Met drops probe into council's financial woes

A criminal investigation into alleged financial mismanagement at Croydon Council has been dropped, the Metropolitan Police has said.

The previous leadership’s handling of the finances were being investigated after the south London council was effectively forced to declare bankruptcy in 2020.

Mayor Jason Perry had referred two independent reports into what he called "catastrophic failures in governance" the police.

Officers determined that there was no evidence of false accounting, fraud or anything that amounted to misconduct in public office (MiPO) and instead pointed to “collective failings”.

Croydon Council issued a Section 114 notice – which halts all new expenditure – in 2020 over a £1.5bn debt and significant overspends.

The Penn Report and the Kroll Report were both commissioned to investigate the circumstances leading to its financial collapse.

The Penn Report focused on the culture and senior leadership of the organisation, while the Kroll Report was a forensic investigation specifically into the refurbishment of Fairfield Halls music venue.

Both identified significant failings that contributed to the financial crisis.

Perry said: "Our residents are rightly angry that they are paying the price for reckless and poor decision-making, and they tell us that they want those responsible, held to account.

"The council’s decision to refer the independent Penn and Kroll reports to the Met police was appropriate, justified and in the public interest."

He added that while they provided sufficient weight for the police to investigate, they did not meet the high evidential bar for a misconduct in public office charge against anyone in the former leadership.

A letter from the Met's special enquiry team to the council said police had determined the "actions and/or inactions" of the previous council executive did not meet the threshold for wilful neglect or misconduct, or abuse of the public's trust.

The police also said the millions of different documents meant any resulting investigation could take years.

Perry, a directly-elected Conservative mayor, said the situation was “not unique" to the borough and called for the government to give councils more powers to hold individuals in public office to account.

The reports will now be referred to the relevant professional bodies, such as the Chartered Institute of Public Finance and Accountancy (CIPFA), for regulatory accountability.

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