Investigators have been unable to determine whether almost £1m of expenses claimed by board members and senior managers - including former chief executive Sir Gary Verity - at tourism agency Welcome to Yorkshire were “reasonable and proportionate” because of a lack of clear spending policies.
Parallel inquiries into expense claims and bullying allegations at the tourism agency, ordered in the wake of Sir Gary’s resignation on health grounds in March, have been published this afternoon.
An investigation by forensic accountants BDO examined £900,000 worth of claims by senior managers and board members over the past six years and identified around £26,000 of claims that it considered to be ‘personal’ expenses that were “not incurred wholly for the benefit of WtY”.
The report does not make clear how much, if any, of these ‘personal’ claims related to Sir Gary or any other party but said "some" of the money has been repaid.
It said there were other claims that may have had a “both a business and personal element” but it had been unable to conclude precisely how many such claims there had been due to a lack of documentary evidence from WTY as well as “the lack of a clear and unambigious entertainment policy”.
The report said: “We are not in a position to conclude whether the majority of material expenses were reasonable and proportionate.
“This is because WTY did not have specific guidelines or policies to govern entertainment expenses. It is a commercial matter for WTY to conclude on whether the amounts claimed can be justified by the level of income that was generated for WTY and/or the contribution to the growth of the wider economy in the Yorkshire region.”
The tourism agency is a private company but receives millions of pounds of funding from the public sector, largely via local councils.
The BDO report focused on the three years between 2017 and 2019 after seeing a “significant increase” in the value of expenses being claimed compared to previous years.
Three company credit cards, in operation with a spending limit of £8,000, were paid each month in full by Welcome to Yorkshire by direct debit.Investigators found “an increasing number of missing receipts, specifically for credit card expense claims”, with a “large proportion of credit card transactions in the latter period of our review not being accompanied by receipts”.
There was evidence of expense claims outside of policy limits - mainly relating to hotels, food and beverages, while there was “an increase in the use of luxurious hotels and fine-dining restaurants during the most recent periods we examined”.
There were also concerns that expenses had not been properly checked and challenged.
West Yorkshire Police is currently considering the findings of the expenses report.
A summary by the tourism agency said while the majority of staff at Welcome to Yorkshire adhered to the company’s expenses policy, “the checks and balances around that policy at CEO and senior management team level failed”.
The company’s expenses policy is to be updated next month with the introduction of a ‘business justification’ system alongside a new entertainment policy including ‘appropriate levels of networking costs for different stakeholder groups’. Future expenses claims of over £250 by senior managers and board members will now be published on the Welcome to Yorkshire website.
Credit card use has been reduced while a ‘missing receipt declaration’ form is to be introduced from next month.
Widespread changes are to be made to the board by next April, with future board members serving a maximum of two years in post and a new open recruitment policy launched with the positions advertised publicly. Initial efforts to recruit a new chief executive are under way, with a recruitment campaign beginning in September.
A parallel investigation into the management culture at Welcome to Yorkshire - launched following bullying allegations against Sir Gary - found employees “have felt let down by a lack of support and human resource policies and procedures within the organisation”.
Fifty-five people gave evidence to the investigation conducted by Clarion, with more than 80 per cent discussing “cultural” problems at the organisation.
It found that Sir Gary Verity had “fallen short” of the highest performance and leadership standards that would be reasonably expected of a chief executive.
But the report also claimed that some of the behavioural issues could be attributed to the pressures that had been facing the organisation in recent years.
“It is evident that in recent years WTY and the team have had to navigate through challenging circumstances, including funding limitations and a rare combination of different stakeholder interests and pressures,” the report concluded.
“This has unfortunately impacted on the culture and behaviour of people. There has been a shortfall against the high standards that could reasonably be expected, including in the case of Sir Gary Verity, as he accepted.”
A new whistle-blowing policy is being written, along with new HR policies and procedures.
Keith Stewart, interim chairman of Welcome to Yorkshire, said: “Welcome to Yorkshire accepts and welcomes the findings and recommendations of these two independent investigations.
“As the interim chairman of Welcome to Yorkshire, I would like to take this opportunity to apologise on behalf of the organisation to those who have been affected by actions and mistakes made. Where we have let people down, we are truly sorry.
“Clearly both reports have identified a number of areas which require improvement and instances where the leadership of the organisation has fallen short of the high standards not only we, but our brilliant team, members, funding partners and stakeholders expect. We have taken immediate steps to remedy this.
“One of the critical findings from both reports was that whilst Welcome to Yorkshire had processes in place around expenses and HR, unfortunately these weren’t always followed properly or implemented in the most appropriate way and there was a lack of oversight at the most senior level. We have undertaken a number of improvements in these areas and have committed to continue to do so.
“In addition, the report into culture, governance procedures and management of the organisation found that behavioural concerns were not always addressed, and that our culture was not always open or focused on employee wellbeing, development or engagement.
“We have introduced a number of new measures, including employing a head of HR, to improve this. The report into expenses identified some which it felt were for personal rather than for business uses. These have all been repaid. We have prioritised a recommendation for changes to our board, including a full audit and refresh of its membership by April 2020.
“I would like to thank all those past and present employees and third parties who came forward to share confidentially their experiences and views of the organisation and leadership team.
“We know it has been an incredibly difficult period for everyone involved, particularly our amazing team, who continue to deliver the vital work that Welcome to Yorkshire does on a daily basis.
“One of the key commitments we have made is to provide counselling for any team members who require this level of support. If any former staff who took part in the investigations feel they require further support this can be arranged by contacting us.
“We appreciate the time and consideration those interviewed have taken to contribute to rebuilding Welcome to Yorkshire and how highly the organisation is valued for everything it achieves for this county.
“We value their honesty into our failings. We also appreciate the desire on the part of all our stakeholders for the organisation to thrive long into the future.”
This developing story will be updated throughout the afternoon.