Newham LBC is set to establish a wide-ranging commission to review its financial controls after mayor Rokhsana Fiaz hit out at a “culture of system weakness” at the council.
An extraordinary meeting of full council next Tuesday will consider a proposal to launch a ‘internal control commission’ led by an independent chair which will examine evidence of financial malpractice within Newham’s repairs and maintenance service (RMS).
Ms Fiaz, who was elected mayor in May 2018, last month said she was shocked to be informed of “astonishing failures of system controls” within the RMS in March last year when, as a councillor, she was a member of the council’s audit board. The information was not made public at the time due to ongoing investigations.
She criticised her predecessor Sir Robin Wales’ administration for failing to inform the board of concerns raised by whistleblowers about the RMS in 2017.
Details emerged last year after the findings of an audit report were leaked to the local press.
The proposed commission will examine why the council failed to prevent the RMS malpractice happening in the first place and how it can become “a model for internal control and governance”.
A report to be considered by the extraordinary meeting says investigations into the RMS resulted in the dismissal of four members of staff, including two senior managers, and final written warnings being issued to five other staff members.
An £8.78m overall council overspend in 2017-18 under the previous administration will also be considered. This, the council says, was caused by “the loss of control” of the ‘Keep Newham Moving’ highways repair programme, which was approved in 2016.
The report adds that “insufficient due diligence and risk assessment” was undertaken into the capacity of the RMS to take on the programme.
The council said while investigations by external auditors found insufficient evidence of criminal activity following allegations of fraud within the RMS, any new evidence would be investigated.
In a statement yesterday, Ms Fiaz confirmed she has held discussions with Newham police borough commander Richard Tucker about the RMS.
She added: “This proposal [for a commission] aligns with my administration’s commitment to transparency, and improving the governance of the council in the interests of all Newham residents.
“We are putting things right. We have been proactive in resolving the financial mismanagement in RMS and taking clear action.
“I have instructed the new management team at RMS to implement a whole series of measures designed to offer reassurance on the effectiveness, governance, and efficiency of management, performance and compliance.”
Last month Ms Fiaz said there would be further inquiries by Newham’s audit board and scrutiny committee into the councils “flawed” £40m investment in the London Stadium, which is now occupied by West Ham United football club.
“What is clear is this: there is a culture of system weaknesses and my administration is getting to grips with it,” she added.
Newham announced in November that Katherine Kerswell, brought in by Ms Fiaz as interim chief executive last August, would have her contract extended by an additional six months.