Independent review suggests developer had access to confidential council information, recommends council remind members and officers on confidentiality (2)

An independent review into a series of property transactions that raised alarms at Haringey Council has recommended the council remind officers and members not to pass confidential information on to third parties, after hearing reports that a developer was partial to information that was not publicly known.

The review, conducted by Chris Buss, considered nine sites where questions were raised about the council's processes. There is also a live police investigation currently being conducted on the matter.

The council's involvement with the sites ranged from potential and actual acquisitions, redevelopment opportunities, site sales and relationships with voluntary sector tenants.

In the course of his investigation, Buss found that a specific developer (Developer A) was connected to four of the nine sites.

He reported that in one particular case, it appeared as though the developer had access to information it should not have known.

According to the review, a council officer is reported to have received a phone call from the developer the day after a cabinet meeting. The call was regarding matters that were on the meeting's confidential agenda and, as such, should not have been known to anyone not in attendance at the meeting.

"There is no way of knowing how the Developer received this information, but it does demonstrate links between either officers or members and Developer A," the report noted.

To reduce the risk of any "suspicious activities of this nature in the future," Buss recommended that the council remind officers and members that they should not pass information contained in a restricted cabinet paper onto a third party.

He also called on council members and officers to keep any plans to develop sites the local authority either owns or intends to acquire confidential.

The review set out the following five areas in which lessons should be learnt: property records, voluntary sector properties, valuations, stock condition surveys & asset management, and the role of councillors in individual transactions.

Upon analysing the council's property records, the review found a "historic lack" of a comprehensive property management system to record the technical, financial and maintenance details of a property and all related correspondence, in particular emails, relating to a site and all related reports commissioned externally or internally.

In the course of the investigation, the council procured a new property management system which should rectify the issue, the report noted.

On voluntary sector properties, the review concluded that the council's processes for letting properties to the voluntary sector failed to ensure that both parties had fulfilled their mutual obligations under the lease agreement.

Council failures in this respect included failure to monitor and undertake repairs, failure to ensure no subletting, failure to intervene in potential redevelopment not permitted under the lease, and the failure to ensure property was being used in line with conditions of the lease.

The review noted that in one case, a councillor was on the board of an organisation that failed to notify the council of proposed action by the organisation, which was detrimental to the council.

It found it "probable" that there were other examples where properties were not being used in line with the original lease and recommended the council complete a full review of its properties leased to the voluntary sector by July 2023.

Turning to the third area – valuations – the report found that, in some cases, the council's valuation briefs failed to "look outside the ordinary". This was particularly the case with valuations on a property purchased by the council named Alexandra House, the report stated.

The council initially declined an offer to purchase Alexandra House for £14.5 million before eventually buying the property for over £21 million a year later.

In the Alexandra House case, the valuation brief failed to consider that a potential buyer could acquire the site for conversion to housing using permitted development rights, which eventually happened.

The report recommended that valuation brief drafts should cover the entire range of potential options for the site, both in respect of sales and purchases.

It also noted that the council should review the cost and timescales involved in the use of Compulsory Purchase Order powers for sites so that members can take a rounded view on the cost-benefit of negotiating for a site versus the use of statutory powers.

Concerning the fourth area – stock condition surveys and asset management – the review found that the council failed to maintain an asset management strategy, and that the authority failed to undertake robust and accurate stock condition surveys.

"The absence of these were critical reasons as to why the decision was taken not to proceed with the potential purchase of Alexandra House when first offered," the report observed.

It added that while stock condition surveys might be seen as a "luxury rather than an essential" during difficult financial times, failure to carry out such surveys can lead to wrong investment decisions and additional costs in the future.

Finally, turning to the role of councillors in individual transactions, the report recommended that councils practice caution when being approached by residents or businesses concerning local matters which may involve land.

It noted that while council arrangements for decision-making are clearly set out in the constitution, the arrangements are less clear-cut when it comes to member interaction with members of the public or firms involved in either contract letting, land purchase or sale.

"[It] must be questionable, if a Councillor who also has decision making powers as a member of the Cabinet or by themselves to meet with individuals or firms without officers being present to discuss matters concerning land transactions or contracts," the report explained.

"Even if nothing untoward happens it potentially creates a question over the arrangement which greater transparency would avoid."

As a result, the review recommended that the council review guidance to councillors on this issue.

Adam Carey