Documenting Past Failures: (7) The Independent Panel and a ‘scathing’ report on LBWF’s ‘deep-rooted culture of non-compliance with procedures to prevent fraud’.

In mid-2009, the crisis around the BNI finally came to a head. The Council had spent c. £116,000 on a series of seven or eight disparate inquiries into the programme, (Waltham Forest Guardian, 17 June 2009)  culminating in the PwC report, but some were obviously flawed, few convinced, and almost all begged further questions. Negative press coverage continued, as when the Waltham Forest Guardian revealed that, contrary to previous assurances, BNI money was being used to subsidise Waltham Forest’s 2012 projects department, with the further revelation – that the documentation here was also in chaos – then adding insult to injury (Waltham Forest Guardian, 19 August 2008). LBWF had just appointed a new Chief Executive, the widely experienced Andrew Kilburn, and he concluded that the only viable way forward was to bring in outside experts to investigate more comprehensively, and accordingly, in May 2009, he commissioned the so-called Independent Panel, chaired by Sir Peter Rogers (Chief Executive of the London Development Agency) to provide a ‘fresh’ and ‘challenging’ view on what had gone wrong, and how to prevent it happening again the future.

The Independent Panel reported in December 2009, and as the BBC put it, was ‘scathing’. For the past few years, LBWF had energetically sought to improve its standing in the Audit Commission’s annual Comprehensive Performance Assessment (CPA) league tables, but in doing so had sacrificed good governance, leading to significant failures in ‘procurement, management and monitoring of contracts, and in the decision making process’. Most worrying of all was what the Panel described as ‘a deep-rooted culture of non-compliance with procedures to prevent fraud’.

The Independent Panel report plus its important appendix B2 are posted in the documents box to the left (the rest can be accessed via the minutes of the Cabinet meeting of 3 December 2009 on the Council’s website), and are worth reading in their entirety, but here are some of their key passages:

On relations with residents:

‘One of the major complaints that the Council has to deal with is that some communities believe that they have been marginalised in setting priorities and taking decisions. During our interviews, we had described to us that there were a number of clear changes of policy in the way that the Council engaged local communities…we have asked for the Cabinet report that proposed alternative options which led to these changes in community engagement. Despite every effort, we have yet to locate any public report on these changes’ (Independent Panel Report, 3.2-3.3).

 On external relationships:

‘Waltham Forest is seen as insular and secretive by some important stakeholders, if not by its partners. During the course of the independent review, a number of people, including MPs, have confirmed the only way they get a response is through FOI requests. This is now regarded as the normal method of communication by many’ (Independent Panel Report, 10.1).

 On organisational culture:

‘There was during the period under investigation…an emphasis on the performance and issues for individual directorates which emanates from members of the leadership team. Not my area, not my responsibility was a theme from the interviews. There is limited evidence of corporate or collective management accountability or of an open, solution-focused approach to organisational learning. There is also seemingly a culture of managers tending to pass responsibility upwards and assume something will happen…Furthermore there is a culture where there are apparently (and evidentially) no consequences of management failure whether commission (error) or omission (apathy). There are disturbing signs…that senior managers were protected from exposure to disciplinary action or at least where action was delayed or deferred and questions about their actions or lack of actions never resolved…There is also a marked level of complacency (things take a long time here) and mediocrity (that’s how we do it here) which…seems to be seen as acceptable by senior managers and other influential staff’ (Independent Panel Report, Appendix B2, p.6).

On the HR function:

‘The absence of an effective strategic Human Resources (HR) department is a serious barrier. It has clearly been ineffective for many years…and there is no strategic direction for the organisational or personal development that is required going forward. The HR function is also ineffective operationally and there is evidence that there is no penalty for not complying with corporate rules. This is not just an issue for HR alone but for the senior management of the Council’ (Independent Panel Report, 4.3).

         On reporting:

‘This report also cites examples where there is inadequate public reporting of important issues. Informal briefings appear to have replaced reports to Cabinet and as a result matters have been left unremedied for several years’ (Independent Panel Report, 4.4).

On action plans:

‘At the heart of the issues to be addressed is a culture where an action plan is produced to remedy deficiencies but any improvement is non-existent or at best short-lived’ (Independent Panel Report, 5.1).

On compliance with LBWF contracting rules:

‘Despite the problems identified with contracts, the situation has in fact deteriorated [since the Panel’s appointment] and whilst there was a compliance of approximately 25% before January 2009, it has dropped to only 19% since then…Both figures show compliance is not seen as a priority despite the emphasis placed on this by successive CEOs. As an example, in some cases the contract does not appear on the contract register, in some cases it has no value, and in other cases the contract is not in a form approved by the Director of Governance and Law’ (Independent Panel Report, 5.5-5.6).

On organisational learning:

‘Good organisations learn from problems and rectify them. Waltham Forest appears to do neither. The relentless push for CPA stars has meant that there has been less focus on embedding proper process and accountability within the Council’ (Independent Panel Report, 6.9).

Significantly, the independent Panel did not look at many specific projects, but one that it did comment on was EduAction’s Youth at Risk (see previous post), and here its conclusions were devastating:

‘Under its NRF-funded Youth at Risk programme, Waltham Forest entered into a contract…with EduAction. There have been numerous complaints through whistle blowers and a number of Freedom of Information (FOI) requests around this contract. It has been impossible to find any individual within the Council itself who understands what was contracted and what has been delivered for the money. Of even more concern, there appears to be little concern from key people that this is the case’ (Independent Panel Report, 6.1).

Reactions to the report inevitably varied. The Leader, Cllr. Chris Robbins, apologised on behalf of the Cabinet, and promised an action plan to ensure that officers were supported to address the failings that had been identified. Others wondered why only officers had been blamed, and local politicians had emerged unscathed. After all, who ultimately supervised the officers? And in particular, who had ‘protected them from exposure to disciplinary action’? For its part, the Waltham Forest Guardian wondered if the Independent Panel report could really achieve what so many previous investigations had not:

‘Readers who have followed the long-running saga of the mismanagement of regeneration funds may be forgiven for that we have been here before. Yes, this is the first time a fully independent review…has been published and the subsequent report slams the culture within the authority in unprecedented terms. The council can not properly account for millions of pounds. The money has been lost forever. The authority’s response…will seek to reassure the public that fundamental changes are under way and failings will not be repeated. The reaction of former chief executive Roger Taylor to damning internal reports was very similar. But his action plan to stamp out a “culture on non-compliance” which left the system open to exploitation has now been discredited. The council has a great deal of work to do to rebuild trust with the general public and, for some, this will be authority’s last chance to retain any creditability’ (Waltham Forest Guardian, 26 November 2009).

In the months that followed, the skeptics were largely proved right. In June 2010, just six months after the Independent Panel’s report, Mr.Kilburn left the Council’s employment with a pay off of £360,000. In October 2010, Deloitte found ‘no evidence’ that specific areas of concern highlighted in previous reports about the BNI had been ‘communicated throughout the Council’ and so concluded there was a real possibility that ‘similar errors could happen in future projects’ (Deloitte, ‘Internal Audit Report. London Borough of Waltham forest Better Neighbourhoods initiative Review. Final report’ (October, 2010)). And all the while revelations about LBWF’s internal workings continued to shock and amaze (see succeeding posts).

The Independent Panel’s acid observation, already quoted, that ‘Good organisations learn from problems and rectify them. Waltham Forest appears to do neither’ clearly remained as pertinent as ever.

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