Gaps in evidence given to investigator who looked into Northamptonshire County Council's limited company

The investigation into limited company NEA Properties  found no evidence of fraudulent activity by officers or councillors.
The investigation into limited company NEA Properties found no evidence of fraudulent activity by officers or councillors.

Officer in charge of standards at Northamptonshire County Council has said there were gaps in the evidence given to an internal investigator appointed to look into financial payments made by a limited company owned by authority.

The council’s monitoring Susan Zeiss told the audit committee on Tuesday(Jul30) that she had made efforts to go back through staff emails and had found some additional paperwork but there were gaps in the records of long standing company NEA Properties that were given to investigator Nick Graham, monitoring officer at Oxfordshire County Council.

In March he concluded his investigation and found that there was no evidence of fraudulent activity by either councillors or officers in relation to activities of NEA Properties.

Susan Zeiss told members of the audit committee: “I was simply not able to find any more material to give to the investigator. We could throw a lot more resources into this and not come out with a different conclusion.”

Questions were first raised about NEA Properties by a whistleblower in January 2017 who was concerned about the expenditure of the company, which was first set up in 1983.

An internal audit into the company gave limited assurance and found that ‘there were minimal governance arrangements’ and said that the ‘potential conflict’ between councillors performing dual roles as directors should be assessed.

Conservative councillors Cllr Bill Parker and Andre Gonzalez were longstanding directors of the company and signed off payments.

NEA Properties derived much of its income from units the council leased to the University of Northampton – which it sold for £820,000 in 2015.

Between 2007 and 2017 accounts lodged with companies house show £1.6m was spent on a series of projects but a full breakdown of what this money was spent on has never been public.

The internal audit showed that in July 2015 NEA Properties had given a £80,000 grant to rugby club Northampton Saints. In exchange the sports club gave use of a 16-person executive box.

External auditors KPMG said this did not fulfil grant conditions and in their view was a purchase of hospitality but investigator Mr Graham, who noted the gaps in records, said the box was given as a ‘reciprocal goodwill gesture’ for the grant.

In May 2017 KPMG also said they had asked to audit the limited company but were told it was not necessary as it was about to be wound down. The company had not been audited since 1995.

At the audit meeting Cllr Mick Scrimshaw said it was ‘clear there have been deficiencies in how records are kept’ and that lessons needed to be learned.

Audit chair Bill Jessup requested that monitoring officer Susan Zeiss check that the authority is complying with its legal requirements under Freedom of Information rules.

A report to the council from Susan Zeiss recommending the ‘matter now be closed’ said that some records from 2014 may have been destroyed in line with the council’s destruction policy.

NEA Properties was also mentioned in the final audit for the 2017/18 accounts reported to the council at the same meeting.

The recommendation from KPMG was that: “The authority should ensure it is transparent in all its transactions, and complies with Companies House legislation as required. Where it sets up new companies, joint ventures or other agreements, then it should ensure that robust governance arrangements are in place, supported by an accountability framework and oversight by the audit committee.”