Councils blamed by ‘out of date’ report for debts at fraud-hit unit

The report had been withheld and author Neil Newton accepts his investigation into the now defunct South Yorkshire Trading Standards Unit is out of date and his findings have been “overtaken by events” since first written in 2006.

But he concludes all four local authorities, who are still in talks about how the debt should be settled, bore responsibility for not identifying problems at the unit which was run by the four councils to provide the weights and measures services they have to provide.

While its general manager Mike Buckley transformed it into what appeared to be a world class business, offering highly specialised services to business customers and apparently making a profit, it emerged after his death in 2005, the unit in fact had debts of around £16m.

Buckley had managed to deceive his managers at Sheffield Council, auditors, trading standards officials at all four councils and councillors on a ‘joint committee’ which oversaw the unit’s work for around a decade.

Mr Newton concludes: “There is no doubt that Sheffield City Council must be held responsible, as the lead authority, for the financial and personnel management process issues, but the responsibilities for general manage direction could fall to the whole of the Joint Committee.”

When Buckley’s new boss at Sheffield Council was appointed in 1993, the TSU already had a reputation for success and he was warned by a council director that “Sheffield should not be seen ‘lording it’, there needed to be a neutral hand on the tiller. Buckley’s role was not to be usurped”.

As a result, Sheffield Council never applied strong leadership and even when one of Buckley’s colleague’s blew the whistle, his observations were dismissed as gossip.

The trading standard’s unit grew to the point where Buckley was buying equipment worth £2m in its final year of operations, yet despite its massive growth it was still operating from the same laboratories in Chapeltown, Sheffield.

Mr Newton questions the Joint Committee’s diligence and says: “I find it somewhat surprising that no one thought to question, either members or officers, just where all this money was coming from.

“Who were the thousands of local firms being helped, who were the most important customers, where were the vehicle movements that should have been generated?

“Why were so many (most) of the laboratories not in continual use? How could the same footprint of buildings sustain such a massive growth in turnover?”

Mr Newton describes the joint committee’s governance of the unit as “somewhat lamentable by modern standards”.

The report also identifies that Buckley’s unit was given “two very complimentary audit reports” in four years and states: “For those closely connected to the unit such glowing audit reports would have simply confirmed their already high opinion of Buckley and unit.”

In his conclusion, Mr Newton says Sheffield Council should bear more responsibility than most for the “high level governance failures” but says: “The brake on Buckley’s activities should have been applied jointly.”

Even when problems were identified with the finances, Buckley was able to talk his way out of trouble and the reality of the situation only emerged following his death from a heart attack.

A Sheffield Council spokesman said: “Whilst we accept the review and take note of the conclusions, this case is historical and practices and procedures have moved on considerably since then. Over the last six years, significant improvements have been made in management and governance practices including fraud prevention in local government generally.”

Publication of the Newton Report was held up while three businessmen who traded with Buckley were prosecuted for their involvement but they pleaded guilty in 2010 and the report was only released following a legal ruling which forced Sheffield Council to make it public.