"The City Mayor has stated that whilst he was involved in the making of the decision to fund the match day costs he does not know why the proper governance procedures including producing a Record of Decision were not followed by officers at the time..." Official Audit Report
While Salford City Council was proposing to cut hundreds of thousands of pounds from services for the city's vulnerable people, it was secretly doing deals with Salford City Reds owner Marwan Koukash to subsidise the rugby club with rent free deals, and free match day costs up to £164,000, at the Stadium (now called the AJ Bell Stadium) it jointly owns with Peel Holdings.
At the centre of the scandal was Salford City Mayor Ian Stewart and former Council Strategic Director Martin Vickers, who, weeks after agreeing deals with the rugby club, took voluntary severance from the Council and got a job with Salford City Reds (now called Salford Red Devils).
An official internal investigation report into the scandal lists a whole range of dodgy, messy dealings at Salford Council...
Martin Vickers, as Salford Council's Strategic Director for Customer and Support Services, and representing its interests as joint owner (with Peel Holdings) of City of Salford Community Stadium Ltd (CoSCoS), negotiated an `informal agreement' with the Marwan Koukash company, SCR (2013), which took over Salford City Reds - that it could use the Stadium rent free for the first two years and that it wouldn't have to pay match day costs at the Stadium.
Peel Holdings, as joint partners with the Council in the Stadium (CoSCoS) didn't agree with subsidising the match day costs and, as the company that handled the administration of the Stadium, deducted £150,000 worth of costs (up to July 2013) before handing over the gate receipts to the rugby club.
The Report states... "Various attempts were made to change the other joint partner's [Peel Holdings] stance on this issue, by both the Strategic Director for Customer and Support Services and by the City Mayor."
A letter to Peel Holdings, dated 3rd July 2013 and signed by Martin Vickers, incredibly stated that if Peel refunded the money to the rugby club, Salford Council would pick up the tab, up to £164,000, by reducing charges made to the Stadium...
...a "Reduction in interest charged by the Council to the Stadium Company" (on a Council loan of £22million)... a "Reduction in charges from Salford City Council to the Stadium Company" and a "Reduction in Stadium Company costs due to the future delivery of services to the Stadium Company by the Council at reduced costs". In the event, the actual level of cash payment was £75,000.
The Report states "The City Mayor has confirmed that he was involved and was aware of, and in agreement with the contents of this letter at the time it was sent and had discussed the matter with the Deputy City Mayor" [Councillor David Lancaster].
The Report also states that Barbara Spicer, Chief Executive at the time and Martin Vickers' boss, was not aware of the letter.
On 15th August 2013, the Report states, "CoSCoS entered into a formal tenancy agreement with SCR (2013). This agreement stated that SCR (2013) would not pay any match day costs for 2 years from 1st January 2013 to 31st December 2014 up to the value of £164,000. This agreement was signed by the owner of SCR (2013) [Marwan Koukash], a CoSCoS Director from Peel Holdings, and the Strategic Director of Customer and Support Services [Martin Vickers] (in his role as the Salford City Council Director of CoSCoS)."
The Report notes the following anomalies...
1) That Martin Vickers had no authority to make such a decision, which involved finance above £100,000, breaking the Council's own Constitution rules.
2) That there was no public Record of Decision published, again breaking the Council's own Constitution rules.
3) That the secret `key decision' wasn't open to scrutiny by councillors because they knew nothing about it.
4) The person who had the "statutory role which carries with it responsibility for overseeing the processes of decision making and governance with the Council" is the Monitoring Officer...The Monitoring Officer at the time was, er, Martin Vickers...Vickers himself was responsible for "ensuring lawfulness and fairness in decision making"...
5) The Report adds: "The City Mayor has stated that whilst he was involved in the making of the decision to fund the match day costs he does not know why the proper governance procedures including producing a Record of Decision were not followed by officers at the time."...
6) ... The City Mayor, according to the Report, has "Primary legal and strategic responsibility for the operational management of the Council and the development of its plans, policies and priorities." In other words, the City Mayor, Ian Stewart, should ultimately carry the can. Especially as he admitted that he was totally aware of what was going on.
There were also financial anomalies in relation to Martin Vickers' severance package with Salford Council...
Vickers didn't leave his job at the Council until 31st August 2013 yet he was paid a lump sum on 26th July which included, not only the voluntary severance payment (which we now know was £78,817) but also his August salary payment which the Report notes "was not due until 15th August 2013".
The Report also notes that "The early payment of the lump sum and salary was supported and verbally approved by the City Mayor due to the personal circumstances put forward by Mr Vickers and on the basis that the Strategic Director continued to work until the end of August to ensure a proper handover".
The Report reveals that "In the email giving her approval on 5th August the Chief Executive comments on the fact that the payment has been made before the Strategic Director for Customer and Support Services left the organisation rather than `the usual arrangement of paying once an employee has left the organisation'.
Vickers also had a staff car loan and the Report notes that "he requested that the balance was not to be deducted from his severance payment but that he be allowed to pay for the car by instalments after leaving the Council. This arrangement was dealt with and authorised by the Chief Executive...the monthly deduction for his car loan was not taken from this August salary payment."
The Salford Star has been trying to ascertain whether Martin Vickers has actually paid this loan back since leaving the Council. Vickers himself hasn't responded to questions from the Salford Star. Meanwhile, under the public right to inspect Salford Council Accounts, we requested details from both the Council itself and from its auditors, Grant Thornton, arguing that the public interest should over-ride any confidentiality restrictions. Yesterday, Grant Thornton refused the request, quoting a whole battery of sections and subsections of various pieces of legislation.
The internal investigators sought legal advice on the issue of Vickers walking into a job with Salford City Reds weeks after leaving the Council, and having led negotiations for favourable terms with the rugby club. The Report notes "restrictions that would otherwise apply to a Chief Officer leaving the Council do not apply in a redundancy situation. In the absence of a specific agreement, the City Council had no influence over any future employment offers".
HUGE AMOUNTS OF PUBLIC MONEY GIVEN TO SALFORD REDS IN SECRET DEALS...SALFORD COUNCIL CONSTITUTION SMASHED ...SALFORD MAYOR IMPLICATED WHAT NEXT?
The whole point of the internal investigation was, in its own words, to review...
1. The governance, decision making and terms of the Strategic Director's voluntary
severance agreement.
2. An examination of the agreements between Salford City Council, Salford City Reds (2013) Limited (SCR), and the City of Salford Community Stadium Limited (CoSCoS) in the three months prior to the Strategic Director leaving the Council to ensure: Probity in the decision making processes and that the correct procedures have been followed; Value for money for the Council has been considered and achieved.
THE CONCLUSION? A COMPLETE WHITEWASH!
The report makes a number of recommendations, including...
1) On Martin Vickers walking into a job with Salford City Reds weeks after negotiating deals with them, the Report concludes that "the Council may have considered some form of binding confidentiality agreement or restriction on future employment if appropriate. A recommendation is made to strengthen the Council's consideration of such matters in future. The City Mayor supports this".
2) On Martin Vickers making `key decisions' above his station and there being no scrutiny by councillors or the Monitoring Officer (as Vickers was the Monitoring Officer), the Report concludes... "Had the Monitoring Officer's role been separate...then these governance issues may have been identified earlier and possibly prevented." So now, "the Council will consider the creation of an independent Monitoring Officer role and the appointment of a qualified solicitor to that post"...
3) On finding that "The agreement for the Council to pay the Salford City Reds match day costs up to the value of £164k was not formally recorded and therefore did not follow due process and ensure transparency in decision making", the Council is conveniently going to backdate the decision to make it legal. Or as the Report states, "A decision notice will be raised to cover the decision that was made in July 2013"...
...Meanwhile, the recommendation is that "the Chief Financial Officer should determine the best way to discharge the liability". In other words, the Council is going to carry on paying it.
The Salford Star does not think these recommendations go far enough. This is the biggest financial scandal to hit Salford Council in years. Services for some of the city's most vulnerable people were being axed while secret decisions behind closed doors were being made to, yet again, hand more money to Salford Reds rugby club.
It was only last week the Salford Star revealed that Salford Council loans to its joint venture Stadium now totalled over £1million for running costs, in addition to the £22million loan to build the structure (see here).
Now we learn that the Council, with the full knowledge of Salford City Mayor, Ian Stewart, and his Deputy Mayor, David Lancaster, was handing revenue from the Stadium that should have paid for match costs straight back to the rugby club to the tune of up to £164,000. And this in addition to previous rugby club loans of up to £1.5million taken on by Marwan Koukash that, according to latest draft Salford Council accounts to March 2014, have not had a penny paid off.
The Salford Star believes that this whole issue needs a full Public Inquiry and a police investigation into possible misuse of public money. In the meantime, Salford City Mayor, Ian Stewart, should resign with immediate effect.
* The Report will be discussed at the Council's Audit and Accounts Committee next Wednesday 27th August - read full report here
*See also previous Salford Star article - Martin Vickers Wins The Something Stinks In Salford award - click here
Update: 21st August
Anti Cuts campaigners demand answers from scandal hit Mayor - click here
UPDATE: 27th August - Watch the live Salford Star TV broadcast from the Audit Committee meeting - http://bambuser.com/channel/salfordstar