Long-standing deficiencies identified in Council’s governance and oversight arrangements in respect of a council owned waste company
Blaenau Gwent County Borough Council’s governance and oversight arrangements in respect of its own waste company, Silent Valley Waste Services Limited were inadequate and ineffective, according to a report issued today by the Auditor General for Wales.
The Council has, however, put in place improved arrangements to strengthen its governance and oversight arrangements in relation to Silent Valley.
All local authorities in Wales have a duty to ensure that public resources within their stewardship are safeguarded and that they have put in place proper arrangements to ensure that public money is well-spent. This duty applies not only to public resources used directly by local authorities, but extends to public resources used by companies owned and/or controlled by local authorities.
Silent Valley Waste Services Limited (Silent Valley) is a company owned and controlled by Blaenau Gwent County Borough Council.
Concerns were raised with the Auditor General regarding the relationship between the Council and Silent Valley, and the Auditor General decided to examine whether the Council had established effective governance and oversight arrangements in respect of Silent Valley.
The Auditor General’s report concludes that the Council failed to establish robust and effective arrangements in respect of its relationship with Silent Valley between 2003 and 2017. The audit identified a number of significant concerns regarding the adequacy of the Council’s arrangements and found that the Council failed to:
- correctly approve pay and pension arrangements in respect of Council officers appointed to the Silent Valley Board;
- comply with procurement regulations in respect of services provided by Silent Valley;
- ensure that Council appointments to the Board of Silent Valley complied with the Council’s constitution;
- establish proper governance and oversight arrangements in respect of Silent Valley from 2012 onwards to ensure accountability for the use of public resources;
- establish proper arrangements to manage potential conflicts of interest in respect of Council officers appointed to Silent Valley’s Board resulting in those officers being exposed to allegations that some of their actions were motivated by self-interest;
- ensure that decisions to make termination payments to Silent Valley directors were in accordance with the law and Silent Valley’s governing document; and
- put in place competitive and robust arrangements for the recruitment of Silent Valley’s new General Manager, (the Company’s most senior officer) in 2016.
Since the Auditor General’s audit commenced the Council has taken action to address the longstanding deficiencies in its governance and oversight arrangements in respect of Silent Valley. The Auditor General has therefore decided to only make one recommendation in this report – that the Council should commission a review to seek assurance that its governance and oversight arrangements in respect of other companies in which it has an interest are adequate and effective, and that the deficiencies identified in this report are not more widespread.
The saga covered by my report illustrates the serious consequences and damage to public trust that arise when local authorities fail to establish and apply proper governance arrangements in respect of their relationships with other organisations. The behaviours and failures that persisted over many years raise a serious question about the Council’s organisational culture during the period to which this report relate.
Under the leadership of its current Managing Director, the Council has taken firm action to address the deficiencies in its governance and oversight arrangements in respect of Silent Valley. In my view the Council needs also to satisfy itself that the culture that contributed to the deficiencies found by my audit no longer persists.
Other councils would do well to consider the issues raised in this report and ensure that their governance and oversight arrangements in respect of companies they own and control are fit for purpose.