When is a wifi investment not an investment?

We have been told repeatedly by Mr Bluh that Swindon Borough Council’s decision to give Digital City a loan of almost £½M of our money was an ‘investment decision’. Indeed, the powers under which the decision was made with the involvement of most of the council’s cabinet were delegated powers for investment decisions. So it is rather surprising that the council has recently provided the following response to a Freedom of Information request.

Council officers were not asked to investigate possible investment into Digital City (UK) Limited. Officers were only asked to consider the provision of a loan.

So if in the council’s now stated view this was not an investment, how legally could the decision to make the loan have been made under delegated powers applying only to investment decisions?

Hungover — the evening after the election night before

Having succumbed to the need for sleep just half an hour before the first Swindon election result came through, it was refreshing to wake up to blue parliamentary representation, but a disappointment that in the local council elections the administration had not been punished for the way it has frivolously wasted our money on vanity projects whilst having to makes cuts to other more important services, such as street cleaning. The local election results are, of course, not typical. In an average year turnout is never much more than 30%. Being at the same time as a general election bolstered that to over 60%. Despite that, the overall outcome, in terms of candidates elected, was almost unchanged from the last time these candidates stood.

From the Swindon general election results, it was apparent that local presence helped: Mr Tomlinson converted a notional red majority of 2,675 into one for him of 7,060 — a swing of over 10% — whereas Mr Buckland managed only a majority of 3,544 where before Ms Snelgrove had a notional majority of only 1,493 — a swing of ‘only’ 5.5%.

Our new MPs now need to prove themselves and their commitment to put constituents before party. Some of us have unfinished business with Swindon Borough Council for which their support is expected.

Positively negative

Positively negative. Click for larger image.Whilst he’s not the first ever politician to suffer from this ailment, it’s disappointing that Mr Buckland — who claims not to be a career politician — in his latest leaflet struggles to distinguish positive campaigning from the negative.

Other parties in this campaign have spent a lot of time knocking their opponents. I am not interested in that. Our campaign has been positive and is all about what we want to achieve for our future.

So just what is positive about implying that the current incumbent in South Swindon is ‘tainted’?

I represent a fresh start for South Swindon, untainted by the discredited politics of the recent past.

I’m also sure that he’s well aware of Ms Snelgrove’s reputation for being the government’s representative in South Swindon when he makes a final plea.

Please give me the chance to serve as your new MP, who will be your representative at Westminster, not Westminster’s representative in South Swindon.

Mr Buckland may not yet be a career politician, but he’s clearly more than content to use the ‘skills’ from his barrister career to practice the politicians’ black art of spin.

Mixing things up: local elections round 6

I’ve been rather inundated by election leaflets today. One came this evening from Mr Buckland, claiming that he called, though it clearly wasn’t him — he was doing t’other side of the street. This morning it was the turn of the reds, one leaflet for Ms Snelgrove making many claims for how she’d like to spend our money, but nothing about how to bring down the crippling government debt her party has left us with; and another leaflet for Mr Wright.

Vote twice! Click for larger image.I’m not sure whose campaign Mr Wright is fighting, his own or Ms Snelgrove. Almost half of the text is devoted to what Mr Cameron would do in government — a vote for Mr Wright could have no effect on that. And surely if, as Mr Wright believes, the blue-run Swindon Borough Council has wasted our money, surely we should delighted if, as Mr Wright believes, Mr Cameron is proposing they should have less of our money to waste?

I like my local politicians to stick to local issues, and a councillor such as Mr Wright advising me on who to vote for in a general election is no more welcome than the pointless yah-boo motions criticising national government pushed through Swindon Borough Council by the local blues.

Changed opinions: local elections 2010 round 5

Smiling isn’t Mr Leakey’s strong point. Click for larger image.Today I received my first ever election leaflet from Mr Leakey and it’s amazing how electoral necessity can change opinions. Only a few months ago his comments on the refurbishment of the old GWR Barracks were mildly scathing.

[W]ho ever designed and agreed to the new entrance and stone work, must have suffered a momentary loss of their senses, for they most certainly bypassed any thoughts of preserving the historical character and appearance of the building…. Would it not have been beyond the capabilities of someone to have designed an entrance sympathetic to the fabric of the building and made it of wood and glass?

However, now his leaflet describes the building as “wonderfully restored”.

I also note that the leaflet claims that a blue council will “Improve street cleaning & graffiti removal” Seeing as the said party in Swindon Borough Council have only recently pushed through a budget that removes one of the thrice daily street cleaning rounds in the town centre, it’ll be more a case of undoing their own damage.

But the overwhelming impression of this leaflet was that the Mr Leakey-specific parts — the three paragraphs on the outer page and the captions beneath his photographs — bear no resemblance to the actions locally of the party he purports to represent.

Rent-a-mob at the Wyvern

You would think that Ms Tomlinson would have sufficient confidence in her son Mr Tomlinson — well known for his assured media performances — not to heckle his opponents during a public debate. You’d think that the likes of Ms Tomlinson and Ms Foley would recognise Mr Tomlinson’s ability to defend his own record against an unjustified attack by the government’s representative in South Swindon, Ms Snelgrove, on scrutinising Mr Bluh’s wifi deal and not feel the need to indulge in a slow hand clap of his opponent. You’d be wrong.

At last night’s question time event at the Wyvern Theatre chaired by the Adver’s Mr King, the lesser lights of the blue nest were on their most puerile and infantile behaviour. Mr King may not have been the best chairman in the world — allowing the candidates to make speeches in place of answers and allowing Ms Snelgrove to waffle on for as long as all the others put together — but the blue rent-a-mob heckling from the back were doing their candidate no favours. The public were there to hear a debate, not to have one side of it drowned out.

And what did we learn from that debate? Aside from the rowdiness of the blues and the willingness of Mr King to allow many questions from the reds own party members, very little. Both Mr Tomlinson and Ms Snelgrove were well practiced, well briefed public performers — no surprise there. Mr Hooton and Mr Hughes were less confident but reasonably well informed, though Mr Hooton claims to disagree with rather a lot of his party’s own policies. The other two candidates that were on show last night seemed to know neither their own policies nor Swindon very well. I now know that all six candidates can read from a pre-prepared script; I also know that two can do little else. In short, I have a better idea of who I definitely won’t vote for, but nothing to convince me that one of the others should get my vote.

Keeping out the drinkers — where next?

New park railings. Image © komadori.With work continuing to put railings around the whole of Faringdon Road Park, the timing of the new order restricting alcohol consumption in the park almost seems coordinated. It’s as though it’s part of a concerted effort to beautify the area. The only concern is where will the hardened outdoor daytime drinkers go next? As more of central Swindon has drinking restrictions imposed, the main effect is likely to be to move the problem to the next nearest open area. Already the Westcott Place recreation ground has gained a few regular drinkers. They are now likely to be joined by a few more.

Unaudited

After last night’s disgraceful performance by Swindon Borough Council’s Scrutiny Committee — when the wifi deal was approved based on a report circulated to committee members before he weekend but kept secret from the public — it is no surprise that the Audit Committee meeting tonight was equally weak. Illustrating the worthlessness of the tawdry deal between Mr Bluh and Mr Montaut, the representative of the Audit Commission present at tonight’s meeting made clear that regardless of whether the council invited the Commission to investigate, the Commission itself would decide for itself whether it would do so.

With the arrogance that we have now come to expect from Mr Bluh, he dismissed concerns raised by Mr Martin and Mr Moffatt that the security obtain by the council for the loan was woefully inadequate. Mr Bluh may believe that the installed network — however little of that there might be — would be worth more than £450,000, but as noted later by the council’s own Director of Finance “It is early days and I wouldn’t want to put a value on it.

Unfortunately for Swindon taxpayers, Mr Bluh seems to believe that he knows better than his professional council officer advisers. He behaves like an elected mayor in what is meant to be a cabinet run council, trusting that cabinet so little that he overruled the advice of the Borough Solicitor that there was a better way to make the decision on the wifi deal, simply to avoid telling most cabinet members about it.

During tonight’s Audit Committee meeting Mr Martin noted that if the council was intent on doing similar deals in future, it needed to ensure that it has officers as capable and “as sophisticated as those we do business with” to ensure the deals adequately protect the council’s interests. In his view, the deal done with the other partners in Digital City (UK) Ltd gives no assurance that the council will ever see its share of any profits there might be: the other partners could easily consume any profits in salaries and charges and the council — having only a minority stake in the company — would be unable to stop that.

But capable and sophisticated council officers are of no value if they are ignored. For as long as arrogant people like Mr Bluh are in charge, Swindon taxpayers’ money will continue to be put at what many perceive to be undue risk.

A letter to the Audit Commission

Forget disreputable deals between Mr Bluh and Mr Montaut on referring Swindon Borough Council’s wifi deal to the District Auditor, this is what the auditor should be examining. The letter below was submitted to the Audit Commission in February.

Transactions between Swindon Borough Council and Digital City UK Ltd.

Background

Swindon Borough Council has provided a loan of £450,000 on commercial terms to Digital City UK Ltd (registered no. 06990831). In return for that loan it has received a 40% equity stake in the company. If the loan is repaid within 2 years, Avidity Consulting Ltd (registered no. 06990825) has an option to purchase 5% of the company’s shares from the council for £1. Avidity Consulting already has a 25% stake in the company. The other shareholder is aQovia UK Limited (registered no. 06846037), which holds the remaining 35% of the company. Digital City UK Ltd is intending to install wireless internet across the entirety of the borough of Swindon.

The decision to make the loan was made by three council officers with the approval of two councillors who are members of Swindon Borough Council’s cabinet.

I have a number of concerns in relation to this undertaking.

1) Both Digital City UK Ltd and Avidity Consulting Ltd were incorporated on 14 August 2009 as ‘off-the-shelf’ companies. They became active on 22 September 2009 and 21 September 2009 respectively. They thus have negligible track record. aQovia UK Limited was incorporated on 13 March 2009, appears to have become active on 16 September 2009 and thus also has limited track record.

In these circumstances, considering the lack of history, trading records and accounts for Digital City UK Ltd, Avidity Consulting Ltd and aQovia UK Ltd, I would expect Swindon Borough Council’s due diligence to pay particular attention to the plans of Digital City UK Ltd. Much of the information in relation to this has been withheld by the council on grounds of commercial confidentiality. However, in a Cabinet Member Briefing Note to Councillor Mark Edwards (Cabinet Member for Finance and Benefits) and Councillor Roderick Bluh (Leader of the Council and Chair of the cabinet), dated 12 October 2009, that was made available to Swindon Borough Council’s Scrutiny Committee meeting of 14 December 2009, it is stated that:

“The success of the company, particularly in the early stages, and consequently the potential for Swindon Borough Council to achieve a return from its shareholding will depend to a large extent on the success of the marketing campaign. A formal marketing plan has not yet been developed, but a Brand Consultant and Marketing Specialist have been informally assisting the project and will be formally engaged once the company is live.”

It thus appears that at the time the decision to invest £450,000 was made, the plans of Digital City UK Ltd were not yet well formed. Furthermore, the response by the council in relation to diligence (in the minutes and annex to the minutes of that Scrutiny Committee meeting), appear in tone, in my view, to be dismissive rather than suitably detailed.

2) The Managing Director of Digital City UK Ltd is Mr John Richard Hunt (commonly known as Rikki Hunt). He is also owner of Avidity Consulting Ltd which is providing consultancy services to Digital City UK Ltd, and a non-executive director of Swindon Commercial Services Ltd (registered no. 06969563) which is Swindon Borough Council’s direct services company and the main contractor to Digital City UK Ltd for installation and maintenance of its wireless network.

Mr Hunt is also Chair of Swindon Strategic Economic Partnership (SSEP), which is charged with implementing some of the council’s social inclusion objectives under the Swindon Local Area Agreement, including the Swindon Digital Challenge proposal, and a non-executive director of The New Swindon Company Ltd (registered no. 04509901) of which Swindon Borough Council is a major funder, and a board member of the Swindon Partnership which is tasked with producing the Swindon Local Area Agreement.

By virtue of his close association with Swindon Borough Council and in particular the SSEP, Mr Hunt may have been in receipt of privileged information in relation to the council’s and SSEP’s plans for widening access to the internet. As a consequence of this it is possible that a conflict of interest could occur in his company’s approach to the council. Under Section 175 of the Companies Act 2006, a director has a duty to ensure that they avoid a situation in which they have, or can have, a direct or indirect interest that conflicts, or possibly may conflict, with the interests of the company. In light of that Act and of the sixth of the Seven Principles of Public Life, I would expect, given Mr Hunt’s close connection with Swindon Borough Council that, as part of its due diligence, the council would ensure that no such conflict had occurred. However, the information made available to the public by the council provides insufficient evidence that this assurance was obtained.

3) Mr Hitesh Kumar Patel was appointed director of Digital City (UK) Ltd on 26 September 2009. Mr Patel is also Group Director Business Transformation and in that capacity one of the authors of the Cabinet Member Briefing Note to Councillors Edwards and Bluh, dated 12 October 2009 and mentioned in (1) above, that recommended providing the loan of £450,000 to Digital City (UK) Ltd. There is no mention of this directorship in the briefing note, nor in any of the other information presented to Swindon Borough Council’s Scrutiny Committee meeting of 14 December 2009. As Mr Patel’s directorship pre-dates his advice to Councillors Mark Edwards and Roderick Bluh, in the absence of further information to the contrary this would appear to present a conflict of interest which, under the Seven Principles of Public Life, Mr Patel had a duty to disclose.

4) It has been repeatedly stated publicly by the council leader, Roderick Bluh, in comments reported in the local press that this was a delegated ‘investment’ decision, and this is also mentioned in the Cabinet Member Briefing Note shown to the Swindon Borough Council Scrutiny Committee. Mr Hitesh Patel has also stated that the decision to provide the loan was made by the Director of Finance (Mr McKellar), the Director of Law and Democratic Services (Mr Taylor) and himself, the Group Director Business Transformation.

The delegated authority for such a decision originates from resolution (5) at Minute 28 of the Cabinet meeting of 23 July 2008, subsequently ratified by full Council on 13 November 2008.

“That the Treasury Management performance for 2007/08, be noted, and the Council be recommended to approve the proposed change to the Annual Investment Strategy, as detailed in paragraph 2.6.7 of the joint report (In respect of joint venture arrangements, to permit the Director of Finance and the Director of Law and Democratic Services, in consultation with the Cabinet Member for Resources, to invest in such schemes provided that the overall terms of the arrangement are suitably advantageous for the Council, subject to the Soft Loan Accounting requirements contained in the 2007 Statement Of Recommended Practice.).”

with paragraph 2.6.7 of the ‘joint report’ being

“In order to pursue its regeneration objectives, the Council is planning to enter into a series of joint venture arrangements with private sector partners. There may be circumstances in which it is advantageous in financial and risk terms for the Council to consider acting as banker for a scheme, subject to the terms and exposure being acceptable. In this context, it is proposed that the annual investment strategy is amended to permit the Directors of Finance and Law and Democratic Services, in consultation with the Cabinet Member for Resources, to invest in such schemes provided that the overall terms of the arrangement are suitably advantageous for the Council, subject to the Soft Loan accounting requirements contained in the 2007 Statement Of Recommended Practice.”

Whilst the decision may have been within the letter of this resolution, it does not appear to have been within its spirit. The decision was not made in pursuit of regeneration objectives, but, according to the Cabinet Member Briefing Note, primarily in support of social inclusion and sustainability objectives. Also, the decision was not made as a consequence of a decision by the full council or cabinet to implement town-wide wireless internet access, but as a result of the company approaching the council seeking investment.

5) If this decision were not within the scope of investment decision described in (4), the council’s constitution does permit delegated decision by individual cabinet members in certain circumstances. That delegated authority is specified on page 5 of the constitution:

“To speed-up decision making and to allow the Cabinet to concentrate on major matters, Cabinet Members have the delegated power to make day-to-day decisions in relation to the areas within their portfolio.”

Given that the decision to loan £450,000 and take a 40% share in Digital City UK Ltd for the purpose of it providing boroughwide wireless internet was announced with a press release on 16 November, and the launch of the service in Highworth was by a member of the parliamentary opposition’s shadow cabinet and accompanied by further press coverage, it seems to me that this decision is firmly in the class of ‘major matters’ for which the delegation described on page 5 of Swindon Borough Council’s constitution should not occur.

6) Swindon Borough Council is allowing Digital City (UK) Ltd to send and receive commercial and private internet traffic via its own Local Authority access point(s) to the internet. I am concerned that this may have serious implications under the Government Code of Connections (’CoCo‘), and that Swindon Borough Council may be inappropriately subcontracting or reselling internet service supplied to local authorities.

Whilst none of these issues individually may be cause for great concern, taken together I believe they are sufficient to warrant further investigation. Given the complicated nature of company law I would like the audit commission to examine the commercial relationships mentioned above and clarify whether they are appropriate and represent acceptable and best use of public money.

A shameful failure of scrutiny

A deal has been done between Mr Bluh and Mr Montaut, apparently in an attempt to suppress further scrutiny of Swindon Borough Council’s dealings with Digital City (UK) Ltd.

I have reached an agreement with the Labour Group Leader that as and when the wi-fi project, which is fully supported by both the Conservative and Labour Groups, has been finally cleared by the Scrutiny and Audit Committees then in the interests of allowing the wi-fi project to move forward without further damaging publicity, without incurring additional costs to the taxpayer and to stop the enormous amount of officer time being spent on this issue to date, I will ask the external auditor to confirm the findings of the internal audit report and also to confirm that due process has been followed throughout. It is time to allow this fantastic, innovative opportunity to get properly underway to deliver for Swindon.

There’s nothing fantastic about squandering local taxpayers’ money, Mr Bluh; nor in being so careless in the deal that much of what councillors and council officers have said on the matter has turned out to be untrue; nor in investing in a project so laxly run that even though it was eight months behind schedule and had to ask for its loan conditions to be relaxed, the company board had not met. And just how arrogant it is of Mr Bluh to think the District Auditor needs his permission to investigate. As I noted a couple of days ago, the District Auditor has already been asked to investigate the wifi deal.

What has this acheived for Mr Montaut? Nothing, just an external enquiry that would have happened anyway.

I have been calling for an external enquiry for months now, because this council needs to focus on the things that matter to all Swindoners, like getting value for money for our council tax payers and ensuring that our public services are working to suit the needs of our townspeople. With the external auditors now investigating the Conservative administration’s wi-fi deal, I believe the council can do this.

That sounds to me like Mr Montaut, the chair of the Swindon Borough Council’s Scrutiny Committee, wants to abandon scrutiny of this deal.

The role of the chair of a council’s scrutiny committee is to hold the council administration to account. To shirk that responsibility through worthless back-room deals like this is a shameful failure.