The Financial Reporting Council (FRC) has punished former Thurrock Council CFO, Sean Robert Clarke, following his admission of misconduct over his role in the operations and investment activities of the council for the financial years ended 31 march 2018 to 31 March 2022.
As CFO the FRC said Clark was responsible for the administration of the Councilās financial affairs.
As part of the settlement Clark received a severe reprimand and was excluded as a member of the ACCA for a recommended period of 5 years.
FRC explained that in October 2017 Thurrock Council formally approved an Investment and Treasury Management Strategy document which set out an approach for borrowing on a short-term basis, primarily from other local authorities, and using the funds to make longer-term commercial investments (a ādebt for yield approachā). Under this approach, short-term borrowing and investments eventually exceeded Ā£1 billion, more than six times the Councilās annual budget.
A number of the investments ran into difficulties from 2020, and the Council reported the investment portfolio lost more than a quarter of its value. In September 2022 the Secretary of State appointed Commissioners to run the Council because of concerns around the ādebt for yieldā approach and associated governance issues.
In December 2022 the Council gave notice that its expenditure was likely to exceed its resources in that financial year, and extraordinary financial support was received from Central Government. In addition to agreed support in excess of Ā£343 million, the Council has needed to make significant increases to Council Tax bills as well as cutting services, and has reported ongoing uncertainty as to the long-term financial position.
As set out in the Particulars of Fact and Acts of Misconduct, Clark has admitted that his conduct fell significantly short of the standards reasonably to be expected of a member of the ACCA in relation to the implementation of a ādebt for yieldā approach, in that he:
- Failed to comply with restrictions on the exercise of delegated authority;Ā
- Failed to comply with the relevant statutory framework;Ā
- Failed to ensure that the Council had access to the necessary skills and experience;Ā
- Failed adequately to manage and report on the risks arising; andĀ
- Recklessly provided misleading information to Council members, and therefore to the public.
The sanctions reflect the seriousness of the Misconduct and its consequences, but also Mr Clarkās personal circumstances and the fact that he has co-operated with Executive Counselās investigation.
As a result of his exclusion from the ACCA, Clark will no longer be eligible to serve as CFO of a local authority.
The terms of settlement have been agreed by the Executive Counsel and approved by a legal member of the Independent Tribunal Panel.
This is the first time that the FRC has imposed sanctions on a local authority CFO, or anyone else working in local government finance.
