Categories
Exaro News Archive

Auditing shake-up ‘set to cost £120m,’ say MPs

By David Hencke | 7 July 2011

MPs today published a report revealing that the government faces a £120 million bill to abolish the Audit Commission. The House of Commons communities and local government committee says that the government has already put aside £56 million to cover costs for redundancy payments and closing down the Audit Commission.

The report, citing figures from the commission, says: “The cost of redundancy payments resulting from abolition is already £27 million and will rise to between £40 million and £105 million.”

“The government is proposing a departure from the established practice that public bodies should not appoint their own auditors”
– House of Commons communities and local government committee

“In addition, there will be £15 million for early termination of leases. Pension liabilities would be additional and depend on whether or not the Audit Commission continues to be classified as a going concern.”

The Department for Communities and Local Government estimates that it will save £50 million a year by abolishing the Audit Commission, but MPs call that into question in the report.

The parliamentary committee says that Grant Shapps, housing and local government minister, “presented no detailed evidence of how the £50 million saving would be achieved.”

The minister had told MPs: “There is nothing that I have seen since the announcement of the abolition and the headline £50 million figure that leads me to suspect that the number is any smaller.” But he declined to provide any details. The figure represents the £50 million charge every year by the Audit Commission to local councils to cover its costs for audits and ‘value for money’ services.

However, councils with annual expenditure of more than £6.5 million would still be audited and would have to pay fees to the private sector. Indeed, councils would face extra costs because they would have to indemnify auditors and set up independent audit committees.

The MPs are worried about maintaining the independence of auditors, who would be appointed by councils. Under the proposals, councils will adopt a business model for appointing auditors.

Their report says: “The government is proposing a departure from the established practice that public bodies should not appoint their own auditors. The proposals place a great responsibility on the government to create adequate legal safeguards and assist local government in establishing local audit committees that are, and are seen to be, capable and independent.”

The MPs also want the government’s proposals for audit committees strengthened and lay down specific safeguards. “Audit committees must be chaired by independent persons of proven competence, and should have a majority of independent members.

“These requirements (including the avoidance of conflicts of interests for independent members) should be defined in law. Chairing of audit committees will be a significant responsibility and should be remunerated, and allowances should be payable to other independent members. The law should require full transparency for audit committee proceedings.”

Related Stories

Categories
Exaro News Archive

Pickles plans no audit for £2bn of public spending

Thousands of public bodies to escape scrutiny of their expenditure

By David Hencke | 7 July 2011

“The current arrangements for local audit… are inefficient and unnecessarily centralised” – Grant Shapps, housing and local government minister

Up to £2 billion of public expenditure is to become exempt from audit next year under radical reforms proposed by the government.

Exaro has uncovered the figure following the decision by Eric Pickles, communities and local government secretary, to abolish the Audit Commission.

The proposed changes to the auditing of local government means that 8,700 public bodies with annual expenditure between £1,000 and £6.5 million would be checked – but not audited – by independent examiners. An audit includes checking all invoices and expenditure.

Another 1,200 public bodies spending less than £1,000 a year would not be checked at all.

Research by Exaro has revealed that the total unaudited annual spend of these 9,900 public bodies could top £1,952 million, and will, at the minimum, be £331 million. Under the plans, the initial annual expenditure escaping audit will be somewhere between those two figures, but it could rise in subsequent years to the maximum.

The remaining 353 local authorities and 215 other public bodies – including fire and rescue authorities, national parks and conservation boards – that have an annual spend above £6.5 million would appoint their own auditors as private companies do. These auditors would be able to undertake other work for the same public bodies, raising the potential for conflicts of interest. The auditing of local government would closely follow practices in the City.

And councils face extra costs because they would have to pay to indemnify new auditors and set up independent audit committees.

Meanwhile, the 150-year-old public right to demand that an auditor launch an investigation into suspected unlawful activity or waste of public money will be abolished under the plans.

The Department for Communities and Local Government (DCLG) is about to publish a draft bill after examining responses to a consultation exercise on its proposals. The government’s aim is for changes to come into effect in April 2012.

The Audit Commission, however, is sceptical about this date, saying in a paper to the House of Commons communities and local government committee: “We understand the timetable for the necessary legislation to abolish the commission, and put in place a new local audit framework, means we are likely to keep some powers until at least December 2013.”

Grant Shapps, housing and local government minister, says in his forward to the consultation paper: “The current arrangements for local audit, whereby a single organisation – the Audit Commission – is the regulator, commissioner and provider of local audit services are inefficient and unnecessarily centralised.”

“We want to put in place a new locally focussed audit regime, which is open and transparent but retains the high quality of audit that we expect.”

However, the parliamentary communities and local government committee today published a report revealing the costs of abolishing the Audit Commission.

Plans for replacing the Audit Commission’s role in auditing health and police bodies are yet to be finalised.

Categories
Exaro News Archive

Audit reforms threaten higher costs to councils

By David Hencke | 7 July 2011

Larger authorities face increased costs because of the reforms to the auditing of local government proposed by Eric Pickles, communities secretary.

Hundreds of councils and other authorities spending more than £6.5 million a year face paying to indemnify new auditors against the possible costs of defending critical reports that later become subject to litigation.

Under the current regime, the Audit Commission automatically meets such costs, but Pickles is planning to abolish this body under his proposed shake-up.

The government is proposing that councils can indemnify auditors by reaching agreements with them to limit their liability. Otherwise, auditors would be allowed to charge higher fees to councils to insure themselves against liability.

“No figure exists for the estimated cost of the proposed new auditing system”

These changes would hit 353 local authorities and 215 other public bodies – including fire and rescue authorities, national parks and conservation boards – with an annual spend above £6.5 million.

And, as local councils adopt a business model for appointing auditors, they will also have to meet the cost of monitoring by the Financial Reporting Council, an independent City regulator.

Councils would, in addition, have to set up new independent audit committees, made up of elected councillors and independent people to recommend who should be appointed as auditors. This would add to the costs to councils, especially as independent members may have to be paid to do the job.

The Audit Commission says in a paper to the House of Commons communities and local government committee that it ensures auditors have the resources to carry out their responsibilities and cannot overcharge.

It says: “By underwriting costs, we ensure auditors cannot be constrained from meeting their statutory responsibilities by lack of resources. Equally, they cannot overcharge.”

The current cost to the taxpayer of auditing councils is £4 million. However, no figure exists for the estimated cost of the proposed new auditing system.

The committee today published its report criticising the costs of abolishing the Audit Commission.

Meanwhile, the 150-year-old public right to demand that an auditor launch an investigation into suspected unlawful activity or waste of public money will be abolished under the plans.

Related Stories

Categories
Exaro News Archive

Saddam rejected US-Soviet peace plan over Kuwait

By Pavel Stroilov | 30 June 2011

America and the Soviet Union failed with their secret peace plan to avert the war with Iraq over Kuwait after Saddam Hussein rejected it.

Following US president George Bush senior’s secret agreement to a Soviet attempt to “sound out” the then Iraqi president over the possible deal, the Soviet leader, Mikhail Gorbachev, sent his chief foreign-policy adviser, Yevgeny Primakov, as an envoy to see Saddam in Baghdad in October 1990.

Primakov then had a meeting with Bush in Washington, followed by another visit to Saddam, as part of his peace mission.

Secret documents in a Soviet archive smuggled to the West suggest that Saddam rejected the Soviet-US peace plan because he would not agree to keep the link between Kuwait and the Israeli-Palestinian conflict secret or “invisible”, and would not unequivocally promise to withdraw from Kuwait.

“The picture of Americans and Russians fighting side by side… would make a very strong impression”
– James Baker speaking to Mikhail Gorbachev in 1990

In November 1990, ten days after the failure of Primakov’s mission, the US began military preparations for an invasion of Iraq. At the same time, James Baker, the then US secretary of state, saw Gorbachev in Moscow.

The transcript of their meeting, written by Gorbachev’s interpreter, Pavel Palazhchenko, from his shorthand notes, is included in the Soviet archive smuggled to the West. Exaro has had the transcript translated from Russian into English. It records Gorbachev as saying: “We can see that you are disappointed, and we are also not pleased with the results of the efforts undertaken.

“However, I would like to assure you: whatever we do, whatever we are yet to do, our agreement with you is still in force. We will take no separate steps behind your back.”

Baker replied: “Thank you. We are confident of that.”

“There has been no shortage of attempts to solve the problem by diplomatic means. The Soviet Union also made such attempts, and we do not criticise you for that.

“We could not have agreed to a partial settlement, we believe it would be a terrible mistake. Frankly, we can see no difference between ‘face-saving’ and rewarding the aggressor.”

Baker also repeated Bush’s request to Gorbachev for Soviet forces to join the planned US military attack on Iraq.

Baker told Gorbachev: “I am haunted by the thought that, if we have to use force, the picture of Americans and Russians fighting side by side – even if your participation is limited to a small sub-division – would make a very strong impression.”

But Gorbachev refused. The US-led military attack on Iraq duly began in January 1991. After America and its allies launched a second military attack on Iraq in 2003, Saddam was hanged in Baghdad in 2006.

The secret transcript of the meeting between the US and Soviet leaders at the summit in Helsinki uncovered in the Soviet archive, which reveals how America secretly took part in an audacious Soviet attempt at a peace deal with Saddam Hussein to head off war with Iraq in 1990, is at variance with the account given in the joint memoirs of Bush and his national security adviser, Brent Scowcroft, ‘A World Transformed’.

Their book said that Gorbachev insisted on linking Kuwait to the Israel-Palestine conflict in a joint press statement, but then conceded the point.

In his own memoirs, Baker takes the credit for outmanoeuvring the Soviets on this issue.

Neither memoir mentions Gorbachev’s proposal to “sound out” Saddam on his proposed peace plan or that Bush agreed to it.

In their memoirs, Bush, Scowcroft and Baker are critical of Primakov’s mission, portraying it as a unilateral Soviet initiative which caught the US administration by surprise.

Pavel Stroilov is a Russian journalist and political exile living in London, and author of ‘Behind the Desert Storm’. Additional reporting by Alanah Eriksen.

Related Stories

Categories
Exaro News Archive

Bush Snr demanded secrecy for peace bid to Baghdad

By Pavel Stroilov | 30 June 2011

US president George Bush senior only agreed to back the Soviet peace bid to Iraq over Kuwait if the background to it was kept secret.

In the smuggled transcript of his meeting in September 1990 at a summit in Helsinki with the then Soviet president, Mikhail Gorbachev, Bush is recorded as saying: “I am concerned with one more thing. Whatever is suggested, it should not be a Soviet-American plan. If our two countries develop the settlement of this issue, it would seem very strange to many people in the world. Probably it should be a [United Nations] move.

“But I must say that the views you have expressed are very interesting. We shall think them over seriously.”

Gorbachev replied: “Can we take a decision on a plan here? No, but if we do nothing, then why meet? Surely, not for doing nothing.

“It is not important who suggested what, and when”
– Mikhail Gorbachev speaking to George Bush senior in 1990

“That is why I think if any idea emerges between us that seems fruitful, we might think of a mechanism to launch that process, and, as a result, some plan or a package might emerge. And then it is not important who suggested what, and when.

“The important thing is the result: multilateral efforts to establish a mechanism for resolving the problem.”

Bush said: “I agree. I would not like to send the others a message that we are working on this problem together.

“It is important just to start the search for a solution and to reach an agreement about the acceptable approach in the end. I agree with you in this respect.”

Gorbachev: “Today we might just say that we have conducted a broad discussion on the problem and believe it is possible to find an approach allowing us to untie this dangerous knot. In order to avoid escalation of this problem into a more dangerous crisis, it is necessary to act jointly now.”

Bush: “I agree with practically everything you have just said, with the exception of one formula. I would say, ‘We shall look for a solution,’ rather than, ‘We believe it is possible to find a solution.’ For I am still not sure that a solution is really possible.”

Bush agreed to the Soviets trying to “sound out” Saddam over the possible peace deal.

Pavel Stroilov is a Russian journalist and political exile living in London, and author of ‘Behind the Desert Storm’. Additional reporting by Alanah Eriksen.

Related Stories

Categories
Exaro News Archive

America agreed Gorbachev’s bid to ‘sound out’ Saddam

By Pavel Stroilov | 30 June 2011

US president George Bush senior agreed to a Soviet attempt to “sound out” Saddam Hussein over a possible peace deal to stop war over Kuwait.

Mikhail Gorbachev, the then Soviet president, according to the secret transcript of his meeting with Bush at a summit in Helsinki in September 1990, cited the view of his chief foreign-policy adviser on the then Iraqi leader, saying: “Yevgeny Primakov, member of the presidential council, who has known Saddam personally for a long time says that Saddam Hussein is not schizophrenic, but a person we must take seriously.

“If Saddam withdraws from Kuwait, he is finished”
– George Bush senior speaking to Mikhail Gorbachev in 1990

“Maybe, we should sound him out before talking to the others. We can send someone to him, perhaps, without telling him the essence of the plan.”

Bush replied: “I suppose that you should try to sound him out anyway. We have no access to him. It would be very constructive if you, with your history of relations with Iraq, could sound him out somehow.”

Referring to Egypt’s then president, Hosni Mubarak, Bush continued: “If you talk to Mubarak, he would say, ‘Saddam cannot withdraw from Kuwait now. Too much is at stake, he has already suffered too great losses.’”

Gorbachev, talking about Syria’s then president, the late Hafez Assad, replied: “Assad says the same.”

Bush: “If he withdraws from Kuwait, he is finished.”

Gorbachev: “That is what the whole process is all about.”

Later in the conversation, the transcript records Bush as saying: “Well, let’s think this over, let’s discuss this.

“I would like to ask my assistant, Brent Scowcroft, whether he has any questions or comments in connection with this.”

Scowcroft, who was then US national security adviser, said: “No, not as yet. But the main question is, if he rejects this plan, can we indefinitely tolerate the current status-quo, this stalemate?”

Gorbachev: “If he rejects this plan, we shall keep exerting pressure, increasing Iraq’s isolation. Some internal processes may start in Iraq, when the people see there is no negotiation with this man. Then, for the Iraqi people, it would be he, rather than we, to blame for all the hardship.”

Saddam ultimately rejected the peace plan.

Pavel Stroilov is a Russian journalist and political exile living in London, and author of ‘Behind the Desert Storm’. Additional reporting by Alanah Eriksen.

Related Stories

Categories
Exaro News Archive

US sought Soviet help for Middle East problems

By Pavel Stroilov | 30 June 2011

US president George Bush senior invited the Soviet Union to work with America to tackle tensions in the Middle East. This marked a reversal of US policy, Bush told his Soviet opposite number, Mikhail Gorbachev, during talks about a peace plan proposed to Saddam Hussein to avert the war with Iraq over Kuwait.

The disclosure is contained in the secret transcript of the meeting between Bush and Gorbachev at a summit in Helsinki in September 1990.

Bush is recorded as beginning the meeting by saying: “Now, to show you all my cards, I wish to say the following. For many years, during the Cold War, the United States policy consisted of preventing the Soviet Union from playing any role in the Middle East.

“Saddam Hussein should not be driven into a corner”
– Mikhail Gorbachev speaking to George Bush senior in 1990

“Naturally, the Soviet Union disagreed with that line; was displeased with the US attitude.

“Even though I am sure that it would be a great victory for Saddam if he managed to add the issues of the Arab-Israeli conflict to the crisis caused by his aggression, I want to assure you that the old concept, the old US attitude towards the Soviet Union’s involvement in the Middle Eastern affairs, has changed.

“The new order, which, I hope, might be established after all these troubles, implies that both the United States and the Soviet Union will make more positive, common efforts to resolve not only this particular problem, but also other problems of the Middle East.”

Bush also said that if Gorbachev were to send Soviet troops to the Gulf to join America and its allies, who were preparing to attack Iraq: “The United States would welcome this.”

However, Gorbachev privately and publicly strongly opposed the idea of military action to drive Iraqi forces out of Kuwait.

He told Bush that his advisors were warning him that a military attack would antagonise the Arab world, split the anti-Saddam coalition, and cause massive casualties and financial losses running to “trillions of dollars”.

“All our experts think Saddam Hussein should not be driven into a corner,” he said.

According to Russia’s former deputy foreign minister, Alexander Belonogov, however, Gorbachev was exaggerating the view of Soviet advisors about the threat. In a book published in Russia in 2001, he said: “I was surprised that [Gorbachev] resorted to ‘horror stories’ of this kind, so reminiscent of the then Iraqi propaganda.”

Gorbachev outlined to Bush his plan to seek a peace deal with Saddam.

Pavel Stroilov is a Russian journalist and political exile living in London, and author of ‘Behind the Desert Storm’. Additional reporting by Alanah Eriksen.

Categories
Exaro News Archive

Gorbachev’s peace plan for Saddam over Kuwait

By Pavel Stroilov | 30 June 2011

Moscow wanted to link the Israel-Palestine conflict to a peace deal with Saddam Hussein to secure Iraq’s withdrawal from Kuwait in 1990.

The then Soviet president, Mikhail Gorbachev, sought to persuade his American counterpart, George Bush senior, of his ambitious peace plan, according to the secret transcript of a meeting between them at a summit in Helsinki in September 1990.

Gorbachev told Bush: “You’ve mentioned that Saddam Hussein wanted to put all the problems in one pile, to link the Arab-Israeli conflict, Palestine, Lebanon. It is so, and he scores on it. It is necessary to face the fact that the problem of Israeli occupation of Palestinian lands is sensitive. Therefore, we find it necessary to knock this card out of his hands, and play it in our common interest. You probably thought of it, too.”

“This plan seems acceptable to many Arabs”
– Mikhail Gorbachev speaking to George Bush senior in 1990

He outlined what he wanted to propose to the then Iraqi president: “The problem of restoring the independence of Kuwait and other regional problems including the Palestinian and Lebanese issues could be discussed at an international conference with the [United Nations] security council members and Arab states.

“But they should start from the problem of Kuwaiti independence. The conference might also discuss the issue of establishing a system of security guaranteed by the Soviet Union and the United States, by the five permanent members of the security council.

“It should be mentioned that European capitals express some interest in this idea, bring forward parallel proposals. If Israel agreed to take part in such a conference, not at the first, but probably at the second stage, perhaps we would be able to re-establish diplomatic relations with Israel to compensate.

“This plan seems acceptable to many Arabs. Of course, Saddam Hussein may reject the idea of troop withdrawal. But, since we connect it to the discussion on the problem of Palestine and the Arab lands, then public opinion would blame him for the continued Israeli occupation and the lost opportunity to solve this problem. It would show to Palestinians and all Arabs that he was just exploiting this problem for his own benefits.”

“We believe that such an approach would allow us to snap up the initiative, to deprive Saddam of his aura of hero of the Arab nation, of the image points he is scoring in the Arab world.

“If Saddam accepts this plan, a comprehensive solution would become possible. But, most probably, Saddam will reject this plan, at least at the beginning.

“Anyway, once this or another such proposal is put forward, you and we will be viewed in a different light, as true advocates of a political solution. Yes, we have shown determination and solidarity in condemning the aggression. But, at the same time, we are giving a chance.

“We knock Saddam Hussein out of his current position, from which he can gain certain dividends. We are protecting the UN resolutions and everything we have already achieved, but also allow the new process to begin.”

Bush reluctantly agreed to Gorbachev’s attempt to secure a peace deal with Saddam.

Pavel Stroilov is a Russian journalist and political exile living in London, and author of ‘Behind the Desert Storm’. Additional reporting by Alanah Eriksen.

Related Stories

Categories
Exaro News Archive

Uncovered: US bid for peace with Saddam over Kuwait

Bush Snr secretly agreed Soviet plan to avert first Gulf War, say hidden papers

By Pavel Stroilov | 30 June 2011

“I would not like to send the others a message that we are working on this problem together” – George Bush senior speaking privately to Mikhail Gorbachev in 1990

America secretly took part in an audacious Soviet plan to strike a peace deal with Saddam Hussein to head off war with Iraq in 1990.

The plan is revealed in top secret documents unearthed by Exaro from a huge Soviet archive that has been smuggled to the West. They show that the then Soviet president, Mikhail Gorbachev, presented to America at a top-level summit his proposed plan to seek Iraq’s withdrawal from Kuwait in return for concessions over the Israel-Palestine conflict.

And George Bush, then US president, reluctantly approved an attempt to secure the then Iraqi leader’s agreement to the deal, according to the newly uncovered papers.

A transcript of a meeting in Helsinki between the American and Soviet leaders in September 1990 shows that Bush agreed to Gorbachev trying to “sound out” Saddam, then Iraq’s president, about the deal that would have stopped the outbreak of the Gulf War of 1990-1991.

Bush is recorded as telling Gorbachev: “It would be very constructive if you, with your history of relations with Iraq, could sound him out somehow.”

The document, part of an archive of more than 50,000 pages, remains top secret in Russia, and features in a book, ‘Behind the Desert Storm’, written by the author of this article and due to be published this summer. The US president was initially sceptical about Gorbachev’s peace plan, but was persuaded to pursue it. Bush also agreed with Gorbachev’s comment that “it would be mad to launch a military action against Iraq unless it makes any new military steps itself.”

Bush insisted on maintaining secrecy to the rest of the world about their partnership over the peace proposal, not wanting it to be presented as a Soviet-American plan. Behind closed doors, he told Gorbachev: “I would not like to send the others a message that we are working on this problem together.”

Bush and Gorbachev issued an unprecedented joint declaration at the summit condemning Iraq over its invasion of Kuwait. They publicly called on Iraq to pull out of Kuwait, restore its “legitimate government, and free all hostages held in Iraq and Kuwait.” But the declaration said nothing about the secret Soviet-American peace plan.

The summit took place the month after Iraq invaded Kuwait. Other documents suggest that Saddam ultimately rejected the peace plan because he would neither agree to keep secret the link between a withdrawal from Kuwait and the Israel-Palestine conflict, nor make a clear promise to exit from Kuwait.

Following the failure of the secret peace plan agreed by Bush and Gorbachev, the US led a military assault on Iraq four months after the Helsinki summit.

The transcript of the meeting between Bush and Gorbachev, written in Russian, does not clearly identify its author. However, from information in the archive, it appears that Gorbachev’s foreign policy adviser, Anatoly Chernyaev, compiled it from his shorthand notes. Exaro has had it translated from Russian into English.

It provides new insight into the extraordinary behind-the-scenes diplomatic moves between the US and USSR over Iraq, and sheds remarkable new light on one of the major events in modern history.

The document is at variance to the account later given by senior American government figures and contrasts with the official version of events, accepted by most historians, that America firmly stuck to its demand of Saddam’s unconditional withdrawal from Kuwait.

Bush also told Gorbachev privately at the summit in Finland’s capital that America would reverse its long-standing policy of trying to block Soviet influence in the Middle East.

Pavel Stroilov is a Russian journalist and political exile living in London, and author of ‘Behind the Desert Storm’. Additional reporting by Alanah Eriksen.

Related Stories