AN investigation into failings around Northumberland County Council’s controversial participation in an international business has been published more than a year after it was deemed “unlawful” by the council’s top finance officer.

The council’s participation in the Northumbria International Alliance, a healthcare consultancy operation selling expertise overseas, was deemed unlawful as it was run as an “unincorporated partnership” for a commercial purpose, breaching the 2011 Localism Act.

The investigation was commissioned after a meeting in June 2022 that highlighted unlawful expenditure related to the international business and a £40,000 “international allowance” paid to ex-council CEO Daljit Lally in connection with the work.

Speaking at that meeting, director of finance Jan Willis said the processes to ensure the council didn’t make unlawful decisions had “failed”. Thirteen months on, a wide-ranging report has identified a string of failings and lessons that need to be learnt to stop a re-occurrence.

The 54-page investigation was compiled by John Gilbert, an “experienced ex-local authority chief executive”, and will be considered by the council’s audit committee next week. A council report identifies 14 “key learning points” as well as 23 recommendations – six of which have already been completed.

A number of issues are highlighted throughout the report – minutes of one meeting of the council’s executive team stated that “all travel” related to international business should be business class, adding: “When the agenda is gruelling, it is not appropriate to travel standard class – recommendation going forward is whole trip is business class.”

It was argued that the amount of “collateral” would see staff pay a “premium for weight of bags”. The minutes go on to say that flights should be compared to ensure “value for money”.

The report states that the habit of holding “informal cabinet meetings” created a lack of transparency for the wider set of councillors. Furthermore, because there were no reports to formal cabinet meetings – those open to the public and press – officers would have been more able to give advice and scrutiny committees would have been able to perform their roles more effectively.

There was “no process for supporting or challenging new opportunities or business ideas”, and NIA was not on the corporate risk register. This, according to the report, impacted their ability to scrutinise and interrogate information.

Members felt they were ignored, while formal reporting and decision-making were absent. Furthermore, complaints and whistle-blowing – prevalent for “much of the time International was in operation” – didn’t seem to be “properly addressed”.

However, Mr Gilbert’s report does state that the council need to be “complimented” as a number of recommendations identified in the report have already been put in place.

Mr Gilbert did note that it was “impossible to quantify with any degree of certainty” whether International made a profit or a loss due to a range of issues with financial record keeping. He adds that the expenditure involved was “significant” but that it “does not appear that the council suffered any financial loss, and may in fact have made some net gain”.

However, he wrote that this “cannot be definitively proven” as “proper trading accounts” and records of time spent by NCC officers supporting the work of International were not kept.

The report will be considered by members of the audit committee on Wednesday, July 26.