Council investigation uncovers evidence of ‘highly irregular’ loan discussions

Evidence implicates former senior management at a county council in offering a “highly irregular” multi-million pound loan to a developer seeking planning permission for a new garden community, a whistleblowing investigation has found.

A report to Northumberland County Council’s audit committee this week said an independent investigation has concluded that a number of decisions and conduct in relation to the application for the 2,000 home Dissington Garden Village were “not transparent or appropriate”.

3rd LATIF NORTH
March 25th, 2020, Manchester
Council treasury investment & borrowing

The report said that investigators had discovered evidence that discussions had reached an advanced stage over a proposed loan from the council to the applicant before the application was withdrawn last January.

The proposed loan, for which heads of terms were obtained by the investigation, offered the developer an initial £34m from the council to fund the development, with further funding of 55% of the site value “once outline planning permission was granted”, the report said.

The report said the “site value” was not clear but “the planning applicant has indicated that the site was forecast to “have a gross development value of c.£772m”.

This week’s committee report, authored by the authority’s chief executive Daljit Lally, said: “It would be highly irregular for any local authority to enter into a funding arrangement such as this with any planning applicant.

“That Northumberland County Council appears to have been offering such substantial funding to a planning applicant – and that the authority is the strategic planning authority which would determine the planning application in question – may well raise valid questions as to the impartiality and objectivity with which the application would be determined.

“In terms of financial governance, the values concerned in turn were likely to represent a serious financial risk to public finances.”

Correspondence relating to the loan was conducted by a former chief officer of the county council, on a personal email account rather than the officer’s county council email account, according to Lally’s report.

“It is now clear that senior officers within the Planning department were similarly using personal email accounts to transact county council business in respect of this same planning application,” the report said.

According to Lally’s report, the investigation also found evidence that a very senior planning officer accepted substantial hospitality, “including first class rail travel, hotel accommodation and fine dining in a private room of a London restaurant owned by a Michelin starred chef” from the planning applicant / their agents.

Lally’s report also said: “There is evidence that the applicant and / or their advisers in the specific planning application were invited / allowed by a very senior officer in the planning department to write and alter parts of the planning officers’ report to the strategic planning committee.

This raised a “serious concern of undue influence / conflict of interest on the part of the planning applicant,” the report said.

A statement from the council said: “It is only right and proper that when significant matters of concern are brought to our attention, that we investigate these fully, and report and act on the findings.

“These related specifically to the professional conduct and inappropriate behaviour surrounding a significant planning application, which was subsequently withdrawn.”

“To confirm, the employees referred to in this report are no longer employed by the council.”

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