Independent auditors raised concerns over the handling of the chief executive’s departure.
They say £24,884 of her payout was labelled as a redundancy payment, which the council says it had to make by law but auditors have questioned.
A further £65,000 of the settlement was an ex gratia payment – effectively a gift.
Auditors also said councillors deciding to award the £400,000 payout to former chief executive Mary Weastell did not have all the information needed to make an informed decision. And safeguards to stop conflicts of interest were not in place.
Councillors quizzed the auditors about their findings at a meeting, which at times became bad tempered as opposition Labour councillors argued with the ruling Lib Dem party councillors over the controversial payout.
Council finance boss Debbie Mitchell apologised to the meeting for a statement made in a press release after the payout was awarded: “I’ll take this opportunity to just reflect and apologise actually to members of the committee.
“The statement that was made by me at the time of the chief executive’s departure was lacking clarity. It was what I understood to be accurate at the time, although I do accept that the council was lawfully exercising its discretion and therefore the statement shouldn’t have read that all the payments were strictly contractual. It wasn’t my intention to be misleading.
“If any of us looked back at something we said or did over 12 months ago we could absolutely improve on that and certainly I would have dealt with things differently.
“I absolutely recognise that we should have done it differently and certainly I would make sure that those statements were clear – that elements of the severance agreement were [agreed by] exercising the council’s discretion.”
Janie Berry, the council’s director of governance, had only been at the council for seven weeks when a secret meeting took place to agree the former chief executive’s bumper payout.
She said: “I’d just like to echo the sentiments made by Debbie as well. I think hindsight is an amazing thing and on reflection I’m sure that both of us would do things an awful lot differently now.”
Lib Dem council leader Keith Aspden chaired the secret meeting at which the payout was agreed for Ms Weastell and did not declare a personal interest – despite it later emerging that Ms Weastell had lodged an employment tribunal against him.
Ms Berry said while she can advise councillors whether they have an interest they need to declare at a meeting, it is legally up to the councillor themselves to decide if they have a conflict of interest.
A Freedom of Information request to the council says the leader of the council did seek advice and was referred to the code of conduct, which says: “If you have a personal interest and a member of the public with knowledge of the relevant facts would reasonably regard it as so significant that it would be likely to prejudice your judgement of the public interest then you have a prejudicial interest.”
Ms Berry also apologised for the business case on the £400,000 payout, which auditors said did not include all the information councillors needed to make a decision, adding that the procedure has now been updated.
Independent auditors Mazars issued a draft audit but found “significant issues” with the handling of the chief executive’s departure. They are carrying out further investigations into the issue – including speaking to council officers, the council leader and independent advisors – and will then publish a detailed report on the matter.
Lib Dem councillor Andrew Hollyer asked if it was appropriate to publish concerns about the payout before the investigations were complete. He said: “We’ve got a commentary which is almost a summary of another investigation or report. Have you any concerns, I suppose, about putting a commentary out there when the investigation that backs that up is not yet complete?”
He said it had led to “speculation and insinuation”.
Mark Kirkham from Mazars said: “Where we identify areas where we aren’t satisfied, we do need to report those in as efficient a way as possible to those charged with governance. And that’s what this report does.”
Lib Dem councillor Tony Fisher said: “At no point in this report does it mention the leader of the council. Is it appropriate to be discussing this, with specifics towards the leader of the council? I thought we were dealing with the actual procedures of the council here.”
But he was told that the independent auditors should be allowed to answer questions about their findings as they see fit.
Mr Kirkham said auditors are “not satisfied that they have seen sufficient evidence of proper arrangements in place” and will be issuing a further report on the handling of the chief executive’s departure.
Ms Mitchell said an action plan will be put in place as a result of the next report, adding: “The next report that you get will potentially have some implications.”