Yesterday, Audit Wales published their long-awaited report into fraud and financial mismanagement at Maesteg Town Council (pdf).
The council’s former Clerk, Margaret Buckley, was recently sentenced to two years and four months imprisonment for defrauding the council of more than £238,000 over several years.
A similar case at Llangynwyd Middle and Ynysawdre community councils hasn’t resulted in a criminal prosecution.
Background
Margaret Buckley was employed as a Deputy Clerk to Maesteg Town Council in 1997 before being promoted to Clerk in 2016 – a post she held until January 2020 (a few months before news emerged of the fraud).
As Clerk, Mrs Buckley was the Responsible Financial Officer (RFO) and dealt with the day-to-day management of council funds. However, overall responsibility for managing the council’s finances rests with the council as a whole (known as being a “corporate body”).
Financial issues at the council were flagged up when Buckley “failed to provide sufficient supporting evidence” for investigations focused on the 2017-18 accounts. This investigation later expanded after a report was published by the council’s internal auditor, Wyn Davies, in July 2020.
How much was lost?
The fraud by Mrs Buckley – between the 2015-16 and 2019-20 financial years – amounted to £238,821. Maesteg Town Council has since recovered £234,590 from insurers.
As has already been reported elsewhere in the press, a sizable proportion of this went to Our Lady & St Patrick’s Catholic Church directly (£18,866) with the main “beneficiary” being a charitable flower group linked to the church (£134,895).
Mrs Buckley kept £80,595 for herself and also gave £3,850 to family members. The smallest item on the list was a payment of £615 to a community group supplier.
Mrs Buckley said none of these groups had any knowledge of where the money had come from or any involvement.
The amount defrauded ranged from 8% to 26.6% of the council’s non-pay-related annual income for each year she was in post as Clerk. Due to a lack of records, other fraudulent payments could have been made before 2015 as Mrs Buckley was involved in the day-to-day management of the council’s finances whilst Deputy Clerk.
The Council’s Governance Failures
While the main responsibility for the fraud lies with Margaret Buckley herself:
“….all councillors who served while she was in post as Clerk bear a degree of responsibility for allowing an environment that Mrs Buckley was able to exploit.”
The fraud was made easier by “members failing to properly scrutinise the financial information” Mrs Buckley presented to the council, as well as a failure to properly convene meetings of the town council’s Finance Committee. For example, there was only one Finance Committee meeting held in 2018-19 and meetings were often cancelled and never reconvened.
While it’s reported some councillors raised concerns about the poor level of financial information provided by the Clerk, fraudulent accounts were nevertheless approved. These approvals were noted in the council’s minutes – notably in 2015-16 and 2017-18.
More damningly, councillors with signatory powers often signed “blank cheques”; signatories were often shown invoices but these details never matched what was put on the cheques themselves. Councillors didn’t question what the money was being spent on.
Maesteg Town Council failed to comply with its audit deadlines at least twice. Delays were blamed on “IT problems” and temporary agency cover but the 2016-17 and 2017-18 accounts were submitted 18 months late.
To make matters worse, Audit Wales found more general issues concerning accurate record-keeping, employment contracts, records relating to employee pay and tax (apparently there’s been an underpayment of tax to HMRC) and pension fund contribution errors.
The council has also failed to properly recover at least £68,700 in VAT; if years before 2017-18 are included it’s likely the lost sum will be significantly higher.
Elected members “could have hindered criminal investigation”; need to accept collective responsibility
Around the time the news broke, some elected members were said to be:
“….putting information into the public domain at a time that could have adversely affected the criminal investigation. I consider that, in this respect, the actions of these members fell far short of the standard that should be expected of elected representatives.”
Details of the insurance settlement were suspected to have leaked by an unnamed elected member to a third party on social media in November 2021 when it should have been confidential. This would count as a Code of Conduct breach.
More damningly, auditors pick out statements issued by the Llynfi Labour Party by name – which presumably includes a joint statement by Ogmore constituency representatives, Chris Elmore MP and Huw Irranca-Davies MS – when the internal audit report was published in 2020 (below). The statements included comments pointing fingers exclusively at the Llynfi Independent group and calling for resignations when everyone who’s been a Maesteg town councillor between 2015-2020 bears joint responsibility for this.
“At this point in time, the police investigation was in its early stages. It was therefore wholly inappropriate for members to have published information concerning the investigation and to have publicly commented on it.”
Luckily, in the end it didn’t have much of an impact on the police investigation.
Maesteg Town Council will now need to hold an extraordinary meeting within one month of the report’s publication to discuss it.
