Labour Councillors Suspended Over 'Dodgy Deals' That Led To Council's Bankruptcy

The cabinet member for finance and the former leader of Croydon Council have been suspended pending an investigation, following complaints of 'bullying behaviour', 'money mismanagement', and what insiders suggest could mount to 'illegal activity'.

Councillors Tony Newman and Simon Hall were in charge of the troubled council in the lead up to its shocking financial collapse – even chucking £100m of the cash-strapped council's money into a posh hotel.

Both stood down from their positions at the end of 2020 but remain as councillors, yet this week were suspended by the Labour Party in relation to an independent investigation by the Local Government Association in relation to financial mismanagement at the council.

Last week four senior members of staff at the council were also suspended in relation to the same damning report into 'dodgy dealings'.

The report has now been completed but is not expected to be made public until investigations into members of staff and councillors have concluded.

The report found that "Council Officials were instructed by members of Newman's cabinet to rewrite some of their reports, in effect to disguise the council's mounting financial problems".

The council was forced to declare effective bankruptcy in November and is set to make significant cuts to services over the coming months and years as it faces a budget black hole of more than £60m.

The report's author, Chris Wood, wrote "It is clear that in recent history Croydon Council has failed to manage its finances adequately in many areas. It is a council that is said to be unfamiliar with taking and implementing difficult financial decisions and as a consequence it has engendered a culture of poor budget management and poor financial control."

Another source said "It will be said that there has been significant incompetence, mismanagement, failures of diligence and poor governance. But as to unlawfulness, there is mere suspicion. The possibility that the suspicion is justified remains, as is often the case with suspicion, but unlawfulness has not yet been evidenced."

Last month, Newman and Hall were placed on 'Administrative Suspension' by the Labour Party, pending an investigation, apparently as a result of their both being named in a report on 'possible wrong-doing' written by Richard Penn, of the Local Government Association. Penn’s report, which is 140 pages long, was delivered to the Council's Interim Chief Exec, Katherine Kerswell, nearly three months ago, but has not yet been released.

Parts of the report that have been leaked so far found that "Council Officials were instructed by members of Newman's cabinet to rewrite some of their reports, in effect to disguise the council's mounting financial problems".

The Council was forced to declare Effective Bankruptcy in November and is set to make significant cuts to services over the coming months and years as it faces a budget black hole of more than £60m.