A leaked report has identified “weaknesses” in controls that led to misuse of expenses in a council’s running of a multimillion pound film studio.

A Freedom of Information request in April revealed that Hertsmere Borough Council leader and Elstree Studios chairman Cllr Morris Bright and the Conservative group had to repay the studios thousands of pounds due to wrongly claimed expenses and use of council-owned property for party political purposes.

The council owns the Shenley Road studios, but a leaked independent audit published by the SIAS and commissioned by the council said it could only provide “limited assurance” – the second lowest of four ratings - that there are effective controls in operation.

The report, which will be made publicly available on the council’s website on July 22, states there have been “significant issues” around conflict of interest, misuse of expenses, and transparency disclosures – however the report states a number of issues have been addressed in recent months.

The Elstree Film Studios board was made up of Cllr Bright as chairman, managing director Roger Morris, councillors Caroline Clapper and Paul Morris and recently retired councillor Charles Goldstein as non-executive directors, as well as council corporate director Sajida Bilje as company secretary, council chief executive Donald Graham as shareholder representative, and council head of finance Matthew Bunyon as Section 151 officer.

Borehamwood Times:

As revealed in the FoI, Cllr Bright has paid back £3,422.14 in expense claims billed to the studios. This includes £1,836.50 in costs relating to a reception when he was made an MBE, sums of £509.21 and £409.93 on trips to Cannes Film Festival, and £222.50 in mileage to conferences and phone calls.

Read more details about the FOI here

Although the report says it is “reasonable to expect” the council leader’s attendance at film festivals, there is an expectation of how councillors should act according to the Nolan Principles; seven guidelines that outline how holders of public office should act.

The report refers to when Cllr Bright requested an upgrade to his accommodation in Cannes in 2014. During an interview with auditors, Cllr Bright said the cost of an upgraded hotel room was offset by the use of a fixed rather than flexible airline ticket. However, the report states that there was no evidence to support this in the accounts.

Borehamwood Times:

Council leader Morris Bright

In 2015 and 2016 he was joined in Cannes by his wife, who was registered as a studios staff member with the title ‘personal assistant management’. But in an email on May 15 last year that was revealed in the FoI request, Cllr Bright said his family had no connection to the studios.

The Local Authority Order 1995 makes it clear councillors should not receive expenses at a higher rate than the council’s scheme – but evening meals in Cannes in 2016 that were billed to the studios cost on average £32.41 compared to the council’s allowance of £11.77.

Taxi fares paid for by the studios between August 2013 and May 2018 came to £1,401.46, but the council only pays for use of public transport or reimbursement of mileage.

When Cllr Bright was made an MBE, he requested that the council pay for an executive car to and from Buckingham Palace. But when the council refused his request, he arranged transport himself and sent the studios the bill, which was signed off.

The audit recommends as a high priority that an expenses and benefits in kind policy is adopted. Any expense claimed by Cllr Bright, who in 2017/18 received allowances of £13,272, or managing director Roger Morris, must now be approved by two independent signatories. Approval of all expenses for all board directors must be by an appropriate level of seniority within the company, and finally, all allowances and expenses must be published.

During the review, auditors found that the studios’ managing director was not directly approving Cllr Bright’s claims and they were instead being signed off by the current and previous financial controller. This has been perceived to be a “weakness in internal control”, which is why the above recommendation has been made.

April’s FoI request also revealed that Conservative use of the studios for a party dinner in March 2015 and training between 2013 and 2018 saw the Hertsmere Conservative Association repay sums of £1,200 and £9,360 respectively.

As a result, the report recommended that council-owned facilities should not be used for any party political purposes. This has already been put into practice.

The report mentions that no declaration of interest was made by Cllr Paul Morris, a non-executive director on the studios board who leases office space under the company name BHE Ltd, when the board reviewed rates charged to companies leasing space from the studios.

A recommendation has been made that on any agenda about a council-owned building, pecuniary interests and other conflicts of interest must be declared.

Towards the end of last year, five new independent non-executive directors were recruited to the board, and an independent panel was appointed to make recommendations on whether and how much board studio directors should be paid.

This, and the council taking action in 2018 to strengthen governance framework and the accountability of the film studios board, have been viewed by the auditors as positive.

Responding to the points raised, studios managing director Mr Morris said: “We have faith in our auditors and will try to ensure recommendations are put into action.”

Councillors, including Cllr Bright and Cllr Morris, have been advised not to comment until the report is publicly released on July 22.

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