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District Auditor

Volume 229: debated on Tuesday 27 July 1993

The text on this page has been created from Hansard archive content, it may contain typographical errors.

2.32 pm

Everybody would agree that there is no place for corruption in public life and no one in the House would be expected to support it. However, there are increasing problems with the role that we have reserved for the district auditor—and with the fraud squad—which is clearly exemplified by recent events in the two boroughs of Westminster and Brent. Four years have passed since the district auditor began to investigate allegations that Lady Porter, while she was leader of Westminster council, abused her position to try to achieve political change in several key marginal wards in the run-up to the 1990 election.

As I recall, when the district auditor investigated events at Lambeth and Liverpool councils, the issues concerned were resolved in the best part of a year. The councillors who had acted contrary to Government policy and had incurred extra charges because of it were found guilty, were debarred and were out of office in a year of the events for which the investigations took place. That has not been the case with Lady Porter and those around her. We have seen a systematic attempt to delay the district auditor's investigation as leading members of the Conservative-controlled Westminster council have refused to meet the district auditor when requested to do so and meetings have been put off to such an extent that the district auditor had to invoke his powers to command their presence.

I do not know how far that inquiry has gone. The last furnished bit of evidence about Lady Porter that came to my attention was an article in The Guardian on 3 March 1992:
"A Whitehall source told the Guardian the district auditor's inquiry is finely balanced between surcharging her up to £4 million with a disqualification from public office for five years, and severely reprimanding her for misconduct."
Another year or more has gone by since then and yet it is still not possible for the district auditor to publish his findings. The reason for that has now become clear. Many of the documents that the district auditor wished to examine to see whether Lady Porter and her close cohorts had been breaking the law were shredded by the chief executive of Westminster council, who was appointed by Lady Porter and is her close confidante.

It is completely unacceptable that a senior public official of a major local authority should shred documents that the district auditor needs to investigate the possible corruption of local government and public funds in excess of £4 million. I wonder what would have been said if Ted Knight and Derek Hatton had refused to meet the district auditor and the chief executives of Lambeth and Liverpool had been shedding documents.

As well as speeding the district auditor on his way in Westminster, we should now look for a full public accounting of activities of the former chief executive Bill Phillips, although I have already raised the matter in an early-day motion. Fortunately, in other departments of Westminster council, it has been possible to find duplicates of many of the documents that were shredded. I hope that we shall soon see a clear resolution of the problem. Clearly the district auditor's powers have not been sufficient to enable him to proceed with the investigation in a reasonable time and to allay public concern and fears.

The second—much more murky—question concerns what has been going on in Brent. Everyone will be aware of the hilarity of some of the antics of the council since the Conservatives took control—for example, the calls for female circumcision in Britain, which completely wrecked a meeting designed primarily to discuss education cuts.

We must also look in some detail at what has been happening to the council's finances. Following the 1990 election, Brent council was a huge council. It developed a Conservative administration when a succession of Labour councillors were persuaded to cross the floor. One of those interesting characters was Councillor Harshad Barot, who had previously been convicted of fraud following a successful attempt to get from the council a housing improvement grant to which he was not entitled. He managed to keep that quiet and was elected to the council. When the truth emerged following his election to the council, he was suspended by the Labour group, and the council set up an investigation.

While the investigation was under way, further problems arose with Councillor Harshad Barot. The Brent Asian Professionals Association, of which Mr. Barot was the director, suddently discoverd that thousands of pounds and computer equipment had disappeared. Once again, an investigation was launched. Lo and behold, Councillor Barot decided to resign from the Labour group and to sit as an independent.

By then, some Labour people had been persuaded to defect, and what was then the Conservative majority on the council voted to discontinue the investigation. Surprise, surprise—Councillor Barot has voted with the Conservatives on every occasion since. Moreover, he actually voted with the Conservatives, at a council meeting, to stop the investigation into his case. That runs contrary to all local government law. When it was suggested that the matter should be referred to the district auditor as a case in which a councillor had voted on a matter in which he had a direct financial interest, the council, under the Conservative leadership, voted to accept Councillor Barot's explanation, which was that he had turned his hearing aid off by mistake and did not know what he was voting for. That beggars belief, although one admires the man's imagination.

Councillor Barot still serves on the council. The thousands of pounds lost by the Asian Professionals Association have never been found and its computer equipment has never turned up. No satisfactory explanation for any of this has ever seen the light of day.

Another little gem is the case of Councillor Judith Harper, who resigned from the Labour group in protest at what happened when she became homeless. She was offered a flat on the local Stonebridge estate—which she represented as a councillor—but decided that it was not adequate for her purposes. She went to the Labour group and said that it should take up her case and ensure that she received a better offer. When the Labour group refused, saying that there was no reason why she should be offered anything better than anyone else, Councillor Harper promptly resigned. The leader of the council, Councillor Bob Blackman, suddenly decided that there might have been a grave injustice in the case and said that he would investigate it personally. Lo and behold, Judith Harper voted with the Conservative administration thereafter. Then—wonder of wonders—it was decided that another offer should, indeed, be made, and a nice home in a leafy road in Barnet was found for her through a housing association.

There the matter would have lain—and that was bad enough—had it not subsequently been discovered that Judith Harper already owned a house in Brent. She had gained further accommodation completely illegally. When the matter was raised by the Labour opposition, Councillor Harper suddenly announced her resignation from the council—the day before she was due to be interviewed by auditors from the housing department. Far from saying that here was an outrage and that he would send the papers to the fraud office or the district auditor, the council leader, Councillor Blackman, said that Councillor Harper had been hounded out of public life by a wicked Labour campaign. One wonders what he would have said about Asil Nadir or the other sundry crooks who now seem to litter the political scene.

Those two were, in a sense, the small fry. The two big fish were Pauline Nyaga and Councillor Nkechi Amalu-Johnson. They managed to defect from the Labour group after one year, while it was suspending both of them and investigating various unsavoury aspects of their political views, such as their support for !di Amin and their weird proposals to sack all Asian staff and replace them with Africans. By sheer miraculous chance, Councillor Bob Blackman, the leader of the council, suddenly decided that those two people were fit to be the chair of housing and the chair of environment. With those appointments came a personal assistant, an additional attendance allowance and the provision of a council flat for Councillor Nyaga to conduct her advice surgeries from. It is an amazing thought that if that should become a national practice. about 60,000 council flats would stand empty while councillors conducted a surgery in them once a week.

Councillor Amalu-Johnson's chairmanship of the housing committee did not last very long following the arrest of her son. It was discovered that he had been rehoused by a community group dealing with the needs of African women after he had been evicted from his Brent council flat. It seems rather embarrassing that the son of the chair of Brent's housing committee owed £6,000 in arrears, but that did not cause Councillor Blackman to bat an eyelid.

Equally depressing for Councillor Blackman was the discovery that Councillor Amalu-Johnson owed the council more than £6,000 in the form of a car loan that she had been given when an employee of the social services department. The council took its normal proceedings and started action to recover the car loan after several years. Lo and behold, on the day that the case came to court, who should turn up to defend her but the deputy leader of the council, Conservative councillor John Warren, who said that he was just there as a friend. It is interesting that friendship should stretch to helping a colleague, but we must remember that Councillors Amalu-Johnson and Nyaga were still voting to keep the Conservative group in power.

It is a difficult question. One must depend on what people say. I know that deals have been in the news this week, but where immediate financial rewards flow they become rather dubious. The biggest problem resulted from Councillor Blackman's promise to those two defectors that, if they changed sides and started to support t he ories, they would be given a £1 million community centre in Chapter road. That was an interesting project; so interesting that Councillor Blackman authorised Brent council's public relations department to issue a press release about the wonders of the organisation that was going to take it over.

The local community association—a group that was also bidding for the property—conducted an investigation and, amazingly enough, virtually all the people on the list of directors of the proposed African community centre turned out either not to exist or to be uncontactable. Let me run through the names to give hon. Members the flavour.

A Mr. Yeshie Abele listed his address as 1A Westview close, NW 10, which turned out to be a false address. No telephone numbers were listed on the public relations handout from Brent council and none of the names could be found in the telephone book—quite remarkable. Mr. David Mkwawa, the chair of the group, was another characer who was not living at Westview close. He was eventually traced to Tottenham, where he refused to give his telephone number. Jonathan Cook, who was listed as the secretary, had given his address as Technic house, which is completely untraceable. Clive Townsend, who was listed as the treasurer, was said to live at 53 Wyndham avenue, W13, which also turned out to be a false address, and he was not on the electoral roll. His claim to he chairman or marketing director of Power Silver United Kingdom Ltd. and two other companies proved hard to confirm when none of those could be found in any list of companies or telephone book. The public relations officer. Thomas Heard, who was listed as living at 28A Burgess avenue, had a problem; that property turned out to be empty.

The other names on the list are equally entertaining. A man who listed himself as "Ambassador" Isaac Jacob Sagay at an address in Maida Vale could not be traced and the Foreign Office protocol department has no record of that name on any diplomatic list. Mrs. Barbara Beyder of 23A Canterbury road, Morden, Surrey is not in the telephone book and cannot be traced. Dida Halake of 41 Ansleigh place, W11 is not in the telephone book. The public relations department of Brent council claimed that he was a founder of the Ladbroke grove Methodist supplementary school, yet the Methodist school and colleges department and the Methodist central office have no record of that school or that person.

It is a remarkable list of non-existent people who are taking charge of a £1 million community centre as a reward for swapping their party allegiance. This is a fit and proper matter for the district auditor to investigate—or at least the fraud squad. However, it gets difficult: who said what to whom at meetings?

Fortunately, there were some people with integrity in the Conservative group in Brent and there was a major effort, in the run-up to the annual general meeting of the council this year, to replace the Conservative leader and deputy leader of the council, Councillors Blackman and Warren. That would have been successful—they would have been defeated by one vote. We all know the importance of one vote in the Chamber. However, as Conservative councillors arrived at the annual general meeting, Councillor Blackman announced that he had admitted two new members—the aforementioned Harshad Barot, who is the benefactor of doubt on a grand scale, and another Labour councillor who had defected, Mr. M. Patel. I have nothing to suggest anything unsavoury about why he should have defected.

The Conservative members of the group turned up and found that there were two new members whom they had not voted to admit and who had not yet become members of the Conservative party because their applications had not been processed. Lo and behold—Councillor Blackman and Councillor Warren survived by one vote the challenge to their leadership.

I am not saying for one moment that all Conservative councillors are corrupt. But this is corruption on a grand scale—the dangling of a £1 million community centre before a couple of people, one of whom is now facing 16 charges of fraud. Nkechi Amalu-Johnson is facing 16 charges of fraud after her brief conduct as chair of the housing committee. Councillor Blackman defended her throughout that period and Councillor Warren, the deputy leader, turned up to defend her in court against his council's action to try to reclaim the money.

The examples of Westminster and Brent are not typical of the Conservative party, any more than they are typical of the Labour party or the Liberal Democrats. However, it seems that the powers of the district auditor are wholly inadequate to deal with the people who have managed to resist and drag out an investigation for four years in Westminster. The chief executive of Westminster is prepared to shred documents that the district auditor needs.

Certainly, when we get into the nightmarish jungle of the politics of Brent, with such bribery and vote-buying taking place continually at meetings, and with completely fictitious lists of people circulated on the orders of the council leader, Councillor Blackman, as the beneficiaries of the £1 million community centre, which was to be a reward for the defection of Nkechi Amalu-Johnson and P. Nyaga, there is nothing to say except that it is corruption. It is the use of public votes to buy office and hold office. It involves a complete double standard that is totally unacceptable. The district auditor should be investigating the personal financial details of all the people involved to see what moneys have changed hands and where Hashad Barot's missing grant has gone.

I am not simply attacking Conservative councillors. When I was the leader of the Greater London council, I received information that one of my members had tried to use his influence to get preferential treatment in gaining a commercial letting. The day that I discovered that, the papers went to the fraud squad and I urged the fraud squad to deal as harshly as possible with that individual. When I heard rumours that four members of the last Labour-controlled council for Brent had intervened in planning applications to benefit themselves, I went to the fraud squad and asked for an investigation. My position is absolutely clear. I have opposed corruption by Labour members on councils with which I have been involved and I expect the Conservative party to do the same with its crooks.

2.49 pm

The speech of the hon.Member for Brent, East (Mr. Livingstone) was a good, end-of-term political knockabout which I am sure will read well in the next issue of Tribune.

We are determined that local government will perform to the highest possible standards of public life and public accountability, irrespective of party complexion or political control. We expect local authorities and local councillors to act within the law and to seek to uphold the best traditions of public life in this country. One of the means to enable us to achieve that objective is the district auditor.

The district auditor has a number of duties in addition to those associated with a normal audit. The auditor of a local authority has a statutory duty to consider whether spending is legal and proper, and whether economy, efficiency and effectiveness—value for money—have been achieved through the use of public funds. While the auditor does not question policy, he considers the effects of policy and examines how policy decisions are reached. He considers whether decisions were reached with appropriate authority, and on sufficient and reliable financial data. If he concludes that the policy has resulted in financial loss, the auditor can apply to the court to have those responsible surcharged.

The auditor's powers are substantial. He can identify recommendations in a management letter which is presented at the conclusion of the audit. The local authority must consider that letter at a full council meeting and must respond publicly. The auditor must have the right of access at all reasonable times to all such documents relating to the organisation whose accounts are required to be audited. Any person who, without reasonable excuse, fails to comply with any of the auditor's requirements shall be liable to a fine and an additional fine for each day on which the offence continues.

The auditor has powers to make any report on any matter that comes to his notice in the course of the audit. Such reports must be considered by the local authority involved. If the auditor believes that an item on the account is unlawful, he can appeal to the courts for such a declaration, and if an item of account is declared unlawful the person authorising that expenditure may be required to repay it. If it appears to the auditor that a loss is due to wilful misconduct, he can set about recovering the amount from the person or people responsible. A member of any local authority who authorises an unlawful sum in excess of £2,000 shall be disqualified from being a member of a local authority for five years.

It is evidence of the auditor's impartiality and the effectiveness of the system that, in recent years, the district auditor has published reports on local authorities of different political complexions. Public interest reports are made for a number of different reasons, so the issue of a report cannot necessarily be interpreted as a criticism of the authority involved.

Let us consider the past three years and the London boroughs involved. In 1990–91. reports by the district auditor were published in relation to the following boroughs; Hackney, which was then Labour controlled; Lambeth, which was then Labour controlled; Camden, which was then Labour controlled; the Royal Borough of Kingston upon Thames, where there was no overall control; Ealing, which was under Conservative control; and the London borough of Tower Hamlets, which was controlled by the Social Democrats. Therefore, any suggestion by the hon. Member for Brent, East that the district auditor is partial in the way in which he applies his powers is totally unfounded and discreditable.

Last year—1992–93—the district auditor published reports on the London borough of Haringey and the London borough of Hammersmith and Fulham, which were both Labour controlled. But he also published reports on other local other authorities around the country, including at least two which were controlled by the Liberal Democrats, one which was controlled by the ratepayers association and the residents association, and one which was controlled by independents.

We are determined that the district auditor will perform his duties. He has considerable powers. We are determined that there will be the highest possible standards of public life. I have every confidence that the district auditor will investigate fully any allegations of malpractice in any local authority. Were he to conclude that any of the allegations were true, it would be for him to take consequential action.

The hon. Member for Brent, East was quiet on whether he had referred any of the complaints about Brent to the district auditor. On the question of Westminster, all he did was to read out some tittle tattle from press cuttings. I very much hope that if he thought there was any evidence relating to any local authority, he would refer it to the district auditor.

It is strange that, of all Labour Members, it is the hon. Gentleman who is seeking to uphold the standards of local government. After all, it was under his stewardship that the GLC's precept rose by 118 per cent. while inflation rose by just 14 per cent. Indeed, local government has not caused as much disappointment as the GLC. Even Labour Members were forced to acknowledge that it had been rightly described as the slowest bureaucracy this side of the Kremlin and the sooner it was abolished, the better.

Of course, the Labour party in London valued the GLC because it was prepared to finance lunatic left-wing activity. That source of funds for bizarre extremist groups has dried up and no longer is the hon. Gentleman able to lavish money on such bodies as the Marx Memorial library and Babies Against the Bomb—[Interruption.] It is very sweet of the hon. Member for Leicester, East (Mr. Vaz) to turn up as the political minder of the hon. Member for Brent, East. Indeed, if the hon. Gentleman were making speeches on my patch of local government I, too, would turn up as his political minder.

When the hon. Member for Brent, East was leader of the GLC, he actively boasted that it had more billboards than any other advertiser in London and that it had the best sites. He said that the Labour party could never have access to such funds as the GLC had. Therefore, I do not think that the House is prepared to take lectures from the hon. Gentleman about how local authorities should perform. Indeed, local authorities in London spent about £20 million—

No, I will not. The hon. Gentleman wallpapered about 15 minutes' worth of Hansard with ailegations, using parliamentary privilege to do so. When he had the stewardship of the GLC in 1984–85, it spent £20 million on Labour propaganda—[Interruption.] If hon. Members cannot read the Order Paper, let me tell them that the debate is about the role of the district auditor. It is about standards in public life. It is a timely reminder that, when the Labour party had control of the GLC, its standards were despicable. It was the hon. Member for Brent, East who declared:

"Fighting alongside the miners we can create the conditions for a general strike to defeat the Tory Government."
Of course, during those times in Lambeth there were instances of funeral cars carrying white feathers being sent to those who wanted to set a legal budget—[Interruption.] The hon. Member for Leicester, East, who sits on the Front Bench and exhibits such mirth, might like to reflect on something that is a sober fact for the Labour party as it disappears for the summer recess. Last week, there was a by-election in a safe Labour ward in Lambeth and the Labour party lost.

I do not think that the House will take any lectures from the hon. Member for Brent, East about public standards and public life. Of all Labour Members, he is the most disreputable when it comes to local government. I suggest, not that he spends the recess lying down in a dark room, but that he takes a happy walk in the countryside and has a good holiday. Perhaps he should take one of the DOE Ordnance Survey maps and go for a long walk along one of the routes formed by the Countryside Commission that was established and funded by the DOE. Then, hopefully, when he returns to the House in the autumn he will be in a position to make a more sensible and balanced contribution to the debate.

I wish you, Madam Speaker, and every hon. Member a very happy recess and hope that we can all find a newt.

I can take no points of order as it is now 3 o'clock. Our debates are now concluded, but as a message from the Lords is expected, I am required to suspend the sitting until the Royal Assent to Bills passed by both Houses can be signified. I understand that this may be a matter of several hours. I shall arrange for the bells to be rung five minutes before I intend to resume the Chair.

3 pm

Sitting suspended.

7.15 pm

On resuming—