AUDITORS have raised concerns over how one of Scotland's biggest councils renegotiated a multi-million-pound deal with a business run by a friend of its leader.
Independent accountants have questioned whether local politicians in North Lanarkshire had the full facts before they gave the go-ahead to radically alter a housing repairs contract with Mears Scotland.
The new-look deal with Mears - which is now known to have cost the public purse an extra £25 million - sparked a bitter civil war within the ruling Labour group on North Lanarkshire Council.
It also prompted council leader Jim McCabe to deny his friendship with Mears Scotland chief executive Willie Docherty, husband of Glasgow Lord Provost Sadie Docherty, had any impact on the decision.
Now, in a detailed report, the local authority's auditors Scott-Moncrieff have said that Mr McCabe and his fellow councillors were right to act on the contract, which was at risk because Mears said it was losing money.
But they warned that politicians could not be sure they had achieved best value for the public purse without re-tendering the contract on the open market.
They stressed that officials in papers put to councillors last year focused on amending the contract, not re-tendering, to ensure continuity of repairs.
They added: "We identified a number of issues relating to the accuracy or robustness of the figures included in the financial scenarios.
"Although the decision to amend the contract was based on a series of reports presented to Policy and Resources Committee, and is with consistent internal governance arrangements, we have identified some concerns over the content of those reports."
A key report presented in private to councillors at the height of last year's independence referendum campaign did not say that the renegotiation would cost an extra £25m over the duration of the contract, auditors found. Nor did it spell out any other options, such as re-tendering, they said.
The accountants concluded: "Without going out to the open market it is not possible to conclude with full certainty that the option to vary the contract rather than retendering provides the optimal solution."
This point echoes concerns first made by the council's own internal watchdog, Labour's Tommy Morgan, more than seven months ago.
The veteran, in correspondence seen by The Herald, quizzed council chief executive Gavin Whitefield on why the contract was not being re-tendered. Mr Morgan was subsequently sacked from his position chairing the council's audit and governance panel after a split vote by the Labour group. He is currently seeking a judicial review of the party's decision.
Mr Morgan said: "The external auditors' report highlights areas of concern I had raised in November last year.
"In the interests of total transparency and good governance, these continued concerns must not be allowed to go unanswered."
The Scott-Moncrieff report is scheduled to be heard by the panel once chaired by Mr Morgan on Wednesday.
Some Labour insiders said the document had already re-opened wounds from infighting early this year. Other council sources said they felt the report vindicated the administration and underlined that it made no allegations of wrongdoing by either the council or Mr McCabe.
A source said: "People are asking for an investigation. Well, we have just had one."
The SNP voted for the new contract in March, but only after losing a vote of no-confidence in Mr McCabe. They believed the Labour leader should have declared an interest. He did not break any rules by not doing so and has been open about his friendship.
Phil Boswell, the SNP's new MP for Coatbridge, Chryston and Bellshill, said: "I am not convinced that this process has delivered best value to the public pound. There are good people working at the council and good people working at Mears. But alarm bells should be ringing now.
"This disconcerting report suggests that councillors took a decision without being in full possession of the facts, and that there is no way of knowing for sure that the renegotiated contract got best value for money without it being re-tendered."
A spokesman for North Lanarkshire Council said: "This independent report is clear that councillors were provided with detailed evidence to allow them to make a decision and that reasonable action was taken to prevent what would be an extremely costly failure of the repairs partnership.
"The report is also clear that the council was proactive in the face of significant risk, was correct to assume that rates paid for repairs would increase if the contract was re-tendered, and that no issue identified by the auditors had a material impact on the justification for the decision.
"The service provided by the partnership is one of the highest-performing and most cost-effective in the country.
"This was the right decision to ensure that our tenants continue to receive an excellent repairs service."
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