Police to investigate after watchdog issues public interest reports

A police investigation is to take place after the Wales Audit Office last month issued public interest reports claiming two councils had acted unlawfully, it has been confirmed.

In a statement Dyfed-Powys Police said: “[We] have now fully considered the three Public Interest Reports published on 30 January 2014 by Wales Audit Office, into matters relating to Carmarthenshire and Pembrokeshire County Councils.  

“As a result, the Force has decided that it is a matter which should be investigated in the public interest by the Police, to ascertain whether or not any criminal offences have taken place.”

The investigation will, however, be undertaken by the Gloucestershire Constabulary.

“Due to the close working relationships and partnership arrangements that exist between Dyfed-Powys Police and both local authorities, it is not appropriate for the Force to carry out the enquiry,” the statement said.

It added: “Dyfed-Powys Police would like to make it absolutely clear that this decision has been taken by the Police alone, and has in no way been influenced by political commentary or media reporting on this issue.”

The police investigation comes after the Assistant Auditor General for Wales, Anthony Barrett, issued public interest reports into decisions by Carmarthenshire and Pembrokeshire to allow senior officers to receive payments equivalent to the employers’ pension contributions if they opted out of the Local Government Pension Scheme.

Barrett said the decisions to approve the arrangements – entered into to avoid potential tax liabilities – were unlawful. The authorities had acted “contrary to law”, he added.

The Assistant Auditor General also published a separate report calling on Carmarthenshire to rescind its decision to grant its chief executive an indemnity to bring a libel counterclaim.

Carmarthenshire has rejected the claims of unlawfulness in relation to the indemnity and last week took the unusual step of publishing legal opinions it received from two QCs which it said backed its standpoint.

The council also denied that the decision to implement the pensions arrangements was intrinsically unlawful, but accepted that there might have been shortcomings in the procedures adopted.

Members of Pembrokeshire County Council will meanwhile be meeting today (14 February) to discuss the WAO report and to receive legal advice. The WAO’s legal position will also be shared with the meeting.

In a statement on its website, Pembrokeshire said: “In that advice the Auditor clearly states that he is not suggesting that ‘a pay supplement of this type is intrinsically and necessarily unlawful’." [Council’s emphasis]

The meeting is also expected to hear independent expert advice saying that the pensions facility offered to council staff was used in other public sector organisations in the health and university sectors. It will also be claimed that actuarial advice suggested that there would be a positive financial benefit to the authority, with a marginal saving for its pension fund, over and above the additional tax paid to the Inland Revenue.

Cllr Jamie Adams, Leader of Pembrokeshire, said: "The council is required to consider the public interest report within one month of its receipt. It is important that councillors have the opportunity to consider all the relevant evidence before deciding how best to respond to the Auditor's recommendations.

"For example, one of the misunderstandings that has developed is that, as a result of this arrangement, two senior officers of the council are receiving tax free pay supplements. That is simply not true. For officers who chose to remain in the Local Government Pension Scheme, employee and employer pension contributions are tax free.

"However, in electing to leave the scheme and make their own arrangements for retirement, the officers concerned are paying considerably more tax on a monthly basis than would otherwise be the case."

Cllr Adams added: "Another misunderstanding that has arisen is that a criminal act has been committed. I understand that at a recent meeting with the Authority, the Auditor confirmed that he was not suggesting this was the case."