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KPMG LLP, the appointed auditors of Cheltenham Borough Council, have issued a public interest report which highlights flaws in the decision-making process followed by the Council in pursuing a legal claim for damages against its former Managing Director.

The Council took former Managing Director Christine Laird to the High Court in January 2009, claiming that she had not disclosed relevant information about her health when applying for the post in 2002. The Council lost this case when the judgement was issued in June 2009, and incurred external costs of £1.045million as a result of pursuing the case. The High Court claim came after several years of dispute between Mrs Laird and the Council.

The report acknowledges that it is not unreasonable for a council to go to court to seek recovery of a substantial financial loss. However, KPMG found that:

    * the Council incurred significant expenditure and management time in pursuing the claim for damages;
    * there was a lack of clarity in the Council's constitution over who should make decisions about this significant legal case, and in practice the decision-makers changed during the process;
    * there were flaws in the decision-making process whereby decisions were made with an over-emphasis on legal matters and not enough on financial, reputational and risk matters, some potentially crucial decisions were not addressed and others were made too late;
    * the Council did not manage this as a corporate issue, despite its financial and reputational significance, and while it focused on developing a legal case it did not apply wider project and risk management processes; and
    * the Council took some understandable precautions in the way it managed the Committee process but these had the unintended consequences of limiting the opportunities for Members to be fully informed and involved.

The report makes 26 recommendations for the Council to consider.

KPMG's audit director Ian Pennington said:

    'The Council was right to consider its options over whether it could recover some of the significant costs it had incurred, but mistakes were made which, if avoided, may have limited the further costs that the Council incurred. There was no single issue or failing, rather there were a series of issues that taken together over time created the situation. The Council did not recognise this as events were unfolding and did not respond effectively or early enough.

'Part of the legacy of this dispute is that it continues to absorb time, energy, attention and money. The Council needs to move on and we encourage Members of all political groups and officers to put the turmoil behind them, and build positive working relationships that will benefit the people of Cheltenham.'

The report, which is attached, will be considered at a meeting of the Council on 22 March, to be held in public, when the Council will provide a response to the points raised.