Council finance chief investigating potential further unlawful payments in Northumberland

If it is found to be the case, section 151 officer and director of finance Jan Willis could be forced to issue a section 114 notice for the second time this year.

A section 114 notice is only issued on two occasions – either a council has gone bankrupt, or unlawful expenditure has been identified.

It comes after the council’s former leader, Coun Peter Jackson, requested a report detailing the processes and practices of employment and redundancy payments be added to the work programme at the last meeting of the council’s audit committee in September.

At the time, Ms Willis confirmed that an Internal Audit report had been drafted on the issue, and that she hoped it would be presented at Wednesday’s meeting of the committee.

However, speaking at the meeting, chief internal auditor Kevin McDonald explained that he had faced some difficulty in compiling the report.

Mr McDonald said: “It has not been a straight forward and easy piece of work. Accessing all of the information has taken some time.

“I have prepared a draft report for the committee, but it hasn’t made the agenda today, so I would assume it would be at the next meeting of the audit committee.”

As part of the work into the overarching report on the council’s processes, Ms Willis has seen reports related to individual payments, and she is now considering whether those reports require her to take action.

She said: “I am taking advice on whether there has been unlawful payments and whether I would need to exercise my statutory powers and report to full council. That work is ongoing and I’m not yet in a position to come to come to a definitive view on that yet.

“My statutory responsibility is to report to full council. Once I have determined whether there has been unlawful expenditure I will need to consider whether it is of such a magnitude that I need to exercise my statutory powers.

“The audit team have had some difficulty in following the audit trail. The report deals with very sensitive and complex matters.”

Under the Local Government Finance Act 1988, the chief finance officer of an authority may make a report under section 114 “if it appears to them that the authority, a committee of the authority, a person holding any office or employment under the authority, or a joint committee on which the authority is represented:

Has made or is about to make a decision which involves or would involve the authority incurring expenditure which is unlawful, Has taken or is about to take a course of action which, if pursued to its conclusion, would be unlawful and likely to cause a loss or deficiency on the part of the authority, or Has or is about to enter an item of account the entry of which is unlawful.”

If it were issued, the council would be required to hold a meeting of all members to discuss the report and decide what action it would take.

In May, Ms Willis issued a section 114 notice relating to the council’s participation in the Northumbria International Alliance, and the other relating to an allowance paid to the then Chief Executive, Daljit Lally. Mrs Lally left the council in July.

Neither the amount of money paid out in potentially unlawful payments, nor who the payments were made to, has been revealed.