Former Leader has reimbursed council for £19k credit card use: report

Former South Tyneside Council leader Iain Malcolm used his council credit card for personal purchases and has reimbursed the council with £18,909.86, an audit has found.

In a report by Stuart Reid, section 151 officer, South Tyneside’s audit committee was told that Malcolm’s use of the card was referred in 2020 to Northumbria Police, who this month told the council there was insufficient evidence to proceed meaning information could be released.

Internal audit officers reviewed all credit card transactions for the period April 2011 to March 2016 to reconcile the amounts identified as personal use, with cheques paid by the former leader to cover these amounts.

The report said total credit card spend was £23,272.11 of which 46% - equivalent to £10,797.55 - was identified as for personal use. The value of the cheques reimbursed was £5,807.88 less.

Malcolm, Labour leader since 2008, left the council in May 2020 and sought an update on how much was owed for personal use of the credit card.

“The outstanding amount was calculated as £18,909.86 which was settled by Mr I Malcolm,” the report said.

Ken Dawes, chair of audit committee said: “The public can be confident that we have absolutely tightened all protocols and process to avoid there being any opportunities for this to happen again.

“This includes limiting the use of cards to incur expenditure where there is a necessary business need and a process of independent checks where expenditure has arisen.

“Further checks around the use of electronic cards to incur council expenditure indicated no issues of concern and that these historic problem arose principally from the actions of one individual.”

The report found Malcolm had reimbursed the council for personal use of the card through an “informal practice”.

It said: “The incidence of Malcolm as then leader of the council using his credit card inappropriately had been occurring since 2011.

“As the practice adopted by Malcolm had not been authorised, no process for the reconciliation of his personal spend with reimbursement had taken place until the end of 2019.

“However, there was no evidence to suggest to officers that a shortfall did exist in the absence of more detailed scrutiny of the transactions as legitimate council spend and personal spend were co-mingled.”

An analysis of employee use of credit cards had trawled through 600 statements and found no other misuse. No other councillor had held a credit card.

The report said that once the police decided to take no action the council became free to publish the relevant credit card statements.

South Tyneside has issued 153 pages of such these, which show purchases including at various restaurants, Sainsbury's and Sports Direct among others.

Mark Smulian