Auditor criticises council for pounds 1m unlawful payments

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The Independent Online
A hundred former council officials who were given bonuses and enhanced pensions on retirement worth over pounds 1m will not be forced to repay them, even though the payments have been ruled unlawful.

In a highly critical report into the extra payments made by the London Borough of Redbridge, the district auditor, Janet Eilbeck, of Coopers and Lybrand, says that the council made unlawful payments of pounds 1,269,402 as a result of a scheme drawn up by its former chief executive, Geoff Price, who retired in 1993.

However, the council said yesterday that it was not going to attempt to recover any of the money apart from around pounds 230,000 paid to three senior officers - Mr Price; the former deputy chief executive, Maurice Tilley; and the former finance director, Stewart Fuller. The three had not upheld the normal standards expected of public servants, the report says.

The auditor investigated the possibility of Masonic influence. While 71 per cent of men who left the council on early retirement between 1989 and 1994 benefitted from the payments, only 7 per cent of women did so.

The auditor says the council must reclaim money paid to Mr Fuller and decide whether to take action against Mr Price and Mr Tilley. No money has been recovered so far.

Council leader Liz Pearce said that following investigation "of each individual case", the council had decided the extra payments had been accepted in good faith and the money would not be recovered.

The revelation comes at a time when pension payments made by public bodies, in particular local authorities, are coming under greater scrutiny because of the very generous terms available under early retirement schemes in many organisations. The large number of early retirements has placed severe burdens on some local authority schemes, heightened by the Chancellor's decision in the July Budget to remove tax breaks for dividends to pension funds. An Audit Commission inquiry into the wider issue is due to be published in November.

The Redbridge investigation followed an anonymous letter to the council suggesting that aspects of the "enhanced" pension scheme operated by Mr Price were unlawful. After the investigation by the council was launched in early 1994, the extra payments - which would have cost the council an estimated total of pounds 2.2m based on actuarial assessments of the pensioners' life expectancy - were stopped. Had the scheme run its course, Mr Price would have received an extra pounds 385,000 and Mr Tilley pounds 595,000.

The council must decided next month whether to institute surcharge proceedings against the officers concerned.

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