Shame of fat cat bosses given huge pay rises and pension boosts just before their council was axed
By Paul Sims
Last updated at 8:38 AM on 29th December 2010
A former £100,000-a-year council boss is to face legal action over claims he inflated his own salary as well as that of senior colleagues to secure an extra £700,000 in redundancy and pension payouts.
The cash windfalls were paid out after the senior executives were all made redundant from Wansbeck District Council in Northumberland in March 2009 as part of a major overhaul of local government.
Under the controversial plans drawn up by the then Labour government, 45 district, borough and county councils merged into just nine ‘unitary’ local authorities, with Wansbeck being merged into Northumberland County Council.
£240,000 payout: Former chief executive Bob Stephenson
But when the new unitary authority examined Wansbeck’s accounts, it discovered a series of financial irregularities.
An urgent inquiry was launched and a report by the council’s anti-fraud investigator found the pay rises were awarded a year before the merger.
The report, seen by the Mail, reveals: ‘The investigation was concluded... with evidence that the salaries of the chief officers had been potentially fraudulently inflated prior to dissolution under Local Government Reorganisation.
‘The total amount involved, including potential future pension payments, is in excess of £700,000.’
Denial: Colin Mitchell (left) declined to comment while Trevor Straker (right) denies any wrongdoing
It is claimed a total of £375,000 was over-paid in salaries and redundancy payments and a further £344,000 in future pension payments to the age of 75.
Investigators also discovered the council’s chief executive, Bob Stephenson, paid himself an additional £40,000 a year as the two-day-a-week head of the council’s regeneration arm, Wansbeck Life.
The payments were made over an 18-month period before his redundancy, they found.
The report recommends court action against five former senior managers to recover the payments and names the five as council chief executive Stephenson, 57; Trevor Straker, head of engineering services; Colin Mitchell, 52, director of neighbourhood and community services; Carolyn Forster, 44, solicitor to the council and Nick Burden, the head of regulatory services.
All of the managers, apart from Stephenson, are understood to have genuinely believed they were entitled to pay rises.
The full report, which concludes that the payments were unlawful, was passed to Northumbria Police and the Crown Prosecution Service.
All five were interviewed by the police, but after a full and thorough investigation no charges were brought due to insufficient evidence.
However, the council now plans to sue all five in the High Court in a civil case – where the burden of proof is much lower – to recover the overpaid money.
Mr Stephenson – who is said to have walked away with a £240,000 pay-off in March 2009, more than twice his annual salary – is alleged to have been responsible for the overpayments.
The council’s anti-fraud investigator, Alan Le Marinel, said in his report: ‘It is evident from what has been stated in the various documents that a claim against Mr Stephenson would be very likely to succeed in that he acted dishonestly and knowingly and beyond his powers in increasing his own and the other... salaries and that because of this he may be liable for the total sum overpaid.
‘However, I would recommend that proceedings be instigated against the other former chief officers on the basis that Mr Stephenson’s actions were ultra vires [beyond his powers].
‘For the avoidance of doubt it is my opinion that in the absence of delegation powers to alter the salaries of the former chief officers the actions are unlawful and ultra vires and therefore recoverable by way of an action of restitution.’
Despite the allegations Mr Stephenson is still believed to be drawing on his pension.
Last night, one council worker told the Mail: ‘He has shown complete contempt for the council and other members of staff, given the fact we all have a question mark hanging over our jobs. It’s incredible. These senior council officials have walked away with vast sums of money they simply are not entitled to.
‘We are facing the harshest cuts in local government for many years and many of us fear losing our jobs.’
Mr Stephenson and Miss Forster are also accused of trying to transfer the ownership of the council’s regeneration arm Wansbeck Life away from the County Council to a North East housing group.
Had they succeeded the County Council would have been left as a minority shareholder while the housing group inherited up to 80 per cent of the firm’s tangible assets – worth up to £31million. Stephenson has since been sacked as head of Wansbeck Life – which relies on £3million in public funding every year – but is appealing against the decision.
A report into the actions of Miss Forster, who is now working for Bassetlaw District Council in Nottinghamshire, has been passed to the Solicitors Regulation Authority amid claims she and another solicitor breached the Solicitors’ Code of Conduct in relation to their roles.
Last night, Mr Straker denied any wrongdoing. He said: ‘I have no intention of talking about this. You have your facts wrong.’
Mr Stephenson and Mr Burden were unavailable for comment.
Mr Mitchell refused to comment and Miss Forster insisted she had not been investigated by the police or the Solicitors Regulation Authority.
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