Thursday, August 21, 2014

News: Rotherham agrees to pay up in Trading Standards dispute

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The inter council dispute over the multimillion pound liabilities for the former South Yorkshire Trading Standards Unit (SYTSU) looks to have avoided formal litigation.

Established in 1985, the unit was effectively part of Sheffield Council and provided specialist services to businesses and the four local authorities. It was managed by a joint committee comprising of councillors from the four councils: Barnsley, Doncaster, Rotherham and Sheffield.

Following the sudden death of the head of the former unit, Mike Buckley, in December 2005, substantial financial irregularities came to light with net losses amounting to approximately £13.5m.

The unit calibrated weights and measures and associated equipment, mainly for industry. SYTSU operated as a traded service, and its reported turnover prior to the discovery of these financial irregularities was £3.5m per annum. It had reported a small surplus in its latter years, which has been distributed amongst the four local authorities.

The unit was closed in 2006 and independent reviews have been carried out into the irregularities. A criminal investigation was also carried out by the Serious Fraud Office, in conjunction with South Yorkshire Police, and proceedings were brought against three defendants, who ran companies used by the unit in a complex fraud to cover losses.

Discussion between the councils on settling the outstanding financial position of the unit have been ongoing ever since.

Sheffield Council have been seeking to recover funds of up to £3m each from Doncaster, Barnsley and Rotherham for a number of years. The councils agreed that the costs should be shared but agreement could not be reached on the amounts as Sheffield originally wanted payment in full whilst the other councils felt that Sheffield, as lead authority, accountable body and having had the responsibilities for audit and accounting, should have identified the problems earlier and thus limited the size of the losses.

In fact, Rotherham Council began to query the cost of the unit as early as 1994 and gave early warning that they were considering withdrawing from the consortium. In the event they did not do so.

Now the cabinet at Rotherham Council has approved a settlement of the potential claim by Sheffield City Council. The settlement, along with similar agreements with Doncaster and Barnsley councils, will avoid them entering into formal legal dispute with Sheffield Council and the associated costs, delays and risks.

A report to Doncaster Council's cabinet shows that it has agreed to pay £2.5m but Rotherham's settlement is not yet known as its cabinet report was heard in private as it contained "information in respect of which a claim to legal professional privilege could be maintained in legal proceedings."

Images: Trading Standards Institute

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