Northamptonshire County Council spent huge sums on corporate hospitality, string quartets and lavish events as it was heading towards its financial crisis.
During 2015 when the state of the finances was becoming increasingly serious, the authority paid for a number of luxuries including £2,700 on a heritage dinner at Rushton Hall, £3,624 on a flypast at the Grafton Underwood memorial event and £4,500 on a marquee for an occasion at Boughton House, Kettering.
It also spent £80,000 with Northampton Saints rugby club, which included the cost of a stadium hospitality box.
The payments were made through NCC-owned company NEA Properties, which an internal council investigation has found had ‘minimal’ governance and documentation.
The extravagances were funded from the proceeds of a sale in September 2014 of a number of units in Boughton Green Road, Northampton, to tenants The University of Northampton.
The sale had been approved that same month by the authority’s cabinet.
A total of £700,000 of the £820,000 sale value went back into county council funds and the remainder stayed with NEA properties, some of which was spent on luxury hospitality.
The limited company, which was first incorporated in 1983 under the name Northamptonshire Enterprise Agency, came under scrutiny in January 2017 after UKIP county councillor Michael Brown blew the whistle over concerns about the expenditure of the company.
The councillor, who lost his seat in May last year and is an independent financial advisor, said: “At the outset as a public organisation they were keeping secret the accounts of a limited company it owns under the small companies exception.
“This should not happen as it leaves itself open to abuse of public funds.
“I would want the breakdown of the expenditure over the years it indicates that these ‘funds’ were a bank account for the ruling party to spend how and where they wish.
“Unbelievable in this day and age.”
A resulting internal audit carried out by the council’s shared service provider LGSS in December last year gave a limited assurance rating.
The report was marked as confidential and circulated to the council’s interim finance director Damon Lawrenson and monitoring officer Susan Zeiss as well as the then chairman of the audit committee David Watson.
It said: “As a wholly owned company of NCC, NEA Ltd is not exempt from the public sector transparency requirements nor the need to ensure NCC interests are properly protected.
“Directors’ declarations of interests were not evident and the declarations of hospitality maintained by NCC for those two directors did not list roles / events arising from NEA functions.”
The report found: “There is no evidence of improper spend or improper management of the company but in the absence of various records only limited assurance can be provided.”
Former NCC cabinet members Andre Gonzalez de Savage and Bill Parker were directors of NEA properties. Both have been contacted for a response. The audit suggested that the among several areas of learning, whether councillors can perform dual roles should be assessed. It said: “The potential conflict between a Cllr or officer performing dual roles eg the Cllr / officer role and Company Director role should be assessed and documented for every role and overseen by the Council’s Monitoring officer.”
It also noted that the ‘value/appropriateness of spend was not within the scope of the review’.
Spending detail contained in the report included a £22,690 payment to Northampton Theatres Trust; £30,754 for local sports clubs, £5,500 on the Rockingham Horse Trials at Rockingham Castle and £600 spent with the Campaign to Protect Rural England for a charity ball.
An £80,000 payment to Northampton Saints was listed in the audit report as for ‘development of the new stand’.
Northampton Saints rugby club has said this is incorrect and “the club can confirm that the county council had a box as part of a marketing package which they purchased”.
It said the payment ‘had nothing to do with the development of the Barwell stand’.
A total of £236 was also spent on a framed and engraved print as a leaving present for former leader Cllr Jim Harker.
Cllr Harker announced his retirement in January 2016, three months after receiving a damning letter from then chief finance officer Matt Bowmer that said the finances were in a serious crisis and he and other senior Conservative councillors were not addressing the issue and needed to take direct action. The authority was continually raiding its reserves to pay for services, which led to the situation this April where it ran out of funds and emergency spending controls were put in place.
County councillors from the opposition parties have expressed their extreme concern about the spending that was not put before any council committees or under any scrutiny.
Liberal Democrat Cllr Chris Stanbra, who represents the Oakley ward in Corby, said: “There is some serious explaining that needs to be done here.
“I knew the company existed but I made the assumption that it was managing the resources properly and that all funds were coming back to the county council.
“I certainly didn’t think they were spending money on hospitality boxes and on fly pasts at Grafton Underwood.
“The money should not have spent on these things and of course I expect that minutes of the company meetings would have been taken and properly documented.
“It is public money at the end of the day and it is completely wrong.”
Labour member Gareth Eales, who represents the Dallington Spencer ward, said: “There needs to be a full and thorough investigation to get to the bottom of this.
“This is money that should have been used to provide services to the people of Northamptonshire and no-one had authority to spend it on these things.”
A spokesman for the council said: “An audit committee report in November 16, 2017, reviewed concerns about NEA Properties Ltd, a wholly owned county council company.
“The governance of the company was reviewed including its finances. The conclusion was that while only limited assurance could be provided over the governance of the company, the organisational impact was minor.
“The report also found that expenditure and financial transactions were transparent.
“However, the committee did draw up a number of recommendations and work on addressing these will be done as soon as possible.
“A resolution to dissolve NEA Properties Ltd was signed by the company directors on September 12, 2017.”
Joint story by BBC journalist Matt Precey and Sarah Ward as part of the Local Democracy Reporting Service