that the six and a half years BDO took to produce two whitewash statements of reasons contributed perhaps more than the firm’s fair share to the national local audit backlog.  It would be an interesting exercise for someone to establish how many other audit reporting delays at English councils were caused in part by rotten auditors dragging out objection investigations for years until well after crooked senior council officers like Mr Malyon and Mrs Beasley had safely retired.

To that end, I invite you Mr Knight, or Mr Mark Shaw to comment on Ms Blake’s disgraceful conduct during successive CCC audits and on the long drawn-out objection “investigations” that culminated in the two worthless statements of reasons in January this year.

I look forward to hearing from you, and to showing readers and central government that the firm is now committed to taking its responsibilities seriously by owning up to the serious accounting and accountability failings of its former National Head of Public Sector Assurance, Lisa Blake.

Yours sincerely,

Andrew Rowson

Encl.

Appendix - Response from Deputy Prime Minister's Office - 28th August 2024

Government statement: Written statements - Written questions, answers and statements - UK Parliament