Summary: Mr Y complains about the actions of the Council’s former Chief Executive. Among other points, Mr Y says he made false pledges on behalf of the Council and, when doing so, acted with a conflict of interest. Mr Y claims his company experienced substantial and ongoing financial losses as a result. The Ombudsman has discontinued the investigation because Mr Y could seek financial redress through the courts and it would be reasonable for him to do so, in the circumstances.

The complaint

1. The complainant, whom I will call Mr Y, complains the Council’s previous Chief Executive acted with a potential conflict of interest in respect of his roles. Mr Y complains that:
• He did not act in good faith or with professionalism. He was selective in responding to correspondence.
• He made pledges on behalf of the Council which he failed to action or reneged on. This resulted in significant financial loss to Mr Y’s company which the Council is responsible for.
• He acted with a potential conflict of interest in respect of his two roles. He was not clear in which capacity he acted in and blurred the lines between the separate responsibilities he had. He failed to act with proper transparency.
• He volunteered action points but failed to carry them out, without explanation.
• He misinformed colleagues about the status of enquiries made by Mr Y’s company and provided factually inaccurate information.
• He delayed in responding to letters sent by Mr Y’s company in September, October and November 2019.
2. Mr Y says he has experienced injustice from the Council’s actions. This is because his company suffered a financial loss and subsequent time delays when it made strategic decisions based on pledges which the Council did not fulfil.

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The Ombudsman’s role and powers

3. We have the power to start or discontinue an investigation into a complaint within our jurisdiction. We may decide not to start or continue with an investigation if we think the issues could reasonably be, or have been, raised within a court of law. (Local Government Act 1974, sections 24A(6) and 34B(8), as amended)

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How I considered this complaint

4. Before making this decision, I took the following action:
• Discussed the complaint with a representative of Mr Y and considered the bundles of information he submitted;
• I considered the Council’s responses to Mr Y’s complaints and its ‘Handbook for Chief Executives’; and
• Consulted the Ombudsman’s ‘Guidance on Jurisdiction’
5. Mr Y and the Council had an opportunity to comment on my draft decision. I considered their comments received before making a final decision.

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What I found

6. Mr Y is the Chief Executive Officer (CEO) of a firm which I will refer to as ‘the company’.
7. In 2013 the company had the opportunity to redevelop a large site in the Council’s area. It received planning permission and successfully applied for funding through a programme administered by the Council. I will refer to this as ‘the fund’. The Chair of the fund was the then Chief Executive of the Council. I will refer to him as Mr W.
8. Mr Y says that funding ‘dried up’ at a critical stage of the development in 2018. He told Mr W the project may be abandoned. Mr Y said that Mr W was keen to avoid any negative publicity and so made a verbal commitment, on behalf of the Council, to offer some help with the lease of one of the units on site. The commitment was not made in writing. But Mr Y says he followed up with Mr W, in writing, in the period thereafter.
9. The company proceeded on this basis and invested substantial sums to complete the development.
10. In September 2018, the company contacted the Council about the commitment previously made by Mr W. The company says it also proposed some ideas to mitigate any risks posed by the backing promised by Mr W.
11. Mr Y’s company corresponded with the Council over the following months. It received confirmation in February 2019 that the Council would not provide the assistance which he says it promised, via Mr W, in 2018.
12. The company continued to email Mr W, both as Chief Executive of the Council and Chair of the fund. Mr Y says the replies were often delayed and incomplete. The company made requests under General Data Protection Regulations (GDPR) seeking information from the Council. Concerns about the Council’s failure to respond to these requests were the subject of a separate complaint made to the Information Commissioner’s Office (ICO).
13. Dissatisfied with Mr W’s actions, Mr Y submitted a formal complaint about Mr W’s conduct. His concerns are summarised in paragraph one of this statement.
14. The Council’s Monitoring Officer (MO) responded in accordance with the Council’s published procedure for conduct complaints. The MO put the allegations to Mr W, consulted with the Leader of the Council and considered the information provided by Mr Y.
15. The MO decided not to investigate Mr Y’s complaint. The main reasons for not doing so are summarised as:
• Mr Y’s claims about Mr W are unsubstantiated and unlikely to be supported by third party evidence. The discussions referred to were held in private and Mr W denies the claims.
• None of the claimed pledges were followed up in writing.
• Mr W’s role at the Council was declared to the fund in a board meeting in October 2015. This is referred to in the minutes.
• After consulting with the Leader of the Council, it is concluded there is insufficient evidence of a breach of conduct.
• The complaint is not in the public interest. Mr Y is an experienced business person and is therefore accustomed to operating in commercial terms.
16. In their response to Mr Y, the Council said he should approach the Ombudsman if he had a complaint about the procedure followed by the Council.

My findings

17. Section 26(6) of the Local Government Act (1974) says the Ombudsman should not intervene if the person affected has already had recourse to an alternative remedy, or they would be better served by doing so. When considering whether an alternative remedy is available, we should be mindful that almost all decisions made by public bodies can be challenged in the courts. Our guidance says that we should not be “unduly prescriptive” in relying on the availability of judicial review as an alternative remedy, and instead we should consider whether it is reasonable in the individual circumstances of the case.
18. We may decide it is reasonable to expect a person to pursue a legal remedy if they are seeking a substantial financial remedy which is larger than the Ombudsman would usually recommend. However, we must also consider whether the person affected is in a financial position to seek redress through the courts.
19. In this case, the primary claimed injustice is a substantial financial loss which Mr Y says the company invested as a direct result of false pledges made by Mr W. Mr Y is the CEO of a successful firm and so, in my view, it is likely that he has the experience and means to seek financial remedy through the courts. Mr Y even refers to legal action as a probable outcome in his correspondence with the Council.
20. However, Mr Y’s representative told me that his complaint is not only about commercial loss; he is also concerned about other matters, such as a general conflict of interest and poor communication. He brought his complaint to the Ombudsman not only because of his own monetary losses, but also because he does not want other people to be affected in the same way.
21. Mr W no longer works for the Council, so there is no possibility of other people being affected by his actions. However, Mr Y says this is a complaint in the public interest, and the Ombudsman should investigate because of the ongoing nature of Mr W’s responsibilities. I am not persuaded by this argument.
22. Furthermore, even if Mr Y has experienced avoidable time and trouble because of any communication delays, the Ombudsman would not usually consider a standalone complaint about communication or complaint handling if we decide the substantive matter is outside of our jurisdiction.
23. For these reasons I have discontinued my investigation into all aspects of Mr Y’s complaint.

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Final decision

24. I have made a final decision on Mr Y’s complaint. I have discontinued my investigation for the reasons explained in this statement.

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Investigator's decision on behalf of the Ombudsman