SENIORLancaster City Council officers committed misconduct during the Blobbygate' affair and the council acted unlawfully but the bill will still fall to taxpayers.

The District Auditor's £600,000, four-year report concluded that the misconduct of former town clerk Bill Pearson and treasurer David Corker was not wilful'.

They cannot, therefore, be asked to pay a surcharge to cover the £2 million losses incurred by the theme park.

The auditor's main criticism came for the renegotiation of the agreement with Unique the so-called supplemental heads of terms.' This was, he said, irrational and unlawful.'

Under the original agreement, the council would have paid the first £40,000 of attendance money to Unique, after which receipts would be split 60 per cent to the council and 40 per cent to Unique.

The council would also have met the costs of running the attraction but would keep profits from merchandising.

However, under the (un-lawful) renegotiated agree-ment, the council would pay Unique £300,000 in the agreement's first two years and £400,000 in the third year and keep all attendance income for fewer than 300,000 visitors (350,000 in year three). Any further income would be split 50/50.

The pay-off was that sponsorhip would be used to either offset the costs of the park or provide new features.

The auditor found that councillors agreed to the new heads of terms on the basis of information in reports which suggested that marketing and sponsorship agreements had been entered in to - when, in fact, they had not.

The town clerk also failed to give members a breakdown of comparative financial situ-ations under the original and supplemental agreements.

In his statement of reasons, the auditor said: "I regard that failure as extraordinary. It almost defies belief that officers invited members to approve entry into the Sup-plemental Heads of Terms without drawing the attention to the likely consequences..."

Only if attendances were between 330,000 and 360,000 would the council be better off under the new agreement, the auditor said.

The explanations offered by the city treasurer and town clerk were absurd' and inconsistent with any sen-sible reading' of the original contract, he added.

The officers' reasons for ent-ering the new agreement are to be issued in a later report, though the auditor claims there is no evidence to support the theory that this was used to cover-up' errors in the ori-ginal agreement.

It was this failure, the auditor argues, that represented misconduct on behalf of Mr Pearson and Mr Corker.

The auditor also considered two further main areas of concern.

The first of these was the council's failure to carry out any kind of market report before entering into an agreement, which he said was poor judgement or impru-dent' but not unlawful.

He found that a report by the town clerk and city treasurer misled councillors into believeing that a side letter' existed under which further ngotiations would take place if minimum attendance levels were not reached.

However, he found the the two officers honestly blieved' such an agreement would, at some point, be signed.

The auditor did not accept evidence including that from the current council leader Cllr Tricia Heath - that some councillors would not have supported the project had they been aware that no such agreement existed.

He also did not accept that members had been told the side letter would be legally binding' when it was not.

The next area of the auditor's inquiry relates to the decision to close the park and begin legal action against Unique.

Here, the auditor claims that the QC on whose legal advice the challenge was launched, only received partial and inadequate instructions' from council officers.

However, he does not accept that this made the legal advice irrelevant'.

February 5, 2003 15:00