1.1 | 1. To examine the instructions under which BDO Alto Limited was engaged to review the financial management of Operation Rectangle and their methods for gathering evidence for this review. Under the Public Finances (Jersey) Law 2005 the Chief Officer of Home Affairs is legally responsible for the expenditure of the States of Jersey Police. All concerned now agree that the decision to place accountability for the States of Jersey Police budget with the Home Affairs Accounting Officer was a mistake. This arrangement made it unnecessarily difficult for the Chief Officer of Home Affairs to ensure effective oversight of expenditure on Operation Rectangle which was an event of unprecedented complexity. | Agreed. Arrangements are being made to enable the Police Chief to become an Accounting Officer with effect from January 2012. The draft States of Jersey Police Force Law, 201- contains a provision which will formalise this arrangement. |
1.2 | The terms of reference for the review of financial management during Operation Rectangle were drawn too narrowly. They directed BDO Alto to focus solely on the internal Police arrangements and the use of resources. | It is agreed that the wording of the terms of reference could have made it clearer that my intention was always that the review should include looking at the role of the Accounting Officer and the Home Affairs Department. Nevertheless, section 3 of the Review does deal with this issue. The whole purpose of the BDO Review was to scrutinise the amount and type of expenditure to examine whether it represented the efficient and effective use of resources. The BDO report was commissioned to provide the Minister and the Accounting Officer with an assurance that resources had been used efficiently and effectively. |
1.3 | As a result, the review conducted by BDO Alto promoted a perception that the high levels of expenditure in the investigation were caused by a lack of management control by senior police officers whereas there was in fact a much broader failure by States systems to provide adequate and timely monitoring of the way financial resources were being used, which has not been acknowledged or examined. | This was not merely a perception but a fact borne out by the Wiltshire Police Finance Report (see paragraph 5.2.38 7 of the `Particulars’ section of the Wiltshire Police Finance Report (page 97). In my view, the Scrutiny Sub-Panel’s report has failed to give sufficient weight to the Wiltshire Police Finance Report. |
1.4 | The examination of governance arrangements in section three of the BDO Alto report is incomplete as it does not take into account evidence from Mr. Power, the Chief Officer of Police at the time. | The Wiltshire Police Finance Report does take into account Mr Power’s evidence. The examination of governance arrangements in the BDO Review needs to be read alongside paragraphs 1.1 to 1.15 of the Wiltshire Police Finance Report. The conclusions drawn are consistent. |
1.5 | An opportunity to include a more strategic examination of how Jersey runs and funds policing and lines of accountability, both professionally and politically, was missed. | No. These matters have been examined thoroughly and new provisions incorporated into the new States of Jersey Police Force Law, 201- which was lodged in November 2011 for debate by the States in early 2012. The most relevant of these are the Police Authority and Accounting Officer provisions. |
1.6 | The appointment of a Finance Manager seems to have fallen between two stools. BDO Alto review did not examine why Home Affairs did not appoint a finance manager at an early stage to work closely with the Police. | If the Scrutiny Sub-Panel had researched the relevant source document – the Guidance on Major Incident Room Standardised Administrative Procedures (MIRSAP) 2005 – they would have ascertained where the responsibility lies for appointing a Finance Manager for a major incident, namely with the Police force. The guidance is produced on behalf of the Association of Chief Police Officers by the National Centre for Policing Excellence and provides the Police with clear information and guidance on the above procedures. Section 1.2.1 states that `the Senior Investigation Officer (SIO) has responsibility for the investigation of the crime. This includes ensuring, in liaison with other senior officers as necessary, that an incident room with appropriate resources is set up.’ Section 1.5 sets out the role of the Finance Manager: `This role coordinates all administration and financial issues regarding staff, vehicles, accommodation, refreshments and equipment thereby relieving the SIO and Office Manager of all administrative matters not connected with the investigation itself. The guidance goes on to say that the Finance Manager should be appointed immediately and is key in the setting up of a major enquiry. |
1.7 | The Minister for Home Affairs should have ensured that the BDO Alto review fully examined the implications of the flawed structure for monitoring and challenge. | No. This finding results from the failure of the Scrutiny Sub-Panel to properly consider and give due weight to the Wiltshire Police Finance Report. |
1.8 | Operation Rectangle had significant unbudgeted consequences for the States of Jersey as a whole. However, it is not clear whether the senior management in the States had any established procedures for identifying and managing the risk. This aspect was not examined by BDO Alto as it was outside their terms of reference. | The Chief Minister’s Department has been consulted on this finding. That Department now maintains a Strategic Risk Register which links into departmental risk registers with the object of identifying key risks early. This includes an escalation process where immediate action is required to treat or mitigate these risks. The potential impact of the Pandemic Flu outbreak in 2010 is a clear example of how a major Strategic Risk to the Island was escalated quickly to the Chief Minister's department and an appropriate senior management team was convened from across the States to provide strategic management of the risk. |
1.9 | The review of an issue as highly sensitive as the Police use of resources in Operation Rectangle should not have been commissioned and overseen by the States department which had responsibility for the Police budget. | The BDO Review was a review specifically commissioned to provide the Minister and The Accounting Officer with an assurance that resources had been used efficiently and effectively. The primary investigation into the management and supervision of the HCAE by the Chief Officer of Police was carried out by the Wiltshire Police and their findings published in their Finance Report. The BDO Review was not unlike any similar audit commissioned by the Department, in consultation with the Chief Internal Auditor, into other areas of its business. |
1.10 | A completely independent body should have commissioned this review in order to provide a more transparent, comprehensive and rigorous challenge to the financial monitoring arrangements in place between the Home Affairs Department and the States of Jersey Police. | The comment at paragraph 1.4 applies. In my view, the Sub-Panel’s review could have benefited from greater reference back to the Wiltshire Police Finance Report which was a report prepared by a “completely independent body”. |
1.11 | In the highly charged atmosphere about the Historic Child Abuse Enquiry and the way it was handled it was inevitable that narrowly drawn terms of reference and the way the report focussed on specific expenditure decisions and less on wider issues of governance and control would be seen by some as less than objective and a deliberate attempt to discredit the HCAE. | The suggestion that there was a deliberate attempt to discredit the Historical Child Abuse Enquiry is very strongly denied. Not only is this incorrect but also there is a complete absence of cogent evidence to support this. At all times, the HCAE was treated very seriously by both the States of Jersey Police and myself. At no time did any relevant party wish to discredit the enquiry. However, the Wiltshire reports indicate that there were very serious failings on the part of the most senior officers. |
2.1 | 2. To clarify the connection between the BDO Alto review and the review separately commissioned by the Acting Chief Officer of Police Mr. Kellett was originally employed by the States of Jersey Police to undertake an internal review, commissioned by Mr. Warcup, relating to the overall conduct of the HCA investigation by the police. | This was not known by me but is apparent from the evidence. |
2.2 | Mr. Kellett, however, was not made aware of this intended task and was given separate instructions which required him to work closely with the BDO Alto review on the use of financial resources. These different instructions were given by Mr. Gradwell and had not been seen or authorised by Mr. Warcup. | This was not known by me but is apparent from the evidence. |
2.3 | Mr. Gradwell’s instructions to Mr. Kellett caused confusion about the police consultant’s role. Mr. Warcup initially praised Mr. Kellett’s work but subsequently decided that it was inappropriate for him to be working on a joint review with BDO Alto on the grounds that it was inappropriate for anyone working for the States of Jersey Police to be investigating matters which were connected to the disciplinary enquiry being conducted by Wiltshire Constabulary. The long delay in bringing the Wiltshire disciplinary enquiry to a conclusion had important consequences for the BDO Alto review as it led to Mr. Warcup’s decision to prevent Mr. Kellett from interviewing Mr. Harper regarding his expenditure decisions during the course of the BDO Alto review. | This was not known by me but is apparent from the evidence. |
2.4 | Despite the significant limitation imposed on the BDO Alto review by his decision, Mr. Warcup did not convey his concerns to the Minister for Home Affairs. The Minister was therefore unable to resolve the problem. | Agreed. |
2.5 | Due to Mr. Gradwell’s widely known negative views on the management of Operation Rectangle by his predecessor it was not appropriate for him to be directing the police consultant’s work on the financial review. This undermined the independence of the BDO Alto review. | It is relevant to record that Mr Gradwell’s credentials in relation to the management of major incidents were impeccable to the extent that he could take an objective view of the management of Operation Rectangle. There was therefore no reason, at the time, to anticipate a difficulty. I accept that Mr Gradwell’s subsequent behaviour gives rise to a serious risk that the outcome of the BDO Alto Report may have been influenced by Mr Gradwell’s view. |
3.1 | 3. To identify the reasons why the Senior Investigating Officer for Operation Rectangle was not interviewed during the review and was not given the opportunity to respond to the report’s findings It is self evident, and all parties agree, that BDO Alto should have interviewed the key witness so that his evidence could have been included and evaluated in their report. Natural justice requires no less. | Although BDO Alto were aware of Mr Harper’s position on a number of issues, it was implicit in the terms of reference that key witnesses should be interviewed. If the difficulties in relation to this had been brought to my attention then I would have ensured that this occurred. |
3.2 | The failure to provide Mr. Harper with the opportunity to respond to the findings of the BDO Alto review was also, in our view, a significant error and inevitably undermines the credibility and fairness of that review. | I accept that the failure weakens the strength of some conclusions. However, some conclusions were independently confirmed by the Wiltshire Police Finance Report and, in other cases, the position of Mr Harper was known and it is unlikely that the response of Mr Harper would have led to a different conclusion. |
3.3 | Given that it was surely obvious that not to interview the Senior Investigating Officer in Operation Rectangle would leave the review open to criticism of being fundamentally flawed, BDO Alto should have brought this problem to the attention of the Home Affairs and insisted that some solution be found. | The BDO Review was carried out by professional auditors and based upon documentary evidence. The factual findings in relation to expenditure are accurate. The BDO Review makes it quite clear that the content had not been discussed with the former SIO. I refer back to my comments on 3.1. |
3.4 | No one involved in the review brought to the Minister's notice the fact that there were apparent obstacles in the way of interviewing Lenny Harper. | Agreed, and I have already commented on that. |
3.5 | The terms of engagement for BDO Alto should have made clear that their review would be subject to public scrutiny. | It was clear to BDO at an early stage that their report would be placed in the public domain. |
4.1 | 4. To clarify the liaison between the review of financial management and the Wiltshire Police Investigation, in particular the references in the BDO Alto report to the Senior Investigating Officer’s statements to Wiltshire Police BDO Alto stated that the references to Mr. Harper’s statement to Wiltshire were included in their report in order to add some support to Mr. Harper’s approach to certain financial issues. | Agreed. |
4.2 | The three references briefly made in the BDO Alto report actually concern contentious issues which deserved a much fuller explanation of Mr. Harper’s position. | See comment to finding 3.3. Where opinions were expressed by the SIO, such as the relevance of Home Office procedures to Jersey, then an explanation of his view would have been helpful. |
4.3 | In our view, the justification given for referring to Mr. Harper’s statement in fact supports the argument that he should have been contacted to establish his point of view across the whole review of financial resources. | I have already commented on that. |
5.1 | 5. To investigate how details of the review into the financial management of Operation Rectangle came to be published in a national newspaper in October 2009 The evidence we have received points to Mr. Gradwell as the person responsible for leaking information from draft sections of the work which Mr. Kellett had prepared for the BDO Alto review. | Agreed. |
5.2 | Neither BDO Alto nor Mr. Kellett were responsible for the leak of information to the Mail on Sunday. | The Department was confident from the outset that no leaks had been made by Home Affairs Department staff or those carrying out the BDO Review. |
5.3 | Mr. Gradwell’s action in releasing prematurely to the media draft sections of an uncompleted report would have been a serious disciplinary matter for the Police. However, no action could be taken against him by the SOJ Police as Mr. Gradwell had completed his secondment and left the Island. | Agreed. |
5.5 | Mr. Gradwell’s reasons for taking such an unprofessional step are not clear to us as he refused to participate in the Scrutiny review. | Agreed. Mr Gradwell did explain his behaviour in a telephone call to me in late 2009 or early 2010, but this was not included in my evidence as I was not asked about this. |
6.1 | 6. Media coverage The emphasis on alleged misuse of taxpayers’ money in instances of media reporting risks implanting the impression in the public mind that the entire expenditure on Operation Rectangle was badly managed. | When I made a press statement in relation to the Wiltshire and BDO Reports regarding the Historical Child Abuse Enquiry, I read out a detailed and balanced statement before answering questions on details. I was not able to control the reporting of this. Some of the reporting was fair and balanced but some was unbalanced and sensational to the extent of wrongly giving the impression that the entire expenditure on Operation Rectangle had been mismanaged. |
6.2 | In our hearing with him on 25th August 2011, the Minister was sympathetic to our concerns about the way negative messages about Mr. Power and Mr Harper had been spun in the media and he offered to make a joint statement to this effect with the Sub-Panel. We believe that this would be a positive step. | The Minister has followed through on this offer, eg: Radio Jersey interview on the 15th November 2011 with the Minister and the Sub-Panel Chairman. In addition to this, I now offer the following further statement (see Appendix 1) |
6.3 | Our primary concern about the premature leaking of details of the review of financial management relates to issues of fairness in the way these leaks are reported in the media without an adequate opportunity for an alternative perspective to be considered. | Agreed. |
6.4 | It is essential that the Chairmen’s Committee give serious consideration to establishing a Scrutiny Panel which could undertake a review which will look specifically at the kind of issues we have identified in this report. | This is not within my remit as Minister for Home Affairs. |