Jones urges Pembrokeshire and Carmarthenshire to act after unlawful payments

First Minister Carwyn Jones said it is important for any local authority to consider the law

First Minister Carwyn Jones says two councils need to act after their chief executives opted out of a pension scheme to avoid potential tax payments.

A Wales Audit Office report found that Pembrokeshire's Bryn Parry Jones and Carmarthenshire's Mark James had cash payments in lieu of employer pension contributions unlawfully.

Police are looking at the report but the councils defended their policies.

Calls have been made for resignations or instant dismissals over the matter.

"It's important that those councils deal with those reports with the utmost seriousness," Mr Jones said during first minister's questions in the assembly.

"It's important for any local authority to consider the law.

"It's important for any local authority to consider any report that comes from the auditor and not just think that it's something that can be put to one side, and I don't think that any local authority should be in that situation.

"It's very important that Carmarthenshire and Pembrokeshire deal with this situation and then act on it," the first minister added.

The public spending watchdog report said that both authorities had acted unlawfully in allowing the chief executives to opt out of the Local Government Pension Scheme (LGPS) to avoid potential tax payments.

Assistant auditor general Anthony Barrett conducted two reports into Carmarthenshire council - the first into pension payments, and another into the decision to grant an indemnity to the chief executive to bring a libel counterclaim.

He said the council acted "contrary to law" by allowing senior officers to opt out of the LGPS.

More than £27,000 was paid to Mr James under the scheme since 2012.

Mark James (left) and Bryn Parry Jones were given cash payments in lieu of employer pension contributions

Carmarthenshire council said is was pleased the report did not think its pensions policy was unlawful but that its procedural process was flawed.

It said steps had been taken to sure ensure such matters are considered as separate items on an agenda.

The council said it remained convinced that indemnifying Mr James in the libel action was correct, and claimed the audit office had not objected to the policy when first consulted on it.

The local authority noted that the audit office had changed its mind on the issue some months later, and claimed it was "too late for us to turn back the clock".

In a separate report on Pembrokeshire council, Mr Barrett concluded similar pension arrangements for some senior officers were also contrary to law.

It is expected that by the end of March 2014, £51,011 will have been paid to chief executive Mr Jones and one other senior officer.

The auditor said the decisions to allow certain officers to receive payments, and then for payments to be made, were unlawful on several grounds.

Pembrokeshire council also insisted its pension payment policy was lawful.

Dyfed-Powys Police later issued a statement confirming it was liaising with both the Crown Prosecution Service and an external force over the audit office report.

Previously, Plaid Cymru called for councillors who approved Carmarthenshire's pension and libel case payments to resign.

Rhodri Glyn Thomas, Plaid AM for Carmarthenshire East and Dinefwr, also called for Mr James to quit.

And the chair of the public accounts committee, Conservative AM Darren Millar, said the reports showed both councils had fallen well below expected standards.