The long-awaited review also exposes the mismanagement of the local authority’s notorious former housing company Brick by Brick (BBB). In response, the South London council is now committing to lobby the government to address the ‘serious gap in the law’ around misconduct in public office.
The Kroll report, published earlier this week, laid bare the former Labour-led council’s questionable refurbishing of one of South London’s largest arts venues. Initially budgeted at £30 million, the Fairfield Halls project ultimately reached a total of £73 million by reopening in 2019.
The report also indicates that key figures within the council, including former Chief Executive Jo Negrini, were aware of the budget overrun as early as mid-2018 but failed to report it to the cabinet. The project’s cost overrun was only formally presented in February 2020—by which time the work was complete.
Kroll’s report highlighted that Negrini, as head of the council, was ultimately responsible for failing to inform the cabinet about the overspend.
Despite this, Croydon Council has confirmed it will not pursue further action to recover a substantial settlement paid to the former chief executive. Despite initial plans to challenge the £437,973 payout following her departure in 2020, the council has now decided that legal action would not be in the best interests of Croydon’s residents.
This follows last week’s announcement by the police that they would be ‘taking no further action’ into the council’s financial collapse, despite finding evidence of ‘potential wrongdoing, breaches of statutory duty and incompetence.’
They said, however, that these failings were collective rather than down to individuals. During a discussion at the Appointments & Disciplinary Committee on Monday (December 9), the council’s finance lead, Jason Cummings, vented his frustration with the findings.
In the meeting with current CEO Katherine Kerswell, he said: “I think we find ourselves in a position where the offence of misconduct in public office has not been proven, but I would still put my hand on my heart and say was there misconduct in public office taking place in Croydon, and I would say absolutely it did.
“It can’t be right that hundreds of millions of pounds of consequence sits on the people of Croydon and people can simply resign from the position, take up another one and that’s the end of it. It just feels morally wrong.
“We’re not saying no one did anything wrong, we are saying the offence of conduct in public office has not been reached and the problem lies there.”
Croydon Council issued a Section 114 in November 2020, declaring itself effectively bankrupt with debts of £1.5 billion. Over the following two years, the council was forced to issue two further notices.
In March 2023, the council vowed to take “unprecedented action” to hold senior officers accountable for the failures that led to the financial crisis, including referring a report by financial investigators Kroll to the police. At a meeting to discuss the police’s decision to drop the case, councillors agreed to publish the full report produced by Kroll.
The report also criticised the council’s relationship with its own housing company, BBB, which was involved in the project. BBB was set up by the then Labour Council to build affordable council houses in the borough.
However, the investigation found that BBB was not treated as an independent entity, which contributed to the mismanagement and financial oversight issues. Moreover, the way the project was financed—through loans to BBB rather than the council’s capital programme—resulted in insufficient financial monitoring.
The report read: “It (BBB) had no track record of delivering any projects, and did not have any experience delivering any projects with the specialist nature of refurbishment of an entertainment venue.”
It added that the council’s decision to allow BBB to manage the project meant ‘no competitive procurement was carried out to assess suitability of the delivery body.’
Despite the findings, the investigation did not uncover evidence of fraud or personal enrichment, though it did reveal several instances where information was withheld or misrepresented to the cabinet.
Croydon’s Mayor Jason Perry, expressed frustration at the council’s inability to take further action to recover the settlement paid to Negrini. Perry, who opposed the settlement while serving on the appointments committee, called the situation a “serious gap in the law” and vowed to lobby the government for legislative changes to prevent similar issues.
Since 2020, the council has introduced new internal controls and governance measures, such as the independent chair of the Audit Committee. Croydon’s government-appointed improvement and assurance panel and the Ministry of Housing Communities and Local Government have also recognised Croydon’s recent efforts to address financial stability.
In a statement published earlier this week, Perry added: “It is right that we publish the Kroll report, as we want to be open about what happened and why. We hope that this continued commitment to transparency over what happened in the past helps as part of the process of rebuilding trust and confidence with Croydon’s residents. Now is the time to look forward and focus on the future of Croydon and restoring pride in our borough.”
The 260 page report has now been published on the council’s website.