Revealed: Charity Citizen's Advice Scotland wasted public money for 20 years

Margaret Lynch highlighted how cash had been used for big pay-offs to a series of chief executives and squandered on costly mistakes for more than 20 years.

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But over that time governments have continued to channel tens of millions of pounds to the organisation, while factionalism and rifts at the top of the charity undermines attempts at reform.

Even now a board described by experts as "dysfunctional and driven by cliques and personal interests" is continuing to oversee a £7.5m budget.

In a document, which was only circulated to board members and civil servants, Ms Lynch highlighted risks to public money from political manoeuvring by internal cliques, and a lack of adequate skills on the part of board members, some of whom made self-interested decisions.

The briefing, which was sent by Ms Lynch to the Department for Business, Innovation and Skills, also highlighted a staggering toll of her predecessors lost to the organisation, with several chief executives leaving with substantial pay-offs after falling foul of internal machinations.

Pay-offs to chief executives John Palmer and Martyn Evans in the 1990s are believed to have cost more than £150,000 between them, a further chief executive Kaliani Lyle retired early - after board members raised grievances against her. Another, Lucy McTernan was sacked and also received a pay off understood to be in the region of £50,000.

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Ms Lynch herself was suspended by CAS a few months after detailing her concerns to civil servants and sacked earlier this year. A review by auditors in 2015 queried her expenses and other spending she had authorised. Subsequent to her dismissal she said she would fight the allegations and was innocent of any wrongdoing.

Her suspension for seven months prior to her sacking is believed to have cost nearly £60,000 while the charity continues to rack up legal costs ahead of her tribunal.

Questions are now being asked about why the government department responsible took no action sooner, after an independent report published this week reached virtually the same conclusions and called for urgent reforms.

This week's review, by Deloitte, made 32 recommendations. As well as demanding the appointment of an independent chair and changes to the current board it proposed a mechanism to remove trustees who underperform or misbehave, limits on the time at trustee can serve on the board, new training for board members and a follow up report within 12 months to ensure changes are being delivered.

But in the confidential briefing" prepared for DBIS (now Business, Energy, and Industrial Strategy) in May 2015, Ms Lynch pointed out that governance reviews, in 1995, 2005 and 2010 had all called for systemic changes in CAS. She said the organisation's recognised failings were not being addressed due to "the capture of the organisation by a well-organised faction of CABs who subvert the democratic processes of the organisation to ensure their continued dominance and control."

She warned of a need to ensure that public funds were being managed in an appropriate and acceptable manner, and said the board appeared to lack the necessary "competencies" to manage an organisation of CAS size.

Ms Lynch highlighted several situations where she said public money had been put at risk or lost as a result of the chaos at the top of CAS. In one case, the charity had to pay HMRC £650,000 in unpaid VAT due between 2006 and 2012."

Another five figure sum had been lost as the result of a board intervention in an industrial tribunal case CAS was defending, she said.

Ms Lynch pleaded for government intervention to secure change. However DBIS, which was at that time responsible for overseeing the CAS budget of approximately £14m, insisted on another Governance review. Now the existing board is being left to bring in a raft of changes.

An insider said "This is a real dereliction of duty. The Government seems happy to give £7.5m to a board that they hae repeatedly been told, in writing, is dysfunctional and incompetent. Who would receive a report on an organisation like the Deloitte one and then leave that kind of public money in their hands?"

Scottish Labour's Economy spokeswoman Jackie Baillie MSP said."It is extraordinary that a report presented to DBIS 18 months ago which forewarned them of the problems inherent within the board at CAS appears to have just gathered dust.

"Everybody values the local Citizen's Advice Bureau, that is why the current dysfunctional board cant be allowed to spoil all that good work. Questions have to be asked about why this devastating report from the former chief executive was not acted upon much more swiftly."

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A BEIS spokesman said: “We take our responsibility for managing public money seriously and were very concerned by the issues raised in Deloitte’s report. Citizens Advice Scotland has since committed to taking concrete steps to instil robust governance and financial controls, and we have agreed to review their progress and continue funding only on the basis that these changes are made.”