Wednesday 3 September 2024 – A Criminal Mastermind

If I was going to steal hundreds of thousands of pounds of public money, that’s how I would do it.  It’s so simple too.  Two guys in the same line of work meet; one a senior council officer with the authority to spend a council budget, and the other working for a registered housing association with the authority to spend public money to support his tenants.  Each of them wants to steal that money, but he can’t steal his own budget.  He’ll get caught.  So they swap budgets.  Criss-cross.

The council officer enters into an agreement with the housing association officer to fund him to deliver a service to his tenants.  But he doesn’t write down any conditions for this to which he can hold the other guy accountable for the service and the money because if the council can’t trust a registered housing association, who can it trust?  Without conditions, the housing association officer can say he tried to deliver the service but failed without having to pay back the money.  Instead, they split the money and go their separate ways.

But a council always needs a written contract when procuring a service provider for public money.  That’s public procurement law.  And contracts can’t have no conditions or it wouldn’t be a contract.  So, the two men need a willing but oblivious intermediary.  They need a third party that is both disinterested enough in the transaction to not care what it’s supposed to be for, as well as professionally bellicose with local authorities to think screwing over the public is part of the day job and not notice they are aiding grand larceny.

Who do local authorities and housing associations both work with that meets that description?  Homebuilders!  A property developer submits a planning application for building new homes.  The council officer writes a S106 planning contract with the obligation that the developer must make a financial contribution to the housing association to support its tenants.  What could be more natural?  Developers always have to make a financial contribution in return for planning permission, usually made to the local planning authority to pay for services to support tenants affected by the development.  What difference does it make to them that they are being instructed by the local authority in their S106 agreement to pay it directly to the housing association instead?  The council agreement is with the developer who has no interest in whether tenants are supported and simply enters into a contract with the housing association as instructed by the council.

Now the housing association officer is in receipt of unconditional money.  The council officer did not apply any conditions on the other guy’s receipt of public money because it didn’t go through the governance process of public procurement; it went through planning.  Criss-cross.  They split the money and abscond.  That’s how I would do it anyway.

Thanks for the nice words from Flann O’Brien above but my miseries of public service have not ended and I have popped up at Barnet Council, once again contending with the real-life frustration and anger from construction developers at being told what to do by a local authority combined with the naïve susceptibility and natural inclination of senior council officers to be corrupted: I am the new Economy and Skills S106 Officer.  My initial task was to go through all the developments in the borough and find out what happened to all the S106 contributions those developers were supposed to have made over the years, both financial and non-financial.  In one case, Poly Global, a property developer, had planning permission to build new homes in Mill Hill East in the centre of the London borough of Barnet.  They were private homes and nothing to do with any housing association, but I learned that, in 2011, The S106 contract obligated the developer to pay £300,000 to Notting Hill Trust, a housing association with housing stock in the borough, to create apprenticeships in construction.  I did find other historical references that the Trust had an employment & skills project in the construction sector called the Construction Training Initiative (CTI) but, other than references to it in old policy documents, I could find no agreement between the council and the Trust to say they were working together on it, or find any reference that any Barnet residents got an apprenticeship, or any job, through it.  There certainly wasn’t any record that the housing association had reported to the council any apprenticeships delivered as a result of this funding dictated by the council.  It’s as if the money had never been used.

So, I asked my new manager, the Head of Economy and Skills, whether I could invoice Poly Global for that unused £300k to get it back from them, or from Notting Hill Genesis (Notting Hill Trust having since merged with the American property developer, Genesis, to form NHG).  On Thursday last week I emailed him whether he had any background knowledge on the matter:

“Hi [Head of Service],

“I’m still trying to get my head round this financial obligation.  The S106 was agreed in 2011…

“[…]

“The S106… goes on to require [Poly Global] to make reasonable endeavours to pay £300k to NHG towards their Construction Training Initiative.  I can’t see this obligation on Exacom [the council’s internal Planning database] and whether or not they did may be lost to the mists of time…

“Should I ask [the Senior Financial Monitoring Officer in Planning] if she has a record of this payment being discharged and, if not (which might be a big “if”), to ask her to invoice for the £300,000?

“Paul.”

 

My new boss is much more responsive than my previous managers at Hammersmith & Fulham and he replied the same day, 

“Hi Paul,

“Yes, this really did get very complicated.  When [my predecessor S106 Officer] was still with us he and I were negotiating with NHG over funds received/taken for CTI but CTI hadn’t delivered.  After a long and protracted set of meetings, it was confirmed that NHG had taken the funds but that CTI had made best endeavours but failed to get proper engagement to enable apprenticeships to be offered…

“What made it very difficult was that NHG blamed the contractor [commissioned by NHG to build homes on their estate, nowhere near Mill Hill East and nothing to do with Poly Global’s development which, otherwise, had no obligations to employ Barnet residents into jobs on it] and the contractor blamed CTI (which is NHG).  Our old [policy document] under Affordable Housing used to require contractors to use CTI to deliver programmes but obviously this no longer exists.

“It was all quite a long time ago.  Actually, it wouldn’t be a bad idea to get [my predecessor’s] view on this, especially as he is now at NHG!

“[…]

“Kind regards,

“[Head of Service]”

 

My predecessor S106 Officer, who was central to agreeing Employment & Skills obligations in S106 agreements, who obligated a developer to pay £300,000 to NHG unconditionally, that had no bearing on the applicant’s development, now works for NHG?  Does nobody see a problem with that?  I replied, 

“The S106 agreement with Poly Global says they must make reasonable endeavours to enter into an agreement with NHG.  (I’m not a planner or lawyer obviously but, and without trying to understand the Descriptions [and amounts of payments included in his last email to me] of what was the basis for paying in phases that didn’t add up to £300k) I would guess that the owner would say they made reasonable endeavours that resulted in £230,350.22 being paid from £300,000.  I can ask [the Senior Financial Monitoring Officer], but I’m guessing, based in this, Planning will say the S106 obligation has been satisfied and we have no more recourse to chase Poly Global.

“That, then, leaves the agreement between the council and NHG which is not a S106 contract which, arguably, NHG didn’t satisfy…  Could I see that agreement before I ask [my predecessor S106 Officer now working for NHG] about it?”

 

He replied,

“I think your surmising is correct.  From memory, in the end NHG refused to engage further in the conversation with us as they said that their agreement was between them and the developer and the developer wouldn’t discuss with us as they said their arrangement was with NHG, not the council.  Stalemate...  It’s all from my memory, which isn’t great.  It really might be worth going through the most recent emails I have, you speaking to [the Senior Financial Monitoring Officer], getting hold of the agreement with NHG (which I don’t have) and also a quick chat with [my predecessor].

“I’ll be honest that I think it will be very limited what you can do at this stage retrospectively (which is what we were trying to do before)…”

 

I want to tell him, that’s not stalemate.  Stalemate is when there is no winner and there are no more moves that either antagonist can make.  Clearly NHG has won here and given that they have created a Catch-22 situation to capture the council’s King in a pincer move, that makes it checkmate.  We lose.  In fact, we lost £300,000 and NHG won £230,350.22.  But maybe he’s not a chess player and doesn’t understand the idiom.  Not knowing where I might get hold of such an agreement on Employment & Skills if the Head of Service responsible for Employment & Skills doesn’t have it and, therefore, assuming there isn’t one, I replied,

“I take it from this that the council entered into a trust agreement with Notting Hill Trust who the council couldn’t trust and they just kept the money and refused to enter into a conversation with the council about what they did with it.  I suppose it’s too late to ask whichever officer at the council made this agreement with Notting Hill back in 2011 to intervene?

“I’ll ask [my predecessor at NHG] for the agreement but I doubt, too, he will act in good faith in any way.

“I’ll ask [the Senior Financial Monitoring Officer] about it too but I’m sure she will either say it has been discharged (the properties are basically all sold and the developer will have no more interest in the development beyond that) or will be objective and say that we will need to make a case for saying that it isn’t satisfied, and I think we wouldn’t be able to do that; NHG has the money which the developer gave them as they were bound to in the S106 contract.”

 

He replied but I don’t think he answered my question:

“OK thanks Paul...  Don’t spend a lot of time on this as it has already taken up 100s of man hours of council staff trying to pick the bones out of it, to no avail.  Whatever is finally agreed and decided, please can you ensure that this is documented somewhere for future enquirers?”

 

So, who agreed a policy of directing public money bound for the council to deliver services to our residents as is our authority and statutory duty, to an external organisation that has delivered no services, not just with this £300k, but ever as far as I can discern.  And how did no-one pick up on that my predecessor, a lowly principal officer, not a senior manager, obligated this payment to NHG unconditionally, knowing that the CTI had never historically delivered anything?  And did anyone other than me express unease that he then went to work for them?  My boss didn’t answer my question, can we ask the senior manager at the council who made this policy decision to intervene?  I suppose he didn’t because that senior manager probably doesn’t work for the council anymore given the way these chums offer each other higher and higher directorates across London boroughs and housing associations in return for who-knows-what except, perhaps, what we’re witnessing here.

He may be right not to want to pursue this matter.  After all, it may have been an innocent policy decision to use what that senior manager understood to be a not-for-profit project to help residents get jobs delivered by, on the face of it, a reputable community organisation.  If, however, it was innocent, then it demonstrates a level of naivety for which you would admonish a school-leaver.  Page one of being a council officer is that we are responsible for delivering services to residents and accounting for the money we commission providers to deliver.  That means, at the absolute minimum, writing down what he or she agreed with what is now NHG.  But Planning doesn’t have any agreement.  And the Economy and Skills Team doesn’t have it.  There clearly never was one.

If, however, NHG could be trusted, then why not report to us what they did with the money rather than tell my manager that he has no legal recourse to ask them what they have done with it no less ask for it back.  They can’t be, and clearly shouldn’t ever have been trusted.

So why did the decision-maker at the council trust them, so much so that they didn’t see fit to write down the conditions for directing the public money to them, at least to tell the council what they did with the money?  It seems obvious why to me because, if I was going to steal money from the council and then leave, this is how I would do it: enter into an agreement with another gangster at an organisation that it might be slightly credible to whom to make payment, channel it through an unsuspecting, disaffected, uninterested-in-the-social-good, dependent-on-the-council-for-its-attention-and-co-operation-for-planning-permission third party, split the money and run.  So why is the possibility of this being a criminal enterprise not being entertained by my manager since, not only is it possible and otherwise we don’t know why this decision was made, it seems to me the most logical reason?  Is my manager so enamoured by sucking up to higher management because that is how you progress in a career as opposed to doing a good job?  Does the council have no recourse to scrutiny and investigation of fraud?  And, if that officer is found to have committed a major crime, are they beyond our reach just because they have left the council’s employ?  That can’t be right can it?  I will ask my manager about this again, but I will have to be diplomatic because I am still in probation and I am conditioned by the culture in public service to think about my own career before that of the services we deliver.

Throw Mamma From the Train (1987): Was Owen a criminal mastermind or an innocent idiot with a Hitchcockian plot fixation?