Council apologises over ex-leader's credit card use

Former council leader Iain Malcolm settled the outstanding amount for personal costs in May 2020

A council officer has said he "regrets" that inappropriate corporate credit card use by a former council leader was not spotted sooner.

On Friday, South Tyneside Council discussed a report into Iain Malcolm's credit card usage, which found he had incurred £18,909.86 of personal costs and did not pay it back on a "timely basis".

Since the initial investigation in 2020, the council has replaced all credit cards with procurement cards, which are limited to specific categories of spending.

The council's director of business and resources Stuart Reid said: "A number of layers of control are now in place. These checks were not in place at the time, but they are in place now."

The BBC has contacted Mr Malcolm for comment.

Council report

The report said Labour council leader Mr Malcolm had been using his corporate credit card “inappropriately” since 2011, and that findings could not be made public until Northumbria Police concluded their investigation.

A review was initiated in early 2020 due to a “range of information coming to light and following some specific enquiries”, the council said.

The audit found he had spent thousands of pounds on personal purchases, both declared as personal by himself, or deemed personal as no documents detailing their business use could be produced, and that Mr Malcolm was not paying the money back “on a timely basis”.

In May 2020, Mr Malcolm asked how much was owed for personal use of the credit card, which was calculated as £18,909.86.

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

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

Changes

In the meeting, Mr Reid said: "As CFO of the council, I personally regret that this wasn't identified earlier, that I didn't identify it earlier."

The Labour-led council said several measures had been implemented since the findings, including:

• The replacement of all council credit cards held by employees with procurement cards which are limited to specific categories of spend

• No elected member is be allowed to have a credit or procurement card

• Procurement card users have to retain receipts and give a full description of all transactions

• Independent spending checks, usually by line managers or another officer

• Card users must sign a conditions of use form

The council also said 600 monthly statements of credit cards used by employees were analysed, and none were found to have been misused.

'Shopping spree'

In the meeting, councillor Andrew Guy, from the Green party, said: "This is horrific reading.

"We have had so many cuts, cuts to vital services, telling residents that we couldn't support them while putting their council tax up, meanwhile someone in this building was running around, on their expense, on a shopping spree.

"He's tarnished the reputation of this entire council."

Councillor Anne Walsh said there had been a "culture change" at the council

Labour councillor Anne Walsh, who has been in council for 14 of the last 18 years, said the amount of "intimidation and bullying" in the past was "absolutely appalling".

"The new leadership have had a massive task to turn this council around and it has been a mammoth task," she said during the meeting.

Ms Walsh added: "The culture has completely changed in the council. You don’t feel threatened or intimidated, it’s refreshing to see and long may it continue."