Audit Probe into Former Leader's Credit Card Use

South Tyneside Council's Audit Committee will consider the outcome of an investigation into historic credit card use when they meet next week.

The investigation, dating back to 2020, relates to credit card use by the former Leader, Mr Iain Malcom who left the authority in November 2020.

In response to the concerns of the three Statutory Officers, following the review of information gathered in relation to enquiries, Internal Audit was asked to review expenditure incurred on the credit card held by Mr I Malcolm.

Internal Audit reviewed all credit card transactions and associated documentation for the initial period April 2011 to March 2016 relating to Mr I Malcolm's Council credit card to reconcile the amounts identified as personal use to the cheques paid in by him to cover these amounts.

Total credit card spend amounted to £23,272.11 of which 46 per cent (£10,797.55) was identified by Cllr I Malcolm as personal use.

The value of the cheques reimbursed was £5,807.88 less than the declared personal spend for the period April 2011 to March 2016.

In addition,  there were transactions totalling £3,023 that were identified on the corporate credit card for those months where a Schedule of Expenditure document was not completed some of which could be related to personal expenditure. This includes for example expenditure at Seaham Hall, and on clothing and petrol.

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

The Audit Committee will review the effectiveness of governance, risk management and control matters in this area. Council business must be conducted in accordance with the law following proper standards expected of all public services and officers and that public money is safeguarded. The standards expected include honesty, accountability, and integrity, and should be carried out in the spirit of, as well as to the letter of the law, in the public interest, to high ethical standards and achieving value for money.

Cllr Ken Dawes, Chair of Audit Committee said: "The public can be confident that we have absolutely tightened all protocols and process to avoid there being any opportunities for this to happen again.

"This includes limiting the use of cards to incur expenditure where there is a necessary business need and a process of independent checks where expenditure has arisen.

"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."

The matter was referred to Northumbria Police in 2020 and the Council supported their investigation throughout. Earlier this week the Council received notification from Northumbria Police that their investigation had concluded with it beingdetermined that there was insufficient evidence to proceed meaning that the Council can now moving forward on several connected issues, the outcomes of which will drive continuous improvement at the authority.

South Tyneside Council has undergone a significant period of positive change since 2020, strengthening the Council's core organisational foundations, reflecting upon standards across the organisation and holding themselves to account by inviting and welcoming external review, challenge, and support as part of its modernisation programme.

Councillor Tracey Dixon, Leader of South Tyneside Council said: "When I became Leader back in 2020, I was determined that this council would work with the people of South Tyneside to bring about real and lasting positive change for the borough. Since that moment I have been relentless in that pursuit, and I am satisfied by the progress made.

"I never said we would change overnight but in the last few years we have worked at pace, reshaping South Tyneside Council to be a PROUD organisation that listens to its residents and businesses and acts upon evidence and insight to make the borough a better place.

"We continue to engage with the workforce and make necessary and additional commitments to deliver on our commitments and address any concerns, where required.

"We have strengthened our engagement with residents, businesses, and partners as well as increased employee satisfaction year on year. Furthermore, we have brought millions of pounds in funding to South Tyneside and are in strong shape to move forward with significant transformation projects across all three towns.

"Change is never easy, but we have set out to create the right foundations for the Council and our communities to thrive. This has been a challenging period for the Council, but we have faced those challenges head on and will continue to do so. I am excited about where we are now and for the future of South Tyneside."

The Council's changed culture and progress has been acknowledged and endorsed through regular work with Local Government Association (LGA) peers and South Tyneside Council is widely regarded as a constructive influence within the new regional arrangements that are bringing billions of pounds to the North East.