Watchdog criticises governance and oversight arrangements Welsh council had in place for waste company, but acknowledges actions taken by local authority

Blaenau Gwent County Borough Council failed to correctly approve pay and pensions awards to staff and directors of its arm’s-length waste company, the Auditor General for Wales has found.

Adrian Crompton said in a report there had been “long-standing deficiencies identified in the council’s governance and oversight arrangements”.

The council formed Silent Valley Waste Services in 1991 as a wholly-owned company and gave it a contract to handle waste.

A whistleblower in 2017 raised concerns with the auditor about the relationship between the council and Silent Valley.

Police began an investigation but this did not lead to prosecutions and Mr Crompton resumed his work after this.

He said issues of “significant concern” included failures to correctly approve pay and pension arrangements for council officers appointed to the Silent Valley board, failure to follow procurement regulations for services it provided and omitting to ensure that council appointments to its board were constitutional.

Mr Crompton also pointed to a lack of rules to manage potential conflicts of interest for council officers appointed to Silent Valley’s board, who were “being exposed to allegations that some of their actions were motivated by self-interest”.

The auditor said: “The saga covered by my report illustrates the serious consequences and damage to public trust that arise when local authorities fail to establish and apply proper governance arrangements in respect of their relationships with other organisations.

“The behaviours and failures that persisted over many years raise a serious question about the council’s organisational culture during the period to which this report relates.”

Mr Crompton pointed to the process under which former council chief executive Robin Morrison became a Silent Valley director.

He said this had been “fundamentally flawed; the remuneration arrangements were not properly approved; and the pension arrangements for the appointment were potentially contrary to the pension regulations in force at the time”.

It had also been “unclear how the council’s then chief executive, chief finance officer and director of environment and regeneration were nominated as paid directors of Silent Valley in 2012, and their appointments were not approved in accordance with the council’s constitution”.

In April 2012, members of the outgoing Silent Valley board voted to pay £11,569 to each retiring board member, “contrary to Silent Valley’s governing document, even though all but one of those present stood to financially benefit from the decision”.

Council officers on Silent Valley’s board approved a payment of £38,737 to its general manager, when he left in August 2016, who “did not have a contractual entitlement to this payment and it is unclear how the decision to approve the payment was in the interests of the council”, the auditor said.

He concluded: “I am pleased to recognise that the council has taken action to address the deficiencies in its governance and oversight arrangements in respect of Silent Valley.

“Nevertheless, I remain concerned that the issues identified in this report occurred over such a protracted period, involved several senior council officials and continued without any apparent challenge until they were brought to the attention of the council by a whistleblower.

“This raises a serious question about the council’s organisational culture during the period to which this report relates and, in my view, the council would do well to satisfy itself that the culture that contributed to the deficiencies found by my audit no longer persists.”

A council statement said: “We recognise the seriousness of its findings”.

It continued: “The council has already taken steps to address the issues raised in the report and made improvements to strengthen governance early in 2018.  This work has been acknowledged in the Audit Wales report.”

Mark Smulian