Croydon Council has appointed a firm to investigate possible fraud linked to Fairfield Halls and council-owned developer Brick by Brick. A damning report published by the council’s own auditors in February found there were “serious financial control and legal failings” in the refurbishment of the arts venue and that more than £60million went out to Brick by Brick without “properly executed written contracts”.
The project to refurbish Fairfield Halls an arts, entertainment and conference centre located in Croydon, was completed in 2019, went nearly £40 million over the original £30 million budget. At a council meeting on Wednesday (March 23) the council’s cabinet member for Croydon Renewal, Councillor Stuart King, revealed the authority has appointed Kroll to carry out a fraud investigation.
It came in response to a question from opposition councillor Robert Ward, who said he was aware of fraud concerns with both Brick by Brick and the Fairfield Halls project. He asked when the public is likely to hear results of a fraud probe.
Cllr King said: “I acknowledge that [Cllr Ward] was one of the early advocates of concerns about making sure the council had appropriate information management and retention policies and procedures in place. I think he would acknowledge that things have improved in that regard.
At a meeting in February, council leader Hamida Ali said she had passed on the Report in the Public Interest, relating to Fairfield Halls, to the Met Police borough commander, chief superintendent David Stringer. A spokesperson for the force said: “We are aware of the publicly available RIPI report in relation to Fairfield Halls – an allegation of fraud have been received and is being assessed.”
The report lays the blame squarely at a handful of senior council officers as well as former council leader Tony Newman, finance and resources cabinet member Simon Hall and member for homes and gateway services Alison Butler.
It also found the council’s then chief executive, Jo Negrini, Section 151 officers and monitoring officers failed to fulfil their statutory duties. All have since left the council.
Mr Newman and Mr Hall have since stepped down from their council positions and while Councillor Butler is still a councillor she is no longer a cabinet member.
Debt crisis
In November 2020 Croydon Council issued a section 114 notice due to the severe ongoing financial challenges facing the authority. Effectively putting a stop to non-essential spending will be stopped while an emergency budget is drawn up to find further savings in this and the coming years.
At the time council included a potential budget shortfall in the financial year of around £66m.
Last year the council was allowed to borrow £120m by the government, to help balance the books for the next two years.
The bailout is conditional on the council proving it can improve its finances and provide the government with regular progress.
In February this year budget report, published, set out how the council risks another de facto bankruptcy, recognised through the serving of a section 114 notice, due to an unresolved shortfall of £73m from allegedly botched property deals.