Ex-council leader racked up £18k on corporate card

Iain Malcolm was leader of Labour led-South Tyneside Council for 12 years

A former council leader "inappropriately" incurred £18,909.86 of personal costs on his corporate credit card, a local authority has said.

South Tyneside Council has released the outcome of their investigation relating to credit card use by former leader Iain Malcom from 2011.

The council said Mr Malcolm settled the outstanding amount for personal costs in May 2020, before leaving the authority in November 2020.

Northumbria Police said "a thorough investigation" was carried out, but the Crown Prosecution Service (CPS) determined there was "insufficient evidence to proceed".

The BBC has contacted Mr Malcolm for comment.

Not repaid on a 'timely basis'

The Labour-run council's audit committee began reviewing Mr Malcolm's council-issued credit card expenditure in early 2020, due to a range of information coming to light, and following some specific inquiries, the council said.

At the time, Mr Malcolm disputed that there was any shortfall.

An internal audit found his corporate credit card was used for mainly personal purposes and recorded as such, but Mr Malcom did not reimburse the council for his personal spending on a "timely basis", it said.

The council said it had informed the police due to the "gravity of the situation and the potential abuse or neglect of the power or responsibilities of public office".

It added Northumbria Police determined that the circumstances merited a formal investigation, and the council's external auditors, Ernst and Young were also briefed verbally.

Personal expenditure

Credit card statements from April 2011, which was the earliest date from which records could be obtained, were audited.

The audit found personal expenditure including at Seaham Hall (a luxury hotel in County Durham), and on clothing and petrol.

The report writers concluded the incidences of Mr Malcolm using his credit card inappropriately had been occurring since 2011.

The council added, as the practice adopted by Mr Malcolm had not been authorised, no process for the reconciliation of his personal spend with reimbursement had taken place until the end of 2019.

In May 2020, Mr Malcolm requested an update on how much was owed for personal use of the credit card. He was advised the outstanding amount was calculated as £18,909.86.

Whilst Mr Malcolm initially queried the figure, payment was made three days later, the council said.

No criminal proceedings

The report into the investigation has only now been published because Northumbria Police had instructed the council not to report its findings whilst officers were investigating.

The police "very recently" advised the council the CPS had decided there was insufficient evidence to proceed with criminal proceedings against any party.

Strengthen systems

The council said since the events, a number of measures had been implemented to strengthen systems of internal control around the use of corporate cards.

The audit committee will consider the outcome of their investigation into historic credit card use when it meets next Friday.

Councillor Ken Dawes, chair of the audit committee, said: "Further checks around the use of electronic cards to incur council expenditure indicated no issues of concern, and that these historic problems arose principally from the actions of one individual."

Leader of South Tyneside Council Tracey Dixon said: "This has been a challenging period for the council, but we have faced those challenges head-on and will continue to do so."