Sunday 23 September 2018

Project Rose: the devastating report Barnet Tories didn't want you to read

Barnet Tory leader Richard Cornelius at a recent residents' meeting

Summer in Broken Barnet has always been a dangerous season. 

A time when devious council strategists quietly slip out any awkward political announcements; when developers submit any awkward applications to demolish yet another piece of our built heritage (more of that in the next post) - but increasingly now it serves as a lull in the storm: a time of desultory Tory inaction, some of our more privileged elected members sitting idly in the garden of their French summer homes, safe in the knowledge - or so they think - that nothing much back home is happening, can happen, and if it does happen: no one will notice.

This year, this summer, before our Tory councillors packed their bags and headed off to the sun, something already had happened - and the long break until September offered them a welcome respite from the gathering clouds that now have broken over their empty heads, only this week, in the form of further trouble, and the publication of a damning report that exposes, in visceral detail, the extent of failure in the corporate management of this borough.

Only after the elections were safely over was it revealed that the authority's pre-election financial statements were wrong, and predicted deficits actually on a catastrophic scale, far worse than previously given. The council also now admitted that the mass privatisation of council services, thrown in the hands of Capita, in the form of two enormous contracts, was failing - or rather, as they put it, required a 'realignment'. Capita itself, of course, is struggling to survive: all of which together has left the borough in a perilous state, at unprecedented risk of financial collapse.

At the same time, again, shortly after the elections, rumours emerged of a scandalous story involving a massive fraud alleged to have been committed by a Capita employee. A fraud said to be more than £2 million in value, and one that had gone undetected until the employee's own bank had reported it to the council. Little could be said, as the matter was going to court, and although the authority had commissioned a report by auditors Grant Thornton into the wider issues raised by the fraudulent activity, they would not publish it yet, claiming that it was not 'in the public interest'.

On Friday this report was quietly made available on the council's website, spotted only by fellow blogger Mr Reasonable - no announcement was made, of course. Why would there be? It would be in breach of their policy of denial, and counter transparency.

But let us set the scene for the latest developments.

A couple of weeks ago, Tory Leader Richard Cornelius returned from his long break to begin a set of three low key public meetings with residents. These engagements, clearly reluctantly undertaken, are lip service to the statutory requirement to consult the public about forthcoming budget expenditure, and the corporate plan. As such, of course, they were given little publicity, in the hope that almost no one would turn up.

Some of us did turn up.

We trailed along, in the dismal early autumn rain, up the steep slope from the tube station to the venue in Chipping Barnet, passing on the way a discarded copy of one of the many leaflets local Tory MP and Brexit enthusiast Theresa Villiers has been stuffing through residents' letter boxes, in the frantic hope that she can, in the event of a snap election - any election - retain what is now a desperately marginal constituency, and one that is staunchly Remain.

Poor Mrs Villiers, marginalised, and digging her own political grave

The venue chosen was the Old Bull theatre: once an inn, so named for the Bull's head drain that used to spout water from the roof - an inn dating back perhaps as far as medieval times, when Barnet itself was a venue for a battle that was one of the pivotal moments in the War of the Roses. 

In the window was a poster for a local society's talk on Richard III, who was of course present at the Battle of Barnet, as a young man. His beady eyes gazed out on to the street that he once must have passed along, after the battle, on his way to London. 

Inside the theatre, another Richard stood waiting on the tiny stage, about to give a soliloquy not on our glorious summer, or the looming winter of discontent, but to expand upon a vision of life as it never is and never can be, in Broken Barnet, where everything, as he put it, is Nice, or at least, parts of it are Nice, and in defence of which he intends to make sure the Nice parts remain Nice.

Sat in the audience were some well heeled residents of Chipping, relics of the days when Barnet was still a Tory stronghold, awash with fundraising strawberry teas, and Pimms on the lawn, and Brian Coleman in a deckchair, and residents' wishes instantly accommodated by local party representatives. 

The sense of entitlement was palpable: two women vied with each other to be the most outraged over the council and police failing to remove homeless people daring to sleep in shop doorways, and spoiling the high street with their poverty and mental health needs, urinating in public and Worse, as one enraged woman at the back hissed across  the auditorium. Defecation! 

No shit. 

No: shit happens, even in Chipping Barnet. And it isn't at all Nice.

The Tory leader promised to 'clamp down' on such unspeakable acts, and said they were all foreigners, anyway, theses homeless people - as some of us looked on in horror, and instantly objected.

Another resident objected to investment in the less advantaged western side of the borough: why should they have 'so much' rather than Chipping? This was a step too far even for the Tory leader, and for one shining moment - a theatrical moment as breath taking as anything ever seen on the boards of the Old Vic - Mrs Angry and Richard Cornelius agreed with each other, and remonstrated with the woman. 

An event so unexpected, in fact, that he stopped to inform the audience it that such a thing had never happened before. 

It is unlikely ever to happen again.

The event was meant to be a consultation on the corporate plan.  Fellow bloggers Mr Reasonable, Mr Tichborne and Mrs Angry all tried to bring the discussion back to this point, and raise serious questions about the massive deficit, and the damage from the failure of the Capita contracts, but to little avail. Cornelius seemed, under any difficult questioning, to cringe, and even shrink in stature: less of a Shakespearean performance, than a puppet whose strings have been cut. 

He denied that successive Tory administrations had been guilty of financial incompetence. He insisted the Capita contracts were making savings. He blamed all financial shortfalls on funding shortages, without attributing this to the policies of his own party in government. Yes: a load of old bull, spouting forth, at the Old Bull. 

In short, Cornelius, and Barnet Tories generally, are in a state of absolute denial. Or at least that is their public facing approach - to deny to others what they must know to be the truth - that the borough faces financial meltdown, and may well end up in the dire straits facing Northamptonshire and other council authorities. Stare it out, deny it: bad news is fake news. 

A twitter follower spotted something rather alarming about the photo of Barnet's Tory leader at his recent stand up/sit down roadshow ...

In order to maintain some sense of equanimity, they have adopted a defence mechanism of total silence - a sworn allegiance to the code of omerta, defiantly maintained in the face of the earlier revelations - immediately after the local elections - of the gravity of our perilous financial position. This was inadequate then: after what has now emerged in the course of Friday's revelations, they find themselves with no cover at all, and exposed for all to see as they really are.

Eventually the Capita fraud case was brought to court, and the culprit pleaded guilty to 62 incidents of fraud, involving payments for non existent cases of Compulsory Purchase Orders of properties in regeneration schemes -  to the value of more than £2 million. He was given a five year prison sentence.

The council had commissioned a report from Grant Thornton to look into the circumstances in which this incredibly serious fraud had occurred. But they refused to publish it, or disclose the contents to members, citing as an excuse - preposterously - that it was 'not in the public interest' to do so. Why not? 

Tory leader Cornelius, Chief Executive John Hooton and senior managers earlier in the summer

Because, they said, it 'contains financial and business information about Re and Capita'. 

Quite clearly public interest is not the same as the commercial interests of Capita: but such is the extent of power, the inversion of power, between customer and contractor in this perverse relationship that Capita has been allowed to move into the more dominant position, leaving Barnet Tories too frightened to hold them to account. And of course the contract requires the council to promote the reputation of its own contractor, making it even harder to hold them to account. 

What sort of fools would sign up for such a contract, you may ask? 

Ask them yourselves: most of them are still sitting at the committee table.

By September, the report had still not been published. 

On 3rd September, Mrs Angry had decided to submit a Freedom of Information request for the report: 

Please give me a full copy of the report of the investigation undertaken by
Grant Thornton into the recent £2million+ fraud perpetrated by an employee of

Please do not claim it is not in the public interest for this report to be
published, as quite clearly that cannot be true, and the ICO will not allow such
a pretext.

Please do not refuse publication on the pretext of future publication as the
report should already have been published, in the public interest, and anyway
no date has ever been given for publication.

There was nothing to lose by formally requesting the report: and it would force the authority, if refused, to explain itself to the Information Commissioner, a body which has always been very supportive when dealing with complaints about Barnet's attempts to obstruct the disclosure of material that is demonstrably in the public interest, and indeed has put the authority into 'special measures' when found to be in breach of statutory requirements.

And it was a timely test of Barnet's culture of counter transparency, as over recent months, almost every politically sensitive FOI request made to the authority by me and others appears to have resulted in delays, delayed demands for 'clarification', and other difficulties.  Last week patience ran out, and a complaint was made to the ICO about two such requests, on two matters that are of serious significance, and should most definitely be put in the public domain. 

This seems to have had a beneficial outcome in one way at least. Within days, the Grant Thornton report was - with no public announcement - at last published on the council website, and Mrs Angry informed that her response had been supplied - and five days early - albeit, as we know, with some redactions. The timing may or may not be coincidental. 

It is now clear, however, why it has taken the authority so long to release this document. 

The report - which you can find here - commissioned under the code name 'Project Rose' - is a devastating exposure of both contractual failings, and the failings of the commissioning side of the council to manage with any measurement of competence, the safeguarding of its own financial investment in services, and the process of privatisation. 

Ultimately, of course, it is an absolute indictment of the Tory group, and the Tory leadership. 

It must be noted, as observed within the report at several points, that Capita does not lend its endorsement to the contents, and that the report had to be redrafted no less than seven times. One hesitates to guess what the original version was like, bearing in mind the state of the final one.

'Project Rose', then.

O Rose, thou art sick.

Where to begin?

First of all it is confirmed that the massive fraud, perpetrated over an eighteen month period, was only detected by the employee's own bank. It was not spotted, throughout this period, by any manager, in either of the two Capita organisations: CSG, or the joint venture Re, or anyone in the commissioning side of the council, or in internal audit, or CAFT, the Corporate Anti Fraud Team. 

The way in which 'the Individual', as he is referred to throughout the report, managed for so long to perpetrate this series of fraudulent acts, was by taking advantage of the inherent vulnerability of a privatised council with complete disregard for basic accounting safeguards,  let alone any adequate system of financial control - or indeed any proper mitigation of the risk of fraud.  

This open larder of opportunity was made all the easier to access, due to something we have so often reported in this blog: the multiplicity of roles played by Capita, the conflicts of interest so deeply embedded within their range of functions - and the double contract system that increases the risk of fraud or corruption, with a lack of protocols guarding against any potential for such activity. The interaction between Capita CSG and Capita Re has been effectively unregulated, or insufficiently regulated. A failure that has been compounded by another, overarching role in which the same contractor is responsible for overseeing the authority's accounts - and reporting on its own financial performance. 

Above and beyond this mess, there is something which goes right back up to the highest levels of governance, and accountability. Something noted repeatedly in a phrase used throughout this truly shocking report, and that is -'insufficient oversight'. 

(Part of) the Capita contracts that Tory councillors did not read fully before approving

The story of the Barnet Capita contracts has been chronicled in detail here, over the years, and elsewhere. 

Go back five years, if you like, and follow the genesis of this reckless process, right from the beginning, and the ineffably vacuous 'easycouncil' model of local government promoted by former Tory leader Freer, now MP for Finchley & Golders Green, one which was fostered and developed by a succession of neo-Thatcherite councillors, senior management officers, and consultants, in order to soften up the ground for the mass outsourcing of our local services. 

Read how Barnet Unison, and anyone with any sense, tried to warn Barnet Tories what would happen. Remember the reports that were submitted to committees, and ignored, unread.

Remember the staff who lost their jobs, the services moved out of the borough to all around the UK.

Remember how the Tory councillors allowed the tendering process to develop, with only one contender, in the end. 

How they were not 'allowed' to read the full contract, and how the same lawyers who worded it approved it on their behalf, and how the Tory councillors voted to approve contracts they had not read.

Richard Cornelius signing away direct control of our local services in 2013

How after they had done so, some of them allowed themselves to express grave doubts about the whole process - too late.

How in the years that followed, one man - fellow blogger John Dix, Mr Reasonable - has continued to scrutinise the performance of the contracts, and explain, in forensic detail, the reasons for his serious concerns about the risks of failure that were evident to anyone with even the least critical eye.

Think about the consequences, for our least advantaged residents, of any serious failure in the local services on which they rely. Combined with a self inflicted lack of funding from council tax frozen for purely ideological reasons, by Barnet Tories, who at the same time were happily endorsing the most brutal cuts in those local services, magnified by a policy of further slashing of funds from central government: and we have a disaster on our hands.

Who will take responsibility for this? 

And has anyone been sanctioned in any way for the gross failure of the authority to prevent the fraudulent activity and widespread financial incompetence uncovered by the Grant Thornton report? 

The line of accountability goes right up to the top. The Tory leader, the Chief Executive, the senior management team; the Chairs of council committees - have any of them accepted responsibility, or lost their posts? 

No chance of the Tory leader standing down: in fact it is rumoured he has only recently seen off a challenge for the leadership. So we must accept that his captaincy of the ship that is now hitting the iceberg somehow equips him to lead the rescue mission, must we? 

What will happen now? 

What has the opposition said about this completely avoidable disaster?

Hard to tell, as there has been no statement on the party website, they say because they have lost access to it - and there is little to see on twitter. Some members have tweeted part of a statement emailed to them, in which apparently the local party is calling for the resignation of the Tory leader and the deputy leader, Dan Thomas, (who has always been the strongest supporter of the Capita contracts, but now appears to have been struck dumb: and who left twitter, by chance, earlier in the year, when the stuff now appearing in the shop doorways of Chipping Barnet began hitting the fan).

Barnet Labour are also now calling for the termination of the two Capita contracts. Better late than never: but really, far too late in the day to have any impact.

Since the contracts were signed, Labour in Barnet has largely failed to communicate successfully to electors the significance of the contractual bondage, or to express any effective condemnation of the continuation of the arrangements, citing the potential financial penalties that might accrue should we threaten to make an exit - without fully exploring whether or not this is correct. (In regard to this, it is also significant that it was a team of local activists - including the local bloggers - who sought legal opinion, backed by Labour lawyers, about the One Barnet outsourcing programme, and saw it through to a Judicial Review, whose judgement found the contracts to be based on flawed consultation, and would have been won if not deemed out of time). 

As to Cornelius's ship of fools, sailing full steam ahead towards and over the edge of the horizon, what is there to say? 

Denial, evasion, and a refusal to accept a duty of accountability will not stop the inevitable conclusion to their years of folly. They will struggle to free themselves of Capita: Capita will desperately try to retain as many services as possible, despite everything that has happened. The Grant Thornton report, incidentally, says very carefully that they 'understand' the £2 million stolen from Barnet has been 'reimbursed' - but where is the proof? Has it been paid in cash, or will it be deducted from fees?

Well: let the Tories sink their own political lives, and leave the careers of the three local Tory MPs clinging on to the wreckage: but let's not allow them to take us with them.

Time for the Labour party in Barnet to shape up, step up: show real opposition, effective strategy - and real leadership. A radical, robust fight is what is needed, not a consensual approach to politics, and an indulgent relationship with senior Tories, and senior officers - the latter habit often excused to Mrs Angry on the basis of having to work with them in the future. Friends, there is no likelihood of gaining power for the foreseeable future, and there never will be, if we carry on like this.

It is not enough to call for an end to the contracts, when in the meanwhile there are largely still the same senior officers in place, the same management structure, the same dependence on hugely expensive agency staff and, unaccountable consultants. Heads should, and must roll: and cuts made in a top heavy, hugely over rewarded senior level of management.

There are also many unanswered questions that emerge from any reading of the Grant Thornton report. 

The failure of the internal audit process, and CAFT, to identify the CPO fraud. The possible occurrence, in the years since the contracts were signed, of other fraudulent or corrupt practices, as a result of the absence of proper safeguards. Planning and enforcement clearly needs a closer look, and regeneration: has there been any wrongdoing in any of the the previous CPO programmes? 

All of these areas clearly require review, and an independent investigation - Project Rose was limited to the scope of immediate impact of the CPO fraud, but the implications go far wider, and in my view that is why we must all now demand a fuller inquiry - for the reassurance of residents and tax payers that their money, and their services, and the community in which we live, are safe from further exploitation, and further financial loss.

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