‘Organisational dysfunction at the most senior level' of Croydon LBC has been laid bare in a long-buried report leaked to The MJ.
The February 2021 report by independent investigator Richard Penn was commissioned by the Local Government Association in an attempt to understand how the council sunk so low.
Croydon's leadership had suggested the Penn report would be published once disciplinary processes had concluded but it has yet to surface officially.
However, it can now be revealed that Mr Penn blamed the council's dysfunction on ‘poor governance by the former political leadership of the council and by correspondingly poor managerial leadership from the council's most senior officers'.
The report read: ‘What happened in Croydon seems to have been an assertion of power to control the operational domain of the council by certain elected members and an apparent acquiescence to that by some senior officers.
'It would appear that those with the biggest responsibilities and personally held statutory duties let the organisation down.
‘Major risks within the council's revenue budgets and in its investment portfolio appear to have been downplayed in the face of what seemed to have been unbridled optimism and seemingly an almost reckless disregard of the potential adverse consequences of these risks.
'By narrowing its focus and attention to a small number of commercial, regeneration and other goals the council appears to have effectively blinkered itself to its wider responsibilities.'
Mr Penn also mentioned concerns about the ‘behaviour of the council's executive leadership team as a group and its behaviour in response to possible breaches of the officer code of conduct in regard to bullying behaviour'.
And he recommended members consider a review of the deal signed with former chief executive Jo Negrini, who left three months before the council issued a section 114 notice.
Mr Penn suggested councillors looked at whether the concerns raised in his investigation amounted to a ‘repudiatory breach of her contract and thus a breach of the terms of the settlement'.
One local government source with detailed knowledge of Croydon said: 'Maybe this leak will allow Croydon to close another chapter in its recent history, and to help concentrate fully on its considerable job of recovering its financial position and restoring good governance.'
In a statement, former council leader Tony Newman said: 'Croydon's problems have been painful for all of us, but the unavoidable truth is that decisions made by the council were made in good faith and were made collectively by the entire cabinet.
'There is a reason the Penn report has not been published – and that is because it has been hopelessly compromised from the start.
'We acted at all times with integrity and honesty.'
Former cabinet member for finance and resources, Simon Hall, added: 'Everyone who served as a councillor, myself included, truly regrets Croydon's financial crisis, and the constraints it continues to put on public services and families in the borough.
'But it would be wrong to attribute Croydon's problems just to spending decisions.
'This is also about longer-term funding shortfalls from central Government, which we were powerless to influence.'
