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Expenses and use of corporate credit cards by mayoral appointees

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					                                 Business Management and
                                 Administration Committee




Expenses and use of corporate credit cards by mayoral
                                           appointees
Copyright


Greater London Authority

September 2009

Published by

Greater London Authority

City Hall

The Queen’s Walk

More London

London SE1 2AA

www.london.gov.uk

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ISBN

This publication is printed on recycled paper
    Business Management and
    Administration Committee
    Members
    Jennette Arnold   Labour (Chair)

    Darren Johnson    Green (Deputy Chair)

    Tony Arbour       Conservative

    Richard Barnes    Conservative

    John Biggs        Labour

    Brian Coleman     Conservative

    Len Duvall        Labour

    Roger Evans       Conservative

    Mike Tuffrey      Liberal Democrat




4
Contents


Introduction                                           6

Why the GLA issues corporate credit cards              8

Misuse of a GLA corporate credit card by Ian Clement   9

Lessons to be learned                                  14

Appendix 1 Chronology of events                        23

Appendix 2 Key findings                                25

Appendix 3 Recommendations                             26

Appendix 4 Orders and translations                     27

Appendix 5 Principles of scrutiny page                 28




                                                            5
    Introduction


    On 5 June 2009, news emerged that Ian Clement, Deputy Mayor for
    Government and External Relations and one of the Mayor’s personal
    appointees, 1 had used a GLA corporate credit card to incur personal
    expenditure. Although Ian Clement had reimbursed the Authority for
    the costs of the items identified as personal expenditure, the use of
    the credit card for this purpose was against the rules on the use of
    corporate credit cards. Ian Clement handed back the credit card.

    In response to requests from an Assembly Member, the Mayor agreed
    to publish full details of the expenditure that had been incurred on Ian
    Clement’s GLA corporate credit card. Following the publication of
    those details on 16 June, further discrepancies came to light. As a
    result, on 22 June 2009, the Mayor accepted Ian Clement’s
    resignation with immediate effect. 2

    Matters relating to Ian Clement’s use of a GLA corporate credit card
    were referred to the Metropolitan Police Service by the GLA on 24
    June 2009. 3 Police inquiries are ongoing at the time of this report.

    Individual staff are responsible for acting honestly and in line with the
    Authority’s procedures. It is not for us as a committee to investigate
    in detail the conduct of an individual officer of the Authority, and we
    do not seek to do so in this report. The police are investigating
    allegations against Ian Clement as is their role, and the Authority’s
    internal auditors have reviewed the documentation in accordance with
    their responsibilities. Our role is to review the issues arising from the
    case and the lessons to be learned and to ensure that they are
    implemented so that the public can have confidence in the Authority.

    In considering the issues arising from the case, we have been
    concerned to ensure that any lessons to be learned are properly
    identified and action taken in order to ensure that the system is
    transparent and robust.

    1
      Under s67(1)(b) of the GLA Act 1999, the Mayor may directly appoint up to ten
    members of staff, some of whom have job titles as deputy mayor. The statutory
    Deputy Mayor is Richard Barnes AM.
    2
      A full chronology of events is included at Appendix 1 to this report. The
    supporting documentation is available as part of the Business Management and
    Administration Committee’s agenda on 24 June 2009: London Assembly - Business
    Management and Administration Committee 24 June 2009
    3
      Transcript of meting of the London Assembly’s Business Management and
    Administration Committee, 24 June 2009, page 1. The transcript is available on the
    Assembly’s website:
    http://www.london.gov.uk/assembly/bmac/2009/jun24/minutes/appendix.pdf
6
We acknowledge the action that has already been taken to increase
the transparency of the GLA’s expenses system, and the measures that
have been put in place to improve systems and processes to prevent
further incidents of misuse of credit cards and the expenses system.

We have been told that in addition to the steps already taken, a review
of the Authority’s expenses and benefits framework is being
undertaken. 4

In this report we record formally the events that took place in relation
to the use of Ian Clement’s corporate credit card. We identify some of
the lessons to be learned from the case and put forward
recommendations as to how those lessons might be acted upon in
order to minimise the risk of further cases of misuse or inappropriate
use of corporate credit cards and in relation to the Authority’s
expenses framework more broadly.




4
  Agenda for Business Management and Administration Committee, 21 July 2009,
item 11, page 3
                                                                               7
    Why the GLA issues corporate
    credit cards

    Under normal circumstances, the goods and services required by the
    GLA and its Members and staff will be procured by the Authority using
    its corporate procurement processes. This enables the GLA to ensure
    that it obtains value for money and adequate controls over
    expenditure incurred on its behalf.

    In some circumstances, individuals might be required to incur expenses
    in the conduct of their jobs which they then submit to the Authority
    for reimbursement. The Authority has an Expenses and Benefits
    framework which clearly sets out the types of expenses that can be
    incurred, limits on expenditure on certain types of expenses, and how
    expenses can be claimed and reimbursed.

    In exceptional circumstances, such as unforeseen emergencies and
    whilst travelling abroad on behalf of the Authority, it may not be
    possible for individuals to use either of these methods. For the
    purposes of such exceptional circumstances, the Authority issues a
    small number of corporate credit cards. They are not to be used for
    private expenditure, and they should only be used when no other
    means of purchasing is available. Seven officers of the GLA hold
    corporate credit cards for these purposes. 5

    Ian Clement was the only mayoral appointee to be issued with a
    corporate credit card following the May 2008 elections. He was issued
    with the card in response to a request from him. The request was
    made and approved on the basis that Ian Clement had responsibilities
    that required him to travel overseas. 6




    5
      See transcript of meeting of the London Assembly’s Business Management and
    Administration Committee, 24 June 2009, page 2, for a list of those who hold GLA
    corporate credit cards
    6
      Transcript of meeting of the London Assembly’s Business Management and
    Administration Committee, 24 June 2009, page 3
8
Misuse of a GLA corporate
credit card by Ian Clement

Corporate credit card holders are required to comply with the
Expenses and Benefits Framework at all times, and must account for
all expenditure on the card and provide receipts and supporting
documentation. 7

Individuals who are issued with a corporate credit card are required to
sign a copy of the terms and conditions of their use. This provides the
Authority with assurance that the cardholder is aware of the rules and
of the potential consequences of failing to comply with the rules –
specific reference is made to the Authority’s disciplinary procedures.
Ian Clement signed a copy of the terms and conditions on 19 June
2008. 8

The Executive Director of Resources confirmed to us that Ian Clement
was not at any point exempted from any of the rules contained in the
terms and conditions of use of the corporate credit card or any of the
Authority’s rules relating to expenses more generally. 9

Despite the clarity of the rules and the steps that were taken to ensure
that Ian Clement was aware of the rules, he used his corporate credit
card to incur personal expenses. What is of most concern is that he
did so repeatedly over a period of several months.

Ian Clement’s corporate credit card was first used to incur personal
expenditure on 24 October 2008, and then again in January, March,
April and May 2009. In total, personal expenditure of £2,300.81 was
made using the card. All this expenditure was reimbursed to the
Authority by Ian Clement, but the card should never have been used
to incur personal expenses in the first place.

Ian Clement also used his corporate credit card to incur expenses that
were not allowable under the GLA’s Expenses and Benefits
Framework. The card was used to pay for car parking at airports, at a
hotel and at Ebbsfleet, at a total cost of more than £250, despite the
fact that the Expenses and Benefits Framework does not provide for
such expenses. In any event, expenses for car use are not permissible


7
  Expenses and Benefits Framework, page 50
8
  Agenda Item 12, Business Management and Administration Committee, 24 June
2009, page 53. Available on the assembly’s website:
http://www.london.gov.uk/assembly/bmac/2009/jun24/item12-appendices.pdf
9
  Transcript of meeting of the London Assembly’s Business Management and
Administration Committee, 24 June 2009, page 3
                                                                              9
     other than in exceptional circumstances. 10 The card was also used to
     pay for lunches with GLA colleagues 11 and lunch and snacks whilst
     travelling on behalf of the GLA. 12 The GLA paid for those expenses
     despite them not being permissible under the rules.

     The card was also used to make purchases that should have been
     made through the GLA’s corporate purchasing processes in order to
     provide value for money and an appropriate audit trail. For example,
     the card was used to withdraw cash when travelling overseas.

     In addition, some expenditure was authorised and paid for by the GLA
     despite a lack of receipts and other supporting documentation. 13

     These examples of misuse of the corporate credit card took place over
     a period of several months, despite the Executive Director of
     Resources reminding Ian Clement verbally about the rules on several
     occasions. 14

     On 1 April 2009, responsibility for authorising expenses incurred by
     mayoral appointees was transferred from the Executive Director of
     Resources to the Mayor.

     On 1 June 2009, the Mayor became aware of the use of Ian Clement’s
     corporate credit card to incur personal expenditure, and of the
     previous examples of misuse of the credit card. Shortly thereafter Mr
     Clement was asked to return the card to the Mayor.

     We should note at this point that this was not the first time that the
     Mayor had expressed concerns about Ian Clement possessing a
     corporate credit card and using it inappropriately. In August 2008, Ian
     Clement used the credit card to upgrade flight tickets for himself and
     a GLA officer in order that they could travel business class to China.
     This was not an appropriate use of the credit card (flight reservations
     are supposed to be booked through the GLA in advance), and it was
     10
        Transcript of meeting of the London Assembly’s Business Management and
     Administration Committee, 24 June 2009, page 24
     11
        Transcript of meeting of the London Assembly’s Business Management and
     Administration Committee, 24 June 2009, page 22
     12
        Transcript of meeting of the London Assembly’s Business Management and
     Administration Committee, 24 June 2009, page 24
     13
        Transcript of meeting of the Business Management and Administration
     Committee, 24 June 2009, page 20
     14
        Transcript of meeting of the Business Management and Administration
     Committee, 24 June 2009, page 10
10
clearly in breach of the Mayor’s publicly stated policy of using
economy class flights. However it did not represent a breach of the
rules on what expenses could be claimed under the Framework that
was in operation at that time.

The Mayor was first told about the repeated misuse of the corporate
credit card on 1 June. 15 Prior to that point, the Mayor was not
advised that the card had been misused. In April and May 2009, he
had been presented with authorisation forms that only included
expenditure that was deemed permissible and supported by receipts,
following work by his executive assistant to ensure that the paperwork
was in order before being presented to him for signature.

When the Mayor approved the corporate credit card log relating to the
April 2009 statement, he was apparently not aware that Ian Clement
had been required to repay the Authority for six items of personal
expenditure appearing on the April 2009 statement, amounting to
more than £500. Nor was he aware of the previous history of
repeated misuse of the card until 1 June 2009, two months after he
assumed responsibility for authorising the expenses of his appointees,
and seven months after the (then) Executive Director of Finance and
Performance (now Executive Director of Resources) became aware of
the first incident of misuse of Ian Clement’s corporate credit card.

This Committee invited the Mayor to attend a meeting in July in order
to discuss his role in approving Ian Clement's expenses and corporate
credit card use and his knowledge of the misuse of the card. The
Mayor responded that he would answer questions either at BMAC or
at Mayor's Question Time, but not at both meetings. The Chair of the
Assembly cannot interfere with Members' entitlements to ask
questions of the Mayor in accordance with Standing Orders. The Chair
of the Assembly could not therefore offer or enforce a guarantee that
no Member would ask questions on the matter at Mayor's Question
Time on 15 July. The Mayor therefore declined to attend a meeting
of this Committee. The Mayor was asked questions on the matter at
Mayor's Question Time meetings, as is recorded in the chronology of
events attached to this report at Appendix 1. However a scrutiny
investigation would normally include detailed questioning of those
involved and qualified to discuss the issues. This Committee did not

15
  See Transcript of meeting of the London Assembly’s Business Management and
Administration Committee, 24 June 2009, page 6, and letter from the Mayor to the
Chair of the Committee, 25 August 2009
                                                                                   11
     have the opportunity to question the Mayor in detail on issues relating
     to his role or his knowledge of the misuse of the credit card.

     On 5 June, a news story appeared on the Guardian website, including
     a statement from the Mayor’s Office that ‘the Deputy Mayor for
     External Relations Ian Clement has handed back his corporate credit
     card following an internal investigation into its use’. 16

     On 16 June, the Mayor wrote to an Assembly Member agreeing to the
     Member’s request that he publish credit card statements, an itemised
     list of the expenses incurred, receipts relating to the transactions, a
     summary of personal expenditure charged to the credit card and a
     signed copy of the terms and conditions of use of the card. All these
     documents were published on the GLA website.

     Whereas most staff within the GLA work to the Head of Paid Service,
     Ian Clement was a direct mayoral appointee. It would therefore be the
     Mayor’s responsibility to discipline him in the event of misconduct or
     underperformance. On 17 June, Assembly Members questioned the
     Mayor about his response to Ian Clement’s misuse of a corporate
     credit card. The Mayor told the Assembly that he believed that Ian
     Clement’s use of the credit card had been ‘crass’, 17 ‘inappropriate’ and
     ‘wrong’. 18 Notwithstanding those views, the Mayor argued at that
     point that dismissing Ian Clement would be inappropriate as there was
     no evidence of dishonesty or personal benefit. 19

     Following the publication of the details of the expenses incurred by
     Ian Clement on the GLA website, allegations were made about the
     veracity of some of the business hospitality claims that had been
     made. In the light of these allegations and further ‘irregularities’, on
     22 June the Mayor accepted Ian Clement’s resignation with immediate
     effect.

     Whilst much of the discussion that took place around this case was
     concerned with Ian Clement’s use of a corporate credit card, we note
     that in addition to the £7,000 of expenditure he incurred using the
     card, he also made separate expenses claims for a further £2,000.

     16
        http://www.guardian.co.uk/uk/davehillblog/2009/jun/05/boris-johnson-ian-
     clement-expenses-gla
     17
        Transcript of Mayor’s Question Time meeting, 17 June 2009, page 21
     18
        Transcript of Mayor’s Question Time meeting, 17 June 2009, page 23
     19
        Transcript of Mayor’s Question Time meeting, 17 June 2009, page 21
12
Some of the expenses claims that were authorised appear to be
outside the expenses that are allowable under the Expenses and
Benefits Framework. Some of the lessons we have identified in the
remainder of this report therefore apply to the expenses system more
generally rather than being limited specifically to expenses incurred
using a corporate credit card.




                                                                        13
     Lessons to be learned


     The fact that Ian Clement was able over a period of months to
     incur expenses that should not have been paid for by the GLA,
     both using the usual expense claims process and using a
     corporate credit card, suggests that the system for approving
     expense claims was not as robust as it could and should be.

     The weaknesses that have been revealed by this case must be
     considered in the context of an internal audit report in
     February 2009 that provided substantial assurance about the
     Authority’s expenses systems and processes. We have no
     evidence to suggest that this substantial assurance is not
     warranted or reasonable, and we recognise that the
     weaknesses identified in that internal audit are being
     addressed. However, there are issues arising from Ian
     Clement’s expenses claims and corporate credit card misuse
     that could usefully be addressed in order to provide full
     assurance that the expenses paid for by the Authority are
     properly incurred and accounted for.

     In this section of the report we outline the lessons to be learned,
     actions already taken, and recommendations for further action.

     Management arrangements in the Mayor’s Office
     Until July, all the Mayor’s appointees reported directly to him. From 1
     April 2009, the Mayor was responsible for approving all the expenses
     claims of his appointees.

     Sir Simon Milton had been referred to as the Mayor’s Chief of Staff,
     but when we questioned him about his role at our meeting on 24
     June, it became clear that he had no formal role in relation to line
     management of other mayoral appointees or approval of their
     expenses. We expressed concerns about the lack of formal line
     management arrangements in the Mayor’s Office and suggested that
     there should be a chief of staff who could carry out functions such as
     line management and authorisation of expenses. This would provide a
     greater degree of management oversight of mayoral appointees than
     any Mayor could reasonably be expected to provide directly.

     Following our meeting the Mayor wrote to the Chair of the Assembly
     on 6 July 2009 confirming the formal appointment of Sir Simon Milton
     as Chief of Staff. Sir Simon at that point assumed line management
     responsibility for all but two of the Mayor’s appointees. Sir Simon
14
Milton is now responsible for approving expense claims and gifts and
hospitality declarations as well as coordinating effective day-to-day
working of the Mayor’s appointees. The job titles of these mayoral
appointees were changed to reflect their advisory nature (they had
previously been referred to as ‘directors’ but are now called ‘advisors’).

The two exceptions to this arrangement are Guto Harri, Executive
Director of External Relations, and Dan Ritterband, Director of
Marketing. Both of these posts involve managing GLA staff, so they
are materially different to those of the other mayoral appointees.
They therefore report to the Chief Executive for the purposes of
performance management and expenses approval.

The appointees referred to as deputy mayors (Sir Simon Milton and Kit
Malthouse AM) and the statutory Deputy Mayor, Richard Barnes AM,
will continue to report directly to the Mayor for the purposes of
expense claims and declarations of gifts and hospitality.

This new, more formal structure in the Mayor’s Office should provide a
greater degree of supervision and coordination within the office.

We welcome the appointment of a chief of staff within the
Mayor’s Office to provide management oversight of the
Mayor’s appointees.

How expenses and credit card transactions are authorised
The GLA’s corporate credit cards are registered to the GLA rather than
the individual who holds it, which means that the GLA is liable for
paying the bills. Expenses incurred on the cards are approved
retrospectively, once the bill has been received. In the event of any
unauthorised, unsubstantiated or illegitimate expenditure on the card,
the Authority is liable to meet the cost and then reclaim it from the
individual. This places the Authority at risk of having to pay for
expenses that have not been properly incurred and do not represent
value for money.

The GLA successfully reclaimed the personal expenditure incurred by
Ian Clement using the corporate credit card. However, there are
further items of expenditure that appear on the credit card statements
which appear to fall outside the expenses allowable under the
Expenses and Benefits Framework. We asked the Executive Director
of Resources whether the GLA had reclaimed those amounts as well.
                                                                             15
     We were told that a decision would be taken in line with the
     Authority’s debt collection procedure in the light of whether it would
     be cost effective to pursue the matter.

     Sir Simon Milton did tell us for the record that Ian Clement had
     indicated that he would repay any monies that should not have been
     claimed as expenses. 20 However the system that is in place means that
     the Authority’s ability to reclaim such monies cost-effectively is
     dependent upon the cooperation of the individual concerned.

     The risks are to some extent limited by the credit limits on the cards.
     In Ian Clement’s case, the credit limit was £5,000. The risks should
     also be mitigated by the authorisation process, which should identify
     any expenditure that is not within the rules and should therefore be
     paid for by the individual. This should enable the Authority to reclaim
     the relevant amount from the individual concerned, and take
     preventive action to ensure that further breaches do not take place.
     For expenses incurred without the use of a corporate credit card, the
     approvals process should prevent the Authority from paying for
     expenses that are not allowable within the rules.

     In the case of Ian Clement’s credit card, there were apparent
     weaknesses in the process for authorising items of expenditure, the
     checks and balances that are in place to verify that expenses claims
     are legitimate, and in the steps that were taken to prevent repeated
     breaches of the rules relating to corporate credit card use.

     The role of the finance department
     The Mayor told the Assembly at Mayor’s Question Time on 15 July
     2009 that he had assumed that the finance department had pre-
     validated Ian Clement’s credit card transactions. He said, ‘It is my
     understanding – and I think you would not correct this – that they had
     been authenticated and legitimated by the finance department as well.
     I certainly would not have signed them had there been protest by the
     finance department or had I been aware of any protest by the finance
     department’. 21

     It is reasonable for the Mayor to expect that decisions he is asked to
     make have been checked to ensure that they are legally and financially

     20
        Transcript of meeting of the London Assembly’s Business Management and
     Administration Committee, 24 June 2009, page 23
     21
        Transcript of Mayor’s Question Time meeting, 15 July 2009, page 2
16
robust and that they comply with the GLA’s own rules and procedures.
This principle should apply as much to expenses claims as to any other
decision the Mayor is asked to make.

In fact the process for authorising credit card expenditure does not
include formal pre-verification by the finance department.

The process relies upon the individual making the expense claim
putting forward honest and supportable claims. The credit card
statement is received by the treasury team within the finance
department. That team might occasionally notice something obviously
amiss, such as expenditure at a supermarket. 22 However, at that point
the team would not have access to the receipts and supporting
documentation relating to the expenditure, so would not be able to
assess whether or not each item of expenditure would be allowable
under the Expenses and Benefits Framework.

The statement is then sent to the credit card holder, who completes a
corporate credit card log. 23 The individual is responsible for
completing the log and providing receipts and supporting documents.
The form is then passed to the line manager or other authorising
signatory for authorisation. The form is then returned to the finance
department. There is no provision on the form for a signature from
the finance department to confirm that the expenditure is legitimate
and within the rules – the responsibility lies entirely with the individual
and the authorising signatory.

For expenses incurred by individuals rather than using a corporate
credit card or other corporate purchasing process, the system similarly
relies upon individuals providing honest accounts of the expenses that
have been claimed. 24




22
   Transcript of meeting of the London Assembly’s Business Management and
Administration Committee, 24 June 2009, pages 11 and 20
23
   See Expenses and Benefits Framework, page 57
24
   Transcript of meeting of the London Assembly’s Business Management and
Administration Committee, 24 June 2009, pages 22 and 25
                                                                              17
     Recommendation 1
        We recommend that in reviewing the Expenses and Benefits
        Framework, the Executive Director of Resources should
        clarify the role of the finance department in verifying the
        validity of expense claims and credit card transactions prior
        to them being authorised by the Mayor or other authorised
        signatory.

     Checks and balances in the system
     Publication of itemised lists of expenses
     Until July 2009, expenses of the Mayor, Assembly Members and senior
     staff were reported in aggregate on a quarterly basis to the Assembly’s
     Audit Panel. This provided transparency and accountability in relation
     to the overall amount claimed by Members and senior staff. The
     information was broken down by category of expense, and the Panel
     was able to (and did) ask for further details of the items of
     expenditure incurred. The Audit Panel also maintained and continues
     to maintain oversight of the systems and processes in place, and has
     considered internal audit reports about the expenses and benefits
     framework as recently as April 2009. The organisation’s accounts are
     opened once a year, when members of the public and media are given
     access to the detailed accounts and supporting documentation.

     However, the information provided to the Audit Panel was an
     aggregate figure, and although the Panel was able to request further
     details, itemised lists of items of expenses were not published as a
     matter of course.

     At our meeting on 24 June 2009, we agreed that the expenses of the
     Mayor, mayoral appointees and Assembly Members should be
     published in full on the GLA website. The Mayor agreed with this
     proposal and on 6 July the GLA published itemised lists of expenses
     claimed during 2008/09. The Authority is now publishing itemised
     lists of expenses of Assembly Members, the Mayor and the Mayor’s
     appointees as soon as they are authorised.

     We welcome the new arrangements for publication of itemised
     lists of expenses claimed by the Mayor, Assembly Members and
     mayoral appointees.

     If this new system is to be as effective as possible in making the
     Authority’s expense claims publicly transparent and accountable, it
18
would be useful if a member of the public visiting the website were
provided with information to enable them to assess the published lists
of claims against the Authority’s rules. Without a clear explanation of
the rules, it is not possible for a member of the public reviewing the
information to assess whether the claims are reasonable and legitimate
within the rules. We therefore recommend that the web pages on
which itemised lists of expenses are published should include a link to
a summary of the rules.

Recommendation 2
   The expenses section on the GLA website should be revised
   to provide a summary of the rules on what expenses are
   allowed.

Scrutiny of expenses by the Audit Panel and Standards Committee
The arrangements for scrutinising expenses claims have also been
changed. The itemised lists of expenses claims will be reported to the
Authority’s Standards Committee, which includes independent
members as well as the Mayor and Assembly Members. The Audit
Panel will retain responsibility for overseeing the systems and
processes.

One of the key issues to arise from the Ian Clement case was the need
for a clear escalation process in the event of an individual repeatedly
breaking the rules and ignoring advice and instructions from the Chief
Finance Officer (the Executive Director of Resources).

In this case, the matter was not escalated to Ian Clement’s line
manager (the Mayor) or any other senior officer in the Mayor’s office.
The Mayor was apparently not aware of the ongoing misuse of the
credit card until 1 June 2009. This was seven months after the first
instance of misuse of the card and two months after the Mayor
assumed responsibility for authorising expenditure on the card. It was
also in the context of the furore about alleged abuses of the expenses
system by Members of Parliament. The Executive Director of
Resources told us that in hindsight he should have alerted the Mayor’s
Office at an earlier stage. 25




25
  Transcript of meeting of the London Assembly’s Business Management and
Administration Committee, 24 June 2009, page 30
                                                                           19
     We suggest it would be useful to formalise the escalation process and
     advise officers of the process by including it in the Expenses and
     Benefits Framework and any associated guidance on expenses claims
     and corporate credit cards. It is also worth considering what role the
     Chief Executive and the Mayor’s Chief of Staff should have in that
     escalation process.

     In order to provide public transparency and accountability, the
     escalation process should include provision for reporting repeated
     instances of breaches of the rules to the Standards Committee as part
     of its consideration of itemised lists of expenses.

     Related to this, it may be worth considering including explicit
     references to the Authority’s whistleblowing policy as part of the
     Expenses and Benefits Framework. This would provide advice to
     relatively junior staff who may have concerns about the expense
     claims of senior officers.

     Recommendation 3
        The Expenses and Benefits Framework should be revised to
        include a clear description of the escalation process in the
        event of an individual failing to comply with the rules after
        the internal escalation process has been followed. The
        process should include, as a last resort, provision for
        reporting repeated breaches of the rules to the Authority’s
        Standards Committee.

     Random checking and other internal assurance measures
     The increased public transparency provided by the publication of
     itemised lists of expense claims is a welcome step. However, the
     Authority must take responsibility for minimising the risk of breaches
     of the rules and taking swift and effective action to correct any
     breaches that do occur.

     We recognise the comments made by the Executive Director of
     Resources about the need for a system that is proportionate and cost
     effective. 26 It would not be cost effective to carry out extensive
     checks to assess every single expenses claim – it must be the
     responsibility of individuals to conduct themselves honestly and in

     26
       Transcript of meeting of the London Assembly’s Business Management and
     Administration Committee, 24 June 2009
20
accordance with the rules, and any individual who knowingly and
deliberately breaks the rules should face appropriate sanctions.

One potentially cost-effective mechanism would be to introduce a
random sampling programme, whereby a certain number or proportion
of expenses claims each year would be examined in greater detail.
This would introduce the possibility of close scrutiny into all expense
claims, and would provide the Authority with further assurance that
the claiming and approvals process is working effectively.

Recommendation 4
   We recommend that the Executive Director of Resources
   should consider introducing a random testing programme to
   assess a proportion of expense claims in greater detail each
   year. We recommend that the Audit Panel should pursue
   this issue as part of its consideration of the Authority’s
   internal audit programme.




                                                                          21
22
Appendix 1 Chronology of
events

19 June 2008        Ian Clement is issued with a GLA corporate credit card
                    and signs an agreement that sets out the rules for using
                    the card. 27
November 2008       GLA’s Chief Finance Officer becomes aware of the use
                    of Ian Clement’s corporate credit card to incur personal
                    expenditure and reminds Ian Clement of the rules
                    relating to the use of the card. Further reminders are
                    given in February 2009 and May 2009 following
                    repeated incidents of the card being used to incur
                    personal expenditure. 28

1 April 2009        The Mayor assumes responsibility for authorising the
                    expenses of his appointees, including those incurred on
                    a corporate credit card.
1 June 2009         The Mayor is informed by Sir Simon Milton, then Deputy
                    Mayor for Policy and Planning (now Deputy Mayor and
                    Chief of Staff) that Ian Clement has used his credit card
                    to incur personal expenditure. Ian Clement destroys the
                    card and provides it to the Mayor.
5 June 2009         A news story is posted on The Guardian website by
                    journalist Dave Hill. The article includes a statement
                    from the Mayor’s Office confirming that ‘The Deputy
                    Mayor for External Relations Ian Clement has handed
                    back his corporate credit card following an internal
                    investigation into its use’. 29
16 June 2009        The Mayor writes to Assembly Member John Biggs
                    agreeing to publish credit card statements, an itemised
                    list of the expenses incurred on the credit card, receipts
                    relating to the transactions, a summary of personal
                    expenditure charged to the credit card and a signed
                    copy of the terms and conditions for corporate credit
                    card holders. This information is published on the GLA
                    website. 30




27
   Transcript of meeting of the London Assembly’s Business Management and
Administration Committee, 24 June 2009, page 3
28
   Transcript of meeting of the London Assembly’s Business Management and
Administration Committee, 24 June 2009, page 8
29
   http://www.guardian.co.uk/uk/davehillblog/2009/jun/05/boris-johnson-ian-
clement-expenses-gla
30
   http://www.london.gov.uk/mayor/team/expenses/
                                                                                 23
     17 June 2009           At Mayor’s Question Time, the Mayor states that ‘these
                            expenses, this irregularity in the system, by which the
                            Deputy Mayor for Government Relations, Ian Clement,
                            was using his corporate credit card to pay for personal
                            expenditure was uncovered by my office and I do not
                            want to minimise my own deep sense of fury when we
                            discovered what had happened. I think he was
                            completely wrong and steps have been taken to ensure
                            that that will not happen again’. The Mayor stated that
                            ‘there is no evidence of dishonesty in this case’, but that
                            the use of the corporate credit card had been ‘crass and
                            inappropriate’.

     22 June 2009           Mayor’s Office issues a statement announcing that the
                            Mayor has accepted the resignation of Ian Clement with
                            immediate effect, ‘following the discovery of further
                            discrepancies in the use of his corporate credit card’. 31
     24 June 2009           Meeting of the Assembly’s Business Management and
                            Administration Committee with Sir Simon Milton and
                            Martin Clarke, Executive Director of Resources. At the
                            meeting, Martin Clarke confirms that matters relating to
                            Ian Clement’s use of a GLA corporate credit card have
                            been referred to the police. The Committee agrees in
                            principle to publish itemised expenses for Assembly
                            Members and calls on the Mayor to do the same for
                            himself and his appointees.
     3 July 2009            Mayor writes to the Chair of the Assembly to announce
                            changes in his office in the light of the resignation of Ian
                            Clement. The changes include formally appointing Sir
                            Simon Milton as Chief of Staff, who will now authorise
                            the expenses of the Mayor’s appointees apart from
                            deputy mayors.
     6 July 2009            Itemised lists of expenses for the Mayor, Assembly
                            Members and the Mayor’s Appointees during 2008/09
                            are published on the GLA website.

     15 July 2009           Mayor’s Question Time – Mayor is questioned on Ian
                            Clement’s resignation and the issues arising.
     21 July 2009           Meeting of the Business Management and
                            Administration Committee to consider formal proposals
                            to change how expenses are reported.



     31
          http://www.london.gov.uk/view_press_release.jsp?releaseid=22540
24
Appendix 2 Key findings


The fact that Ian Clement was able over a period of months to incur
expenses that should not have been paid for by the GLA, both using
the usual expense claims process and using a corporate credit card,
suggests that the system for approving expense claims is not as robust
as it could and should be.

The weaknesses that have been revealed by this case must be
considered in the context of an internal audit report in February 2009
that provided substantial assurance about the Authority’s expenses
systems and processes. We have no evidence to suggest that this
substantial assurance is not warranted or reasonable, and we recognise
that the weaknesses identified in that internal audit are being
addressed. However, there are issues arising from Ian Clement’s
expenses claims and corporate credit card misuse that could usefully
be addressed in order to provide full assurance that the expenses paid
for by the Authority are properly incurred and accounted for.

We welcome the appointment of a chief of staff within the Mayor’s
Office to provide management oversight of the Mayor’s appointees.

We welcome the new arrangements for publication of itemised lists of
expenses claimed by the Mayor, Assembly Members and mayoral
appointees.




                                                                         25
     Appendix 3 Recommendations


     Recommendation 1
     We recommend that in reviewing the Expenses and Benefits
     Framework, the Executive Director of Resources should clarify the role
     of the finance department in verifying the validity of expense claims
     and credit card transactions prior to them being authorised by the
     Mayor or other authorised signatory.

     Recommendation 2
     The expenses section on the GLA website should be revised to provide
     a summary of the rules on what expenses are allowed.

     Recommendation 3
     The Expenses and Benefits Framework should be revised to include a
     clear description of the escalation process in the event of an individual
     failing to comply with the rules after the internal escalation process
     has been followed. The process should include, as a last resort,
     provision for reporting repeated breaches of the rules to the
     Authority’s Standards Committee.

     Recommendation 4
     We recommend that the Executive Director of Resources should
     consider introducing a random testing programme to assess a
     proportion of expense claims in greater detail each year. We
     recommend that the Audit Panel should pursue this issue as part of its
     consideration of the Authority’s internal audit programme.




26
Appendix 4 Orders and
translations

How to order
For further information on this report or to order a copy, please
contact the London Assembly Secretariat on 020 7983 4790 or
assembly.translations@london.gov.uk

See it for free on our website
You can also view a copy of the report on the GLA website:
http://www.london.gov.uk/assembly/reports

Large print, braille or translations
If you, or someone you know, needs a copy of this report in large print
or braille, or a copy of the summary and main findings in another
language, then please call us on: 020 7983 4100 or email:
assembly.translations@london.gov.uk.

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Vietnamese                           Bengali




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Punjabi                              Gujarati




                                                                          27
     Appendix 5 Principles of
     scrutiny page

     An aim for action
     An Assembly scrutiny is not an end in itself. It aims for action to
     achieve improvement.

     Independence
     An Assembly scrutiny is conducted with objectivity; nothing should be
     done that could impair the independence of the process.

     Holding the Mayor to account
     The Assembly rigorously examines all aspects of the Mayor’s
     strategies.

     Inclusiveness
     An Assembly scrutiny consults widely, having regard to issues of
     timeliness and cost.

     Constructiveness
     The Assembly conducts its scrutinies and investigations in a positive
     manner, recognising the need to work with stakeholders and the
     Mayor to achieve improvement.

     Value for money
     When conducting a scrutiny the Assembly is conscious of the need to
     spend public money effectively.




28
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