Report v02

COMPLAINT

TO

THE COMMISSION OF THE EUROPEANCOMMUNITIES CONCERNING FAILURE TO COMPLY WITH COMMUNITY LAW

BY

A GROUP OF CITIZENS OF THE UNITED KINGDOM

KNOWN COLLECTIVELY AS THE NO TO BIKE PARKING TAX CAMPAIGN

AGAINST

THE UNITED KINGDOM OF GREAT BRITAIN & NORTHERN IRELAND

FOR

VIOLATIONS OF DIRECTIVE 92/50 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL OF MARCH 2004

ON THE PROCEDURES FOR THE AWARD OF PUBLIC SERVICE CONTRACTS – CONCEPT OF “AWARD OF A CONTRACT” – MEANING – AMENDMENTS TO THE PROVISIONS OF A PUBLIC CONTRACT DURING

THE CURRENCY OF THE CONTRACT

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Executive Summary This complaint is made following the discovery of a material change to a public works contract for the provision of parking enforcement services awarded in 2003 by Westminster City Council to National Car Parks Limited, and the failure of Westminster City Council to take any form of remedial action. The material change – fundamental change of supplier. Until March 2007, National Car Parks Limited (NCPL) was contracted to over 40 UK councils to provide parking enforcement services via its “Services Division”, a separate division from it main business activity of running car parks. In March 2007, it announced that it was de-merging and that the “services division” was being transferred to a new company, to be called NCP Services so that NCPL could be relieved of its rights & obligations arising from these parking enforcement contracts, and thereafter, be sold, unencumbered to Macquarie Investment Group. To complicate matters, NCPL primarily transferred these contracts to another newly-formed “holding” company called NCP Topco Ltd which then transferred the contracts to NCP Services Ltd. The evidence suggests that this was done firstly, to avoid delaying the sale, and secondly to allow the original owners of NCPL to realise a cash return for these contracts post the sale. Under contract law, there are only 2 ways in which a party to a contract can transfer its rights & obligations, either “assignment” or “novation”. The crucial difference is that, under an assignment, the assignor still remains obligated to the other original parties even though its obligations are being met by the in-coming assignee. Under a novation, the party seeking to transfer its rights & obligations is totally replaced by the in-coming party thereby relieving the first party of its obligations. Therefore, it is undeniable that the transfer effected by National Car Parks Ltd in March 2007 was a novation, which not only breached the terms of the original contract, but also violated both UK & EU Procurement Legislation. Breach of Contract In the original contract of 2003, under a section titled “Assignment & Sub-contracting”, points 40.1& 40.2 clearly differentiate between assigning & novating the contract, restricting the contractor to the former, and then only with written consent from the council. Point 40.1.2.2 indicates the council’s requirement that the original contractor remain obligated. Under the terms of the contract, at point 40.2.1, only the council can “novate” the contract. Violation of UK procurement legislation For a novation to be binding under UK legislation, it needs to be signed by all 3 parties, which clearly was not the case in NCPL’s novation to NCP Topco Ltd, and the latter’s novation to NCP Services Ltd. Violation of EU Directive 92/50 Under this directive, the material change to a party, so evident in the replacement of NCPL by ultimately NCP Services Ltd requires an immediate re-tendering process. On 13 March 2008, Advocate General Kokott restated what amounted to the default position on transfer of contracts, with respect to public procurement under the terms of Directive

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92/50/EEC – Procedures for the award of public service contracts – defining the concept of “award of a contract”. He ruled:- “A change in service provider during the currency of a public contract prima facie indicates a material contractual amendment, as an undertaking which did not have to compete with other bidders and whose selection did not depend upon any comparison with any other bidders is, after all, entrusted wholly or impart with the carrying-out of the public contract. Inherent in such a manner of proceeding is the danger of circumvention of procurement law and the concomitant risk of distortion of competition on the relevant market and giving preference to the new service provider over other possible service providers”

I. The Complainant 1. The No To Bike Parking Tax Campaign is a single-aim protest group, comprising stake-

holders & Westminster City Council (WCC) residents, formed in response to the introduction of parking charges for motorcycles & scooters by WCC in August 2008, herein referred to as the MCS (Motorcycle Charging Scheme).

2. The group’s policies & administration are controlled by a Committee comprising

unelected volunteers, and has a website-subscribed membership numbering 7,500+ 3. Following a public declaration by WCC that the MCS was to be conducted on a

“Revenue-Neutral” basis, extensive investigations have yielded evidence that has convinced the group that certain Officers & certain Councillors at WCC concocted the MCS solely as a mechanism for enhancing the economic prosperity of their preferred private contractors engaged in the collection and enforcement of the MCS.

II. The Member State that failed to comply with Community Law 4. The United Kingdom of Great Britain & Northern Ireland (the “UK”) failed to fulfil its

obligations under Community law as Westminster City Council (“Westminster”) failed to re-tender its “on-street parking enforcement”; “Clamping” & “Removals & Pound Management” contracts following a material change from the original “Contractor”, National Car Parks Limited (UK Company no. 253240) to new supplier & start-up company NCP Services Ltd in violation of Directive 92/50 as set out in sections III & IV below.

5. The United Kingdom of Great Britain & Northern Ireland (the “UK”) failed to fulfil its

obligations under Community law as Westminster City Council (“Westminster”) failed to re-tender its “on-street parking enforcement”; “Clamping” & “Removals & Pound Management” contracts following a material change in extending the scope of works to be performed by the contractor to cover the enforcement of the Motorcycle Charging Scheme. Since prior to the introduction of the Motorcycle Charging Scheme in August 2008, motorcycle had been allowed to park for free, it is tacit that these works could not have been originally covered by the terms of the initial contract, and their inclusion shifted the economic balance of the contract in favour of the contractor in a manner that was not provided for in the terms of the initial contract.

6. The No To Bike Parking Tax Campaign Group respectfully requests that the Commission

pursue this complaint and declare as illegitimate the unilateral novations, in March 2007, of these contracts by original contractor National Car Parks Limited in favour of NCP Topco Limited (UK Company no. 06033001) with the declared intention of a second unilateral novation in favour of NCP Services Limited (UK Company no. 06033060).

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7. Also, that the Commission declare as illegitimate the attempted ratification of the above by Westminster City Council by way of a novation without re-tendering, a full year later in March 2008, in favour of newly formed NCP Services Limited having accepted a “Parent Company Guarantee” from also newly-formed NCP Services Topco Limited (UK Company no. 06181220). These novations were then declared as being “back-dated” to 2003, the year in which the contracts were originally signed.

8. Should the Commission be minded to uphold this complaint, the No To Bike Parking Tax

Campaign Group respectfully requests that the Commission declare that any payments made by Westminster City Council for the performance of these contracts be reclaimed from the illegitimate replacement contractor, and that any revenue collected by Westminster City Council under these contracts be repatriated to its originator.

9. By admission by its previous owner 3i plc, at the time of the de-merger into two separate

companies in March 2007, National Car Parks Ltd sought to novate over 40 other local authority contracts. Said Councils include:- London Boroughs of Camden, Lambeth, Islington & Richmond, Sunderland, Bolton District, Brighton & Hove, Buckinghamshire, East Sussex & Nottinghamshire County Councils to name a few.

III. Facts giving rise to the complaint Material Change to a party to a public works contract 10. In March 2007, National Car Parks Ltd (UK Company No. 253240) was due to be sold by

its owner 3i plc to Macquerie European Infrastructure Fund II for a £790m, which required its de-merging into “two businesses”, as described in a press release from its majority shareholder, 3i plc on 14 March 2007 (App 1, No.1).

11. At the last paragraph of the press release, it is highlighted that National Car Parks Limited

(NCPL) at the time “runs more than 40 contracts for local authorities” through its “services business”, and that it is tacit from the press release, that the intention was to split this division known as “services business” into a brand-new, stand alone entity to be known as NCP Services Limited. Thereafter, the contracts originally awarded to NCPL would be “transferred” to new entity NCP Services Ltd

Assignments & Novations 12. Legally, there are only 2 ways in which the right & obligations of a contract can be

transferred between parties, either “assignment” & “novation”. 13. An assignment is a transfer, recognised by law, of a right or obligation of one person to

another. Assignment differs from novation in so much that the parties to the contract do not change. Most rights and obligations are capable of assignment. Novation is a mechanism whereby one party can transfer all its obligations under a contract and all its benefits arising from that contract to a third party. The third party effectively replaces the original party as a party to the contract. When a contract is novated the other contracting party must be left in the same position as he was in prior to the novation being made. A novation requires the agreement of all three parties involved.

14. Under the terms of the original contract signed in 2003, the section titled “Assignment &

Sub-contracting” (App1, No.5) clearly makes the above distinction. Point 40.1. prohibits the contractor from assigning without prior WRITTEN consent from the council. Moreover, 40.1.2.2 qualifies that, even with such permission, the contractor shall not be

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15. With its proposed sale, the intention is clearly for NCP Services Ltd to fully replace

NCPL as party to the WCC parking enforcement contracts, thereby relieving NCPL of responsibility for any “acts, default or neglect” occasioned by NCP Services Ltd. This would only achievable by a novation.

16. However, point 40.2 in conjunction with 40.1 made clear that the ability to novate the

contract was exclusively held by the council, and thus, not available to the contractor. The implication must be that the unilateral novations were also breaches of the original terms of the contract.

17. Furthermore, the novations would constitute a material change in the party contracted by

WCC, and as such, under EU Directives, the contracts should have been re-tendered, and it is the failure of the 40+ local authorities to recognise this stipulation that has led to this complaint being filed.

18. Further, having been provided with comprehensive evidence of their failings in this

regard, the continued refusal by those in charge to take remedial action in favour of a concerted stance of denial, until, in the case of WCC, after the contract expired in April 2010.

19. Those of particular culpability are the Councillors that acted as Cabinet Members for

Transport, namely Danny Chalkley, Lindsay Hall & Lee Rowley under the Leadership of Councillor Colin Barrow. Also, the Officers of the Legal & Parking Departments, namely Peter Large (Head of Legal) & Helen Coutts (Principal Solicitor who signed the Deed of Novation), and from Parking, Head of Parking Alistair Gilchrist, Asst Head of Parking Kevin Goad under the leadership of Council Chief Executive, Mike More. This matter has been fully brought to the attention of both Colin Barrow & Mike More both of who have given a green light to a course of denial & subterfuge.

Trading local authority contracts like a commodity 20. Whilst the press release explains which members of staff from the original NCPL were to

be employed by this new company, its fails to explain the intention to realise a cash return for the contracts by selling them to the management of this new company, NCP Services Limited, as if these contracts were mere commodities that could be traded at will.

21. This transaction was detailed in the Auditors Report to the Accounts of NCPL for the

year ended December 2006, (App1, No.2) under a section entitled “Events after Balance Sheet Date”, wherein the term “disposal” is applied to clarify the intention to remove the “on-street enforcement contracts” from NCPL and to realise a cash return.

Unilateral Novations 22. As mentioned, in order that NCPL could be sold unencumbered by its obligations to the

40+ local authorities, the same had to be “transferred” to a replacement “contractor” said transfer having to be a novation, since an assignment would have left NCPL in situ, and obligated. More crucially, it would have required the written permission from over 40 separate councils with potentially detrimental time delay for the sale to Macquarie.

23. Therefore, as described by the Auditors, one of the 3 new companies, NCP Topco Limited, UK Company no. 06033001 (App2, No.5(i), Pg1) incorporated on 19 December

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24. Simultaneously, 2 other dormant companies were acquired, (a) UK Company no.

06033060 (App2, No.6(ii), Pgs2-7) incorporated 19 December 2006 as De Facto 1461 Limited, becoming NCP Services Limited on 21 February 2007 before becoming NSL Limited on 27 April 2009, and (b) UK Company No. 06181220 (App2, No.6(iv), Pgs9-12) incorporated on 23 March 2007 as dormant company De Facto 1484 Limited, becoming NCP Services Topco Ltd on 12 April 2007 before becoming NSL Services Group Limited on 27 April 2009.

25. It is important to note that this third new start-up, 06181220 (App2, No.6(iii), Pg8) is used

to provide a Parent Company Guarantee to the second new start-up 06033060 when Westminster Council attempts to ratify these novations a year later in March 2008.

26. According to the Auditors’ note, on 29 March 2007, the first of 2 novations was affected

whereby NCPL (Company no. 253240) transferred the assets pertaining to its Parking Enforcement Contracts to NCP Topco Ltd (Company no. 06033001) to facilitate a S110 liquidation by which these assets could then be sold.

27. Whilst no specific date is given, it is assumed that a simultaneous novation of these

contracts from NCP Topco Ltd (Company no 06033001) to NCP Services Limited (Company no. 06033060) occurred.

28. No evidence has been supplied to suggest that Westminster City Council, whilst notified

of the NCPL de-merger in February 2007, either knew; gave authority to; was party to; or ever signed any novation agreements in March 2007.

Acknowledgement by Westminster City Council as to its being aware of the novations 29. For permission to have been granted by Westminster City Council for such a material

change of contractor for what is classed as its third largest contract, there is a requirement for such a decision to be made either by an elected Member (Councillor), or by an Officer with delegated power by a Member.

30. As there is no recorded Statement of Decision within Westminster City Council’s

archives, or any reference to anything in writing that would act as the required written permission to novate, its has to be assumed that these novations were affected unilaterally by the management of NCP Topco Ltd & NCP Services Ltd without reference to Westminster City Council in order that NCP Services Ltd could assume responsibility for performing the contracts in March 2007.

31. Furthermore, once Westminster City Council was aware of the unauthorised novations, it

is our submission that it should have either (a) alerted NCP Services Limited that the Council did not recognise that company as a legitimate contractor, and that the contract was to be re-tendered, or (b) awarded NCP Services Limited temporary custodianship of the contract whilst the re-tendering exercise was undertaken. It chose to do neither.

32. In trying to establish when Westminster City Council were aware of the situation

pertaining to the replacement contractor, Head of Legal, Mr Peter Large, in a letter dated 28 August 2009 (App4, Pgs 7-9) implied that it was first referred to the Departmental Contracts Board in August 2007, a full 4 months after having been alerted by 3i plc as to its intentions.

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33. However, upon being asked by Councillor Paul Dimoldenberg which supplier had been recompensed for performing the contracts, the same Peter Large replied on 28 September 2008 (App4, Pg18):- “I am told the answer is: Prior to March 2007 – National Car Parks Ltd; April to December 2007 – NCP Services; January to March 2009 – NCP Services Ltd; April to present day – NSL Ltd”

34. This response is submitted as pivotal proof that internal investigative actions should have

immediately been undertaken action by officials at Westminster Council, but instead, a concerted stance of denial, refusal to admit liability & the subsequent passing the blame that has prevailed ever since our own investigations commenced.

35. Whilst the inference would be that 2 separate legal entities were recipient of payments,

invoices submitted after March 2007 were apparently from new supplier NCP Services Ltd were authorised for payment by then Head of Parking, Alistair Gilchrist.

36. To effect payment to the same, the accounts department would have been informed

accordingly. 37. Couple these admissions with the establishment that no elected Member had given

delegated powers to any Officer to accept the 3i plc unilateral novation should have alerted Head of Legal Peter Large that something was amiss, especially bearing in mind that he hold the position of Monitoring Officer,

Email & Letter from Peter Large – 28 August 2009 38. On 28th August 2009 (App4, Pgs 7-9), Peter Large wrote a definite email outlining his

view on what had taken place as regards the Council’s attempt to ratify the unilateral novations, which are subject to this request that the Commissioners scrutinise thoroughly.

39. At point 2, he admits that the group “separated” in March 2007 & that “new entity” NCP

Services Ltd received a “transfer of the business of inter alia, the parking enforcement business”. He then admits: “the Westminster contracts were TRANSFERRED to NCP Services…”

40. Being Head of Legal, earning over £2,000 per week, it is unacceptable that he would not

be aware that, legally, there are only 2 ways in which a contract can be “transferred”, ie by assignment or novation. Had the “transfer” in 2007 to which he refers been an assignment, it would have left National Car Parks Ltd (NCPL) as party to the contract, and NCP Services as a sub-contractor of NCPL. Crucially, were this the case, then payments were have continued to have been made by Westminster to NCPL, who would have forwarded the same to sub-contractor, NCP Services.

41. Interestingly, in a later response dated 10 September 2009 (App4, Pgs 12-13) to a request

for information made under the Freedom of Information Act (FOIA), it is stated at point 4.:- “The novation deeds, as stated above, were executed on 13 March 2008. Prior to the finalisation of the novation, the contracts were performed by NCP Services Limited on behalf of National Car Parks Limited.”. Whilst knowing the transfer to have been a novation, it seems that, by using the term “on behalf of” WCC were herein implying an assignment.

42. However, when the same “on behalf of” (thus assignment) was suggested by Sunderland

Council and subsequently reported in a local newspaper called the Sunderland Echo, the Chief Executive of National Car Parks Ltd, Mr Andrew Potter was most adamant in a letter to the same newspaper that this was absolutely incorrect. He states “It is NCP

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43. Further, on 24 October 2007, in response to a “blog” on a website run by parking

campaigner Neil Herron, the following clarification was offered:- Neil, You seem to be confused between NCP Services and NCP (National Car Parks Ltd). They are two separate companies (used to be one and the same but were separated in March and are now separately owned).The hospital car parks in question are, I believe, run by NCP, so I would be obliged if you could remove the NCP Services logo .I work for NCP Services, which does not run any local services in Humberside. You spelt "indefensible" wrong as well. Cheers. Tim Cowen, Director of Communications NCP Services.

44. As the evidence clearly demonstrates, the “transfer” in question was indisputably effected

by 2 novations, which would have required 2 Deeds signed by the relevant 3 parties ie (i) Westminster City Council, (ii) National Car Parks Ltd & (iii) NCP Topco Ltd in the first instance, and then (i) Westminster City Council, (ii) NCP Topco Ltd & (iii) NCP Services Ltd in the second. Neither Deeds exist.

45. At point 3, Mr Large confirms the attempt by Westminster Council to ratify the novation,

and duly provides copy of a Deed of Novation dated 13 March 2008, a full year later from the date of the original novations.

46. However, in trying to legitimise this violation of EU Procurement legislation, the parties

failed to factor in the original novation, which transferred the contracts from National Car Parks Ltd (Company no. 253240) to NCP Topco Ltd (Company no. 06033001). Therefore, the post-dated Deed of Novation upon which Westminster Council seems to rely was incorrectly signed by NCPL instead of NCP Topco Ltd as the “transferring” party.

47. Furthermore, in a response dated 15 March 2010 (App4, Pg35-36) to inquiries by

Member of Parliament Mark Field, WCC Chief Executive, Mike More refers to the unilateral novations of March 2007 as being “contract novation” and the attempt to ratify a year later as being “legal novation” with the interim period being covered by “an enforceable lawful contract”. It is utterly unclear as to what Mr More means by the terms.

48. A request for information dated 06 April 2010 (App4, Pg41-44) under the FOIA asking

Mr More to distinguish between these two phrases has been ignored 3 times by Westminster City Council.

The requirement to re-tender 49. At point 4 of his letter dated 28 August 2009, Peter Large appears to dismiss the

requirement under EU Directives to re-tender the contract following such a blatantly material change to one of the parties, when he categorically states:- “The novation of a contract does not, as a matter of procurement law or otherwise, require a tendering exercise”.

50. In the FOIA response of 10 September 2009 (App4, Pg12-13), at point 6, WCC offer an

alternative by suggesting that “The Contracts were not re-tendered because they had not expired”

51. However, in an incredible about turn, in an email dated 29 July 2010 (App4, Pg 60-61) to

Councillor Dimoldenberg, Mr Large make the following counter-argument:- “At the time, the novation of the contract would not have been regarded by any of those involved as a complex matter. It must be remembered that the Pressetext judgment in the ECJ, which is

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Pressetext few if any procurement professionals would have considered any question of a procurement exercise arose in these circumstances - and of course it is not clear that it does even after that case”.

52. It would appear that Mr Large, whilst employed to “know the law”, wants to exonerate

himself by claiming that few, like him would have known the EU Directives since no other party had been adjudged to have violated it prior to the Pressetext case, as if ignorance can now be used as a defence.

“Novation” meaning “New” 53. With the term “novation” coming from the Latin “nova” meaning new, it is our

understanding that the legal recognition of a novated contract is a new contract that commences from the date of signing, with the old contract terminating simultaneously. For obvious reasons, a novated contract thus could never be “back-dated”.

54. However, again at Point 4 of his letter of 28 August 2009 (App4, Pg8), Mr Large states

the complete opposite:- “It does not involve the creation of a new contract”, having already at point 3 stated that it had been “backdated” to the start of the contract in 2003.

55. Interestingly, when London Borough of Camden similarly novated, they claimed to have

back-dated their novation to March 2007. 56. In the same FOIA response referred to above (para 26), at point 1, WCC suggest that:-

“The Contracts between National Car Parks Limited and the Council did not cease. They were novated”

Who at Westminster knew what, and which Elected Members were aware. 57. It has been established, by change of payment to a new supplier, that Westminster City

Council was aware of 3i plc’s actions with regards to the contract “transfers” in March 2007.

58. The decision to novate a £50m Council contract, being of such magnitude can only be

made by an elected Member. Prior to September 2007, an entry was made by persons unknown into Westminster City Council (WCC) “Forward Plan of Decisions” (App1, No.4) which was described as “Approval for entering into a Deed of Novation (Transferring legal responsibility for the performance of the Parking Enforcement Services Contract & the Vehicle Removals, Relocations & Pound Management Contract from National Car Park Ltd to NCP Services Ltd)”, citing the “Decision-Maker” as being the Cabinet Member for Economic Development & Transport (Cllr Danny Chalkley).

59. This entry would appear to coincide with the consideration of the same by the Central

Services Departmental Contracts Board (an OFFICER body which advises the relevant Chief OFFICER on procurement & contract management) in August 2007.

60. At point 10 of Peter Large’s email & letter of 28 August 2009, he notes that the Report of

that meeting “flagged up” the issue as to whether a Cabinet Member (elected) decision was required (to authorise the novation of the third largest contract that the Council awards). According to Mr Large:- “However it does not appear to have been appreciated that one was”. This begs the question as to why someone then made the entry as detailed above at para.42.

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61. To ensure that Members are fully appraised of such changes, the Audit & Performance Committee of Members sits annually in February to review all the contracts that the City Councils had ongoing during the previous financial year which ends 31 March.

62. Therefore, the A & P Committee meeting of February 2009 would have been therefore

been aware of any novation to a contract made prior to 31 March 2008. However, even though these contracts had been novated from NCPL to NCP Topco Ltd in March 2007, and the subsequent ratifiying novation on 13 March 2008, no mention of it appears in any document prepared for the A & P Committee meeting. The record shows that the parking enforcement contracts were still be performed by National Car Parks Ltd even though many Officers were aware that this was simply not the case.

Report to Council’s Cabinet from Peter Large 63. At point 13 (App4, Pg9), Mr Large states that he has informed Councillor Chalkley, and

suggest that a report be prepared by the “parking service”. 64. Having taken the issue directly to the Chief Exective, Mike More, he reiterated in an

email dated 02 October 2009 (App4, Pg20-22) that “a formal report on the matter be submitted to Councillor Chalkley by Mr Goad, and beginning discusions with the Head of Procurement and Contract Management and the Director of Finance about changes to the City Council's procurement code to ensure this does not happen again”. To date, despite requests, a copy of this report has not been forwarded to us.

65. He then adds that “He (Peter Large) will also be reporting formally on the matter himself

to the Council's Cabinet, in his capacity as Monitoring Officer. Mr Large acknowledged in his letter of 28 August that there had been a failure of process and this will be reported to Cabinet.”

66. However, nearly nine months later, in a letter dated 25 June 2010 (App4, Pg50-53) from

the District Auditor, whom we charged to investigate the matter, it is made clear that this Report is yet to materialise. The Auditor seems to place reliance on the future production of this report as justification for his aversion to taking further action. He states:- “It is my initial view, based on the information I have seen, that the Council did not manage well or in accordance with its internal rules the transfer of the contract from NCP Limited to NCP Services Limited. The Council has acknowledged this and I understand that the Monitoring Officer is intending to report the matter to the Council’s Cabinet. In the circumstances, taking into account the information currently before me, the initial legal advice I have received and the Council’s actions, to date and intended, I do not believe it would be in the public interest to use my formal powers at this time to report or apply to the courts for a declaration that there is an item of account contrary to law.”

67. On both 5 (App4, Pg57) & 21 July 2010 (App4, Pg60), Councillor Dimoldenberg asked

Mr Large to confirm when this Report will be presented to Cabinet. Mr Large finally replied on 29 July 2010 that he intended to report as Monitoring Officer “at the first opportunity”.

68. In an email dated 17 September 2010 (App4, Pg65-67), the District Auditor again relies

on the intention of Mr Large to submit this Report. 69. At the time of preparing this complaint there has been no indication as to when this report

will be completed or presented to the elected Members of Westminster City Council. 70. Notwithstanding the lack of an official report, we have made it our business to inform as

many elected Members as we could find that were prepared to listen. These included the

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71. Interestingly, an FOI request seeking information as to Councillor Linday Hall’s

involvement in these novations has been ignored 3 times by Westminster City Council. Serious failings of the District Auditor to investigate & invoke remedial action 72. In an email dated 27 November 2009 (App4, Pg25-26), Mr Haworth-Maden, the District

Auditor for Westminster City Council made the following statement as regards his duties as an auditor:- “Essentially, I am concerned with the financial transactions of the Council in the year of audit and its arrangements for securing economy, efficiency and effectiveness in its use of resources. I do not have a general power to review actions taken by the Council and would in general only become involved in individual cases if there is evidence of illegality or fraud and/or corruption”

73. However, it is the right of any citizen to approach the District Auditor in the event that the

Council may have made illegitimate payments to individuals, which is clearly the supposition in this case, and equally, if the Council has been unjustly enriched.

74. Notwithstanding the EU Directive that stipulates the immediate re-tender, the novations

of March 2007 have been demonstrably shown to be invalid as they fail to have been signed by all 3 parties; and the novation of March 2008 is also invalid as it fails to list the correct.

75. Should it be argued that in declaring the 2007 novations invalid, it would ipso facto

validate the 2008 since NCPL would then have to have been declared as responsible for performing the contracts in the interim, it has to be recognised that payments were in fact illegitimately made to NCP Services from April to December 2007, and NCP Services Ltd from January 2008 onwards.

76. Furthermore, if NCP Services & NCP Services Ltd had no legitimate right to perform

these contracts, the issuing of Penalty Charge Notices; application of clamps or removal of vehicles by either of these entities must, ipso facto, be also deemed illegitimate, as would any funds resultantly received ie “unjust enrichment”. It is important to realise that, since parking contraventions were decriminalised, the demanding of a charge by way of punishment for a parking contravention has to, in law, be deemed a contract. Hence the terms “Charge” & “Notice” both applicable only in contract law.

77. Whilst our initial meeting with the District Auditor took place in early November 2009, it

was not until 25 Jun 2010 (App4, Pg50-51), nearly 3 months after the contract had expired, that he made a substantive response.

78. Having clearly conspired with his fellow Auditors facing similar questions regarding their

own Councils, and in a concerted attempt to exonerate the Councils by legitimising these payments to NCP Services Ltd especially prevalent between March 2007 & March 2008. Mr Haworth-Maden claimed:- “In addition, I am advised that in terms of the enforcement of on-street parking, the legislation requires only that there be an ‘arrangement’ in place between the Council and the provider. In my view, notwithstanding the flaws in the process for entering into the novation agreement, there does appear to have been an arrangement in place and that this was authorised can be implied from the behaviour of the Council’s officers toward NCP Services Limited.”

79. It is clear that Mr Haworth-Maden did not bother to check the validity of this advice else

he would have been counter advised that the only reference to a requirement for an

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80. However, later in the same email is his assertion that, in his opinion, the transfer

amounted to an “assignment between two related companies”. As proved, both these assertions are blatantly incorrect. It was indisputably a novation and the only relationship between the 2 companies was that the newer one comprised several members of staff that used to be employed by the older one. There is no other corporate relationship between NCPL & NCP Services Ltd save that investment house 3i plc, the majority shareholder in NCP Services Ltd used to be a majority shareholder in NCPL prior to its sale to the Macquarie Group.

81. In emails of 28 June 2010 (App 4, Pages 54/5) & 1 July 20102010 (App 4, Pages 54/5),

both these clarifications were brought to Mr Haworth-Maden’s attention, which he, in an email of 19 July 2010 subsequently deemed as being “no additional information or argument that I was not already aware of.” (App 4, Pages 58,)

IV. Provisions of Community law being infringed by the United Kingdom of Great Britain & Northern Ireland 82. The unilateral novation of the contracts primarily from National Car Parks Limited to

NCP Topco Limited, and then from NCP Topco Limited to NCP Services Limited, together with the post-dated novation by Westminster City Council of the contracts from National Car Parks Limited to NCP Services Limited violated Directive 92/50 in so far as the blatant material change in the party to the contracts required that the same were immediately submitted for a re-tendering process.

83. The above violations run parallel to the ruling of the European Court of Justice pressetext

Nachrichtenagentur GmbH v 1. Republic of Austria (Bund), 2. APA-OTS Originaltext-Service GmbH, 3. APA AUSTRIA AGENTUR (Case C-454/06) (APA) (App 1, Page 3) which implied that contractual amendments during the life of the contract give rise to a new contract requiring re-tendering.

84. Whilst it is noted that the contract in question, being that awarded by Westminster City

Council expired in April 2010, firstly, the concerns herein were brought to the attention of the Monitoring Officer & Head of Legal, Mr Peter Large together with the Councillors responsible, Cllrs Danny Chalkley, Lindsay Hall & Lee Rowley in July 2009, nine months earlier, and secondly, many of the other 40+ councils are yet to re-let.

85. Evidence submitted herein will demonstrate a concerted & well-orchestrated scheme of misrepresentation & prevarication by way of denial, and refusal to accept these most blatant of material changes until after April’s expiration date.

86. Thereafter, Peter Large is ready to accept that a re-tender process could have been required, apparently assured that no repercussions could transpire, declaring in Oct 2010: “the contract which is the subject of your request for an "investigation" expired some time ago. For my part, therefore, I cannot see what scope there is for intervention by the Commission, or what purpose an investigation would or could serve.”

12

13

List of documents submitted in support of the complaint Appendix 1 1. Press Release by 3i plc – 14 March 2007

2. National Car Parks - Notes to the Financial Statements for the period from 12 July

2005 to 29 December 2006 – “Events after Balance Sheet Date”

3. Summary of Judgement in pressetext Nachrichtenagentur GmbH v 1. Republic of Austria (Bund), 2. APA-OTS Originaltext-Service GmbH, 3. APA AUSTRIA AGENTUR (Case C-454/06) (APA)

4. Extract from WCC “Forward Plan of Decisions”

5. Extract from original contract awarded by WCC to National Car Parks Ltd Appendix 2 6. Company formations:-

(i) NCP Topco Ltd – 06033001 (ii) NSL Ltd – 06033060 (iii) Annual Return for NCP Services Ltd - 06033060 (iv) NCP Services Topco Ltd – 06612095 (v) NSL Services Group Ltd – 06181220 (vi) NCP Services Ltd – 06612099

Appendix 3 7. Novation Documents

(i) Schedule of Documents (ii) “Bonds” from Lloyds Bank on behalf of NCP Services Ltd (iii) “Parent Company Guarantee” from NCP Services Topco Ltd on behalf of

NCP Services Ltd. (iv) “Deed of Novation” dated 13 March 2008 between, WCC & NCP Services

Ltd 06033060 & National Car Parks Ltd 253240 Appendix 4 - Investigate Correspondence

APPENDIX 1

To the

COMPLAINT

TO


BY



AGAINST


FOR


ON THE PROCEDURES FOR THE AWARD OF PUBLIC SERVICE CONTRACTS – CONCEPT OF “AWARD OF A CONTRACT” – MEANING – AMENDMENTS TO THE PROVISIONS OF A PUBLIC CONTRACT DURING

THE CURRENCY OF THE CONTRACT

1. Press Release from 3i plc – 14 March 2007 2. Notes to Accounts of National Car Parks Ltd

3. Summary of ruling in ECJ – Pressetext 4. Extract from WCC “Forward Plan of Decisions” – Aug 2007

5. Extract from original contract awarded by WCC to National Car Parks Ltd

0

NCP to de-merge into two businesses

14 March 2007 National Car Parks (NCP), the UK’s biggest parking services company, and 3i today announces that it is to de-merge into two separate businesses. After a period of rapid expansion and development following 3i’s investment, which has seen the company move successfully into new areas of transport services, accompanied by an 18% increase in the number of employees, the business is to be split between the traditional car parking business (‘NCP’) and the quickly evolving outsourced services business (‘NCP Services’). NCP Services is already the market leader in outsourced parking services and will also include NCP’s successful bus and coach operations, debt recovery and urban design consultancy. This side of NCP’s business has grown rapidly since its first contract win in 2000 and continues to do so. The services company now has a turnover approaching £140m and employs almost 4,000 people. It operates a number of key government contracts across the UK, including recently won contracts for Northern Ireland Roads Service, the Royal Borough of Kensington and Chelsea, and the DVLA. It also runs the UK’s biggest parking contract, for Westminster City Council. 3i intends to remain principal shareholder in this business alongside management. NCP, the iconic brand for UK car parks for over 75 years, continues to be the most successful car park operator in the UK. With 3i’s involvement it has benefited from considerable capital investment to install technology and keep the business at the forefront of its industry. This business is being acquired by Macquarie European Infrastructure Fund II in a £790m transaction providing NCP with a long term ownership structure. Chris Williams, 3i Partner who led the transaction said: “This is evidence of the material difference private equity involvement can make to a business. NCP, led by an outstanding management team with great vision, has now exceeded expectations in its transition into a leading public sector outsourcing business. We hadn’t planned to make any partial realisation at this stage, but with a business well ahead of its milestones, and strategically attractive to others, the board of NCP decided that Macquarie’s offer provided the right solution for developing both of the businesses further”. Bob Macnaughton, current NCP Chief Executive, will become NCP Services Chairman. Ian Kavanagh, On Street Director of NCP, becomes NCP Services Chief Executive, and Chris Dobson, Off Street Director of NCP, becomes NCP Chief Executive. Commenting on the decision to separate the businesses, Bob Macnaughton said: “The rationale behind this move is to enable the two companies to better concentrate on their core skills. NCP Services is a young company, starting in 2000, with an expansion into on-street parking enforcement. Since then, the business has grown rapidly and has broadened it service offering across enforcement, bus and coach operations, debt recovery and back office processing. This business is very firmly positioned as an outsourced service provider for the public sector. This is a rapidly growing market and we have a

1

substantial pipeline of further new business opportunities. The future for the business is very exciting.” 3i and NCP were principally advised by Travers Smith, Deloitte and NM Rothschild. ENDS

About 3i

3i is a world leader in private equity and venture capital with operations in Europe, the United States and Asia. 3i is active across all stages of funding. From early-stage venture capital to growth capital, buyouts and infrastructure, 3i invests approximately €2bn a year in some of the most exciting and ambitious companies in the world. 3i is the only FTSE 100 company in its sector and has total funds under management of £7.0bn (€10.4bn). About 3i Buyouts 3i’s buyouts business is a leader in the European mid-market. We lead mid-market buyouts of companies valued at up to around €1bn, using insight from our local knowledge, international connections, and our sector teams. With over €8bn of funds under management and an existing portfolio of over 65 companies across Europe, 3i Buyouts invests in all sectors, with a particular focus on media, healthcare and business support services. 3i Buyouts recently raised €5bn, representing the largest fund in Europe dedicated to mid-market buyouts. About NCP NCP was first incorporated in 1931 as a parking business. It experienced its major growth as an off street car parking business in the 1940s and 1950s, initially through converting town and city centre bomb sites into car parks Its first move into on street parking enforcement started in 2000, with contracts to run on street parking enforcement in Durham and Lewisham. Before separation, the NCP group was the market leader in off street car parking, airport car parking, paid-for rail car parking and on street parking enforcement. The separated businesses will remain market leaders in those categories. It has since successfully moved into the broader services sector, and runs a debt recovery business, bus and coach operations - including public routes for transport for London and aviation coaching at Heathrow and Gatwick – CCTV monitoring and notice processing. In total the services business runs more than 40 contracts for local authorities, plus two national Government contracts, on behalf of the DVLA and the Northern Ireland Roads Service.

For further information please contact:

Press team, 3i, email. [email protected]

tel. +44 (0)20 7975 3558

2

mailto:[email protected]

Case C-454/06

pressetext Nachrichtenagentur GmbH

v

Republik Österreich (Bund) and Others

(Reference for a preliminary ruling from the Bundesvergabeamt)

(Public procurement – Directive 92/50/EEC – Procedures for the award of public service contracts – Concept of ‘award of a contract’)

Summary of the Judgment

“The ECJ has recently considered in pressetext Nachrichtenagentur GmbH v 1. Republic of Austria (Bund), 2. APA-OTS Originaltext-Service GmbH, 3. APA AUSTRIA AGENTUR (Case C-454/06) (APA) (App 3) the difficult question of how procurement rules apply to post-contract amendments reflecting changes in circumstances. The case concerns a contract between the Austrian State and APA for the provision of news agency services, which was subject to various amendments concerning the contract pricing formula, among other things. The ECJ stated that, in principle, contractual amendments during the life of the contract give rise to a new contract requiring re-tendering, if the new terms are "materially different" from the original contract and "demonstrate the intention of the parties to re-negotiate the essential terms of that contract". A change is material if it would have allowed others to participate in the tender or a different tender to be accepted. Any amendment that changes the economic balance of the contract in favour of the service provider is material and requires the contract to be re-tendered. However, minor amendments that are objectively justified and do not give the contractor a significant advantage do not re-trigger the procurement rules. APA also highlights the importance of making provision for future changes so that any amendments are within agreed parameters laid down in the contract. The court accepted that adjustments to the rebates were within the ambit of the clauses laid down in the agreement and therefore did not constitute a material amendment. A change of contractual partner could, in the ECJ's view, also require the public authority to re-tender the contract (again, unless the contract expressly provided for substitution). The novation of a contract to a new independent provider, even where the contractual terms remain the same, might therefore constitute a material change. The court also considered that changes in the identity of the shareholders of the service provider (other than in the case of publicly listed companies) might constitute a material change and therefore require the public authority to re-tender the contract. This highlights the importance of providing in the contract for a change of control, allowing the public authority to terminate and re-tender in the event of a sale of the business.”

4

09/2007

CITY OF WESTMINSTER

FORWARD PLAN OF

KEY DECISIONS

WESTMINSTER CITY HALL

VICTORIA STREET SW1E 6QP

www.westminster.gov.uk September 2007 – December 2007

5

http://www.westminster.gov.uk/

FORWARD PLAN OF KEY DECISIONS FOR ECONOMIC DEVELOPMENT & TRANSPOR KEY DATES

PROPOSED KEY DECISION

TO BE CONSIDERED

DECISION MAKER

i.e. Cabinet, Cabinet

Member, Committee

Officer

When is it expected that

the report (and background

papers) will be available

When is it expected that

a decision will be made

WHO WILL BE CONSULTED?

The date and means of making representation

To approve Westminster's revised Economic Development Strategy (2007-2010)

Cabinet Member for Economic Development and Transport

Early September

2007

Mid September

2007

Westminster City Partnership and local businesses to be consulted. Built Environment O&S Committee were consulted on 3 April 2007.

*Approval for entering into a Deed of Novation (transferring legal responsibility for the performance of the Parking Enforcement Services Contract & the Vehicle Removals, Relocations & Pound Management Contract from National Car Parks Ltd to NCP Services Limited)

Cabinet Member for Economic Development & Transport

Early September 2007

Late September

2007

No formal consultation

6

APPENDIX 2

To the

COMPLAINT

TO


BY



AGAINST


FOR


ON THE PROCEDURES FOR THE AWARD OF PUBLIC SERVICE CONTRACTS – CONCEPT OF “AWARD OF A CONTRACT” – MEANING – AMENDMENTS TO

THE PROVISIONS OF A PUBLIC CONTRACT DURING THE CURRENCY OF THE CONTRACT

6. Company formations:-

(i) NCP Topco Ltd – 06033001

(ii) NSL Ltd – 06033060 (iii) NCP Services Topco Ltd – 06612095 (iv) NSL Services Group Ltd – 06181220

(v) NCP Services Ltd – 06612099

Name & Registered Office: NCP TOPCO LIMITED HILL HOUSE 1 LITTLE NEW STREET LONDON EC4A 3TR Company No. 06033001

Status: Liquidation Date of Incorporation: 19/12/2006 Country of Origin: United Kingdom

Company Type: Private Limited Company Nature of Business (SIC(03)): None Supplied

Accounting Reference Date: 31/12 Last Accounts Made Up To: (NO ACCOUNTS FILED) Next Accounts Due: 19/10/2008 OVERDUE Last Return Made Up To: Next Return Due: 16/01/2008 OVERDUE

Insolvency History Previous Names:

Date of change

Previous Name

2 1/02/2007 DE FACTO 1460 LIMITED

http://wck2.companieshouse.gov.uk/8354eb0cca06aa1d16319df31b27e114/insolvency

NSL LIMITED 4TH FLOOR WESTGATE HOUSE WESTGATE LONDON UNITED KINGDOM W5 1YY Company No. 06033060

Status: Active Date of Incorporation: 19/12/2006 Country of Origin: United Kingdom

Company Type: Private Limited Company Nature of Business (SIC(03)): 7487 - Other business activities

Accounting Reference Date: 31/12 Last Accounts Made Up To: 31/12/2008 (FULL) Next Accounts Due: 30/09/2010 Last Return Made Up To: 19/12/2008 Next Return Due: 16/01/2010

Last Members List: 19/12/2008

Previous Names: Date of change Previous Name

21/02/2007 DE FACTO 1461 LIMITED 27/04/2009 NCP SERVICES LIMITED

Name & Registered Office: NCP SERVICES TOPCO LIMITED FOURTH FLOOR WESTGATE HOUSE WESTGATE LONDON W5 1YY Company No. 06612095


Company Type: Private Limited Company Nature of Business (SIC(03)): 9999 - Dormant Company

Accounting Reference Date: 30/06 Last Accounts Made Up To: (NO ACCOUNTS FILED) Next Accounts Due: 05/03/2010 Last Return Made Up To: 05/06/2009 Next Return Due: 03/07/2010


Previous Names: Date of change

Previous Name

08/10/2008 NSL SERVICES GROUP LTD 27/04/2009 NSL SERVICES GROUP

LIMITED 07/10/2008 ASCENT INTERNATIONAL

SERVICES HOLDINGS LTD

NSL SERVICES GROUP LIMITED 4TH FLOOR WESTGATE HOUSE WEST GATE LONDON W5 1YY Company No. 06181220


Company Type: Private Limited Company Nature of Business (SIC(03)): 7487 - Other business activities

Accounting Reference Date: 31/12 Last Accounts Made Up To: 31/12/2008 (GROUP) Next Accounts Due: 30/09/2010 Last Return Made Up To: 23/03/2009 Next Return Due: 20/04/2010



Previous Name

12/04/2007 DE FACTO 1484 LIMITED 27/04/2009 NCP SERVICES TOPCO

LIMITED

Name & Registered Office: NCP SERVICES LIMITED FOURTH FLOOR WESTGATE HOUSE WESTGATE LONDON W5 1YY Company No. 06612099


Company Type: Private Limited Company Nature of Business (SIC(03)): 9999 - Dormant Company

Accounting Reference Date: 30/06 Last Accounts Made Up To: (NO ACCOUNTS FILED) Next Accounts Due: 05/03/2010 Last Return Made Up To: 05/06/2009 Next Return Due: 03/07/2010



Previous Name

07/10/2008 ASCENT INTERNATIONAL SERVICES LTD

24/04/2009 NSL LIMITED

APPENDIX 3

To the

COMPLAINT

TO


BY



AGAINST


FOR


ON THE PROCEDURES FOR THE AWARD OF PUBLIC SERVICE CONTRACTS – CONCEPT OF “AWARD OF A CONTRACT” – MEANING – AMENDMENTS TO

THE PROVISIONS OF A PUBLIC CONTRACT DURING THE CURRENCY OF THE CONTRACT

7. Novation Documents

(i) Schedule of Documents (ii) “Bonds” from Lloyds Bank on behalf of NCP Services Ltd

(iii) “Parent Company Guarantee” from NCP Services Topco Ltd on behalf of NCP Services Ltd.

(iv) “Deed of Novation” dated 13 March 2008 between, WCC & NCP Services Ltd 06033060 & National Car Parks Ltd 253240

APPENDIX 4

To the COMPLAINT

TO

THE COMMISSION OF THE EUROPEAN COMMUNITIES CONCERNING FAILURE TO COMPLY WITH COMMUNITY LAW

BY



AGAINST


FOR

VIOLATIONS OF DIRECTIVE 92/50

OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL OF MARCH 2004

ON THE PROCEDURES FOR THE AWARD OF PUBLIC SERVICE CONTRACTS – CONCEPT OF “AWARD

OF A CONTRACT” – MEANING – AMENDMENTS TO THE PROVISIONS OF A PUBLIC CONTRACT

DURING THE CURRENCY OF THE CONTRACT

“Investigative Correspondence”

0

Letter from National Car Parks Limited Chief Executive Andrew Potter to the Sunderland Echo

"I am writing in relation to the article published on November 12 in which you published that my company, National Car Parks Limited (which trades as NCP), has a contract with Sunderland Council for providing off-street parking services which will be brought back to the Council when the contract with my company is at an end. My company does not have a contract with Sunderland Council and therefore the article is wrong in that regard. National Car Parks Limited was de-merged in 2007 into two distinct companies. National Car Parks Limited and NCP Services Limited. It is NCP Services Limited who currently have a contract with Sunderland City Council, and not National Car Parks Limited. I think it is a matter of deep concern that a newspaper would publish articles refering to my company when my company was not called to comment on the same in order that the matter could have been dealt with prior to publication. I also wish to make it very clear that comments by Sunderland councillor, Mr Martin, as quoted, should never have been made by him as he should have ensured his facts were correct in order to ascertain which company has a contract with Sunderland Council in relation to off-street parking enforcement. I reiterate that it is not my company, National Car Parks Limited."

Email – 23 Jul 2009 at 16:25 – WD to PL – cc DB, PD

Dear Mr Large, 1) Complaint against Cllr Harvey I am informed by both Mick Steward and the City Council's Monitoring Officer, Rhian Davies that you have been handling my complaint against Cllr Angela Harvey. Bearing in mind that this complaint was sent in May, can you please explain why I have had no further communication regarding it, and why it has taken almost 3 months to process it. I am sure that you will accept that this is an unacceptably long time for processing such a complaint and I hope that I won't have to approach the Standards Board of England directly to seek their intervention. I await your update. 2) Contract for Parking Enforcement Could I ask you (to avoid FOI) for a copy of the contract between WCC and NCP for the enforcement of parking in the borough? Should this be too cumbesome a document, I am keen to see the following:- a) the names of the contracting parties b) the date the contract started; its proposed duraction and thus termination date. c) an indication as to variations (if any) made during the term. 3) Revenue-Neutral

1

Could you please explain, in layman terms, exactly what is meant by the term "revenue-neutral" as it was applied to the MCS? 4) "Surplus" v "Raising Income" Further to the above, in your reply to our letter before action at point 3.17, you claim that Cllr Chalkley reduced the charge under the MCS "with the intention that the City Council should no longer make a surplus from the scheme", yet when the same Cllr Chalkley was interviewed by More4News, and it was put to him that the reduced charge would still nett a surplus of £700k, he replied to the effect that the City Council was indeed "raising income". You will appreciate that, again to the laymen, the two statements would appear to be at odds. Could you clarify this for me? Many thanks for your co-operation Yours Warren Djanogly

Email – 23 Jul 2009 at 16:35 – PL to WD – cc DC, KG, DB, PD

Dear Mr Djanogly Good afternoon and I acknowledge receipt. I will be replying to you tomorrow in relation to your complaint about Councillor Harvey. I will respond to your other three questions as soon as I am able. Regards Peter Large

Email – 29 Jul 2009 at 10:50 – WD to PL – cc DC, KG, DB, PD

Dear Mr Large, Many thanks for your letter. I am sure you won't be surprised when I say that I disagree with your decision not to take my complaint against Cllr Harvey to the next stage. Presumably there will be a procedure for lodging this, and I would be grateful for your forwarding details of the same. However, I still don't seem to have responses to the other matters raised in my email of July 23. With regard to point 2 - "Contract for Parking Enforcement" - would it assist if I explained that I am having trouble finding details of the various recommendations, approvals and Authority for novating the contract following the dissolvement of NCP in Summer 2007 and its emergent NSL which apparently has inherited the contract. To avoid confusion, I have attached a copy of similar published by Camden Council. If you could steer me to the relevant area on the WCC website to see the documents regarding the novation I would be most grateful. You will see that I have copied Cllr Chalkley in on this email in the hope that it should assist you in supplying answers to points 3 & 4 regarding explanations as to the meaning of "Revenue-neutral" and "Surplus -v- Raising Income".

2

Can I ask you to give this your urgent attention. Yours Warren Djanogly

Email – 30 Jul 2009 at 12:15 – WD to PL – cc DC, KG, DB, PD

Dear Mr Large, Uncharacteristically, I still don't appear to have a response from you regarding the points raised in my email of 23 July, and my subsequent email of yesterday 29 July. Novation of the Contract regarding NCP/NSL I am informed that there is an item on the 'Forward Plan' of decisions for September-December 2007 which was described as "Approval for entering into a Deed of Novation (transferring legal responsibility for the performance of the Parking Enforcement Services Contract & the Vehicle Removals, Relocations & Pound Management Contract from National Car Parks Ltd to NCP Services Limited)". However, as far as I am able to research, I can find no documents relating to such a decision having been taken by the cabinet member for Economic Development and Transport. As I cannot believe that he would have been so remiss regarding a multi-million pound contract, and the obvious implications for the Council regarding the reimbursement of unjust enrichment, could you please either provide a copy of the statement of decision or indicate where on the WCC website I might view it? Awarding of a Pilot-Scheme Contract to Verrus (UK) Ltd Could I ask for your clarification regarding comments you make in your reply to our Letter Before Action regarding the awarding of the Pilot-Scheme contract to Verrus (UK) Ltd, at point 3.15. To recap, we stated this: Further it is submitted that the pay by phone scheme is illegal on the basis that WCC contracted privately with mobile technology providers Verrus UK Ltd for the 12 month pilot scheme element of the contract, instead of inviting European-wide tenders as they are bound to do under the Public Contracts Regulations 2006. It is apparent that both the pilot scheme and the main scheme are inextricably linked. To which you replied: In relation to the 12-month Pilot scheme there was no requirement to advertise in the OJEU in accordance with PCR 2006 because the value of the contract was well below the relevant threshold for those Regulations. Nevertheless, I am instructed that the City Council negotiated with four other possible providers of the service as well as Verrus, in order to obtain best value for the service. I am also instructed that an advertisement was placed in the parking press to encourage bids to run the parking scheme. Once it was decided to introduce pay by phone permanently, the contract was advertised in OJEU in accordance with the regulations. 1) It has been brought to our attention that the value of the Pilot Scheme contract was in fact £187,236-17, which would appear to overstep the OJEU level pertaining at the time of the award of £144,371 by some £43,000. Can you clarify how you assert that the value was "well below the relevant threshold"? 2) According to WCC's own regulations regarding procurement, it would appear that contracts above £10,000 can only be secured following tender submissions from a minimum of 3 suppliers. A variant dictates that this can be reduced to 2 submissions, as long as the tenderers are on the City Council's "Approved List", of which I can find no reference to Verrus UK Ltd being on that list. Can you clarify whether "negotiating with four other possible providers" and/or the placing of an

3

advert in the "parking press" satisfies this stipulation, as opposed to actual tender submissions from the other four, and therefore the award of the pilot scheme contract does not breach the City Council's code of procurement? 3) Could you also clarify whether there were any variations to the pilot contract within the 12 month term, together with any "variation of contract" values? I look forward to your prompt reply

Email – 31 Jul 2009 at 21:31 – PL to WD – cc DC, KG, DB, PD

Dear Mr Djanogly I am surprised that you disagree with my decision not to treat your complaint about Councillor Harvey as one which relates to the Code of Conduct, because I set out my reasons in some detail and gave you the opportunity to make further representations if you wished. If you believe your complaint does relate in some way to he Code please explain why that is. In relation to your second point, the basic information you requested is a) the names of the contracting parties NSL Services Ltd and Westminster City Council b) the date the contract started; its proposed duraction and thus termination date. April 2003 - Mar 31 2008 (extended to Mar 31 2010) c) an indication as to variations (if any) made during the term. 2 year extension agreed in 2006. You correctly state that the contract has been novated from NCP to NSL. I am still investigating he decision making process and I will revert to you as soon as I am able. That will not be until the week after next. A scheme is "revenue neutral" if the costs of running the scheme and the revenue it generates are roughly the same. You have a copy of the report considered by Councillor Chalkley in May, which explained in the financial implications section that the revenue generated by the scheme with the reduced charges was projected to be £755k per annum. That figure, which I believe to be the one referred to by Councillor Chalkley in the interview you mention, is the gross revenue before costs are taken into account. We have not disputed that the experimental scheme, though intended to be revenue neutral, did in fact generate a surplus. Regards Peter Large Email – 03 Aug 2009 at 14:55 – WD to PL – cc DC, KG, DB, PD

Dear Mr Large, I iterate your response regarding my request for information regarding the novation of the NCP Contract of Enforcement:- "In relation to your second point, the basic information you requested is a) the names of the contracting parties NSL Services Ltd and Westminster City Council

4

b) the date the contract started; its proposed duraction and thus termination date. April 2003 - Mar 31 2008 (extended to Mar 31 2010) c) an indication as to variations (if any) made during the term. 2 year extension agreed in 2006. You correctly state that the contract has been novated from NCP to NSL. I am still investigating he decision making process and I will revert to you as soon as I am able. That will not be until the week after next." Could you clarify the following:- 1) Your need to "investigate" the decision-making process when, surely your department must have been fully party to all aspects of this procedure. 2) Exactly what date did NCP cease to exist as a legal entity - documents deposited by LB of Camden would suggest June 2007). 3) Exactly what date was the contract actually novated - again, a search shows that there was an item on the 'Forward Plan' of decisions for September-December 2007 which was described as "Approval for entering into a Deed of Novation (transferring legal responsibility for the performance of the Parking Enforcement Services Contract & the Vehicle Removals, Relocations & Pound Management Contract from National Car Parks Ltd to NCP Services Limited)". However, no such decision appears to have been taken by the cabinet member for Economic Development and Transport. 4) What, from a legal perspective, would be the status of the contract between these two dates. 5) Why, and on what basis was an extension agreed in 2006 6) An indication as to the authority to extend thereby denying others an opportunity to tender. No doubt you will be able to respond following your absence from your office this week. Many thanks in anticipation Warren Djanogly Email – 20 Aug 2009 at 11:07 – WD to PL – cc DC, KG, DB, PD

Dear Mr Large, Can you please explain the delay in providing the requested proof to back up your own assertion that the novation of the legal responsibility for the performance of the Parking Enforcement Services Contract & the Vehicle Removals, Relocations & Pound Management Contract, has indeed being performed. As previously stated, it is inconceivable that such a process would have been conducted without reference to you or your department. Furthermore, if NSL Services Limited have been contracted for the said performance, then details of such contract must be in the Deeds Registry. Therefore, it is also inconceivable that, if your assertion is correct, that you cannot either provide said proof via a copy of the relevant part of the Deeds Registry or an indication as to how it can be accessed via the WCC website. Can I therefore ask for your immediate, and categoric response to the following questions:- Has the Contract for the performance of the Parking Enforcement Services Contract & the Vehicle Removals, Relocations & Pound Management Contract been novated in favour of NSL Services Limited?

5

If yes (as you have already attested):- Exactly when approval was given, and by which Members for said novation to take place? Has it been registered in the Deeds Registry? Is a copy of the Deed of Novation available for inspection? Would said Deed list the contracting parties? Would said Deed be signed by both parties? Would said Deed be DATED? Obviously, if novation has not been approved, can you explain why you informed me that it has been done, and under what authority dos NSL Services Limited continue to issue penalties. Finally, can you explain how a new company that commenced trading in March 2007 can be awarded in April 2007 a multi-million pound contract by mere novation as opposed to a formal tender process? Please note that, should this information not be made available to me within the next 7 days, I will request (under FOI) a full list of all contracts & names of contractors listed in the Deeds Registry since March 2007, and should there be no reference to this novation, will demand that provision be made for the restitution of monies paid against all PCN's, clamps & removal since March 2007. Yours Warren Djanogly

Email – 27 Aug 2009 at 09:51 – WD to PL – cc AG, DC, KG, DB, PD

Dear Mr Large In an email to me dated 31 July 2009 (at 8.51pm) you state, in relation to my enquiry regarding the novation of the legal responsibility for the performance of the Parking Enforcement Services Contract & the Vehicle Removals, Relocations & Pound Management Contract following the demerger of NCP Limited in March 2007:- 1) the names of the contracting parties NSL Services Ltd and Westminster City Council 2) "You (referring to me) correctly state that the contract has been novated from NCP to NSL." Since then, I have given you ample opportunity to verify both these statements which you have failed to do. It is therefore my logical conclusion that you may have deliberately misrepresented the situation for reasons unknown, and, considering your position as Head of Legal Services, I fail to see how you have not rendered your position untenable. As it is apparent that the normal complaints procedure would be handled by you, subject to your explanations, I have no alternative other than to bring this matter to the urgent attention of the Chief Executive.

6

I trust that either proof of the validity of your claims, or an formal explanation as to why you have penned such misrepresentations will be immediately forthcoming. Yours Warren Djanogly

Email – 27 Aug 2009 at 14:02 – PL to WD – cc AG, DC, KG, DB, PD

Dear Mr Djanogly You are very free with your allegations. The information I have previously given you is correct, and I will be making copies of the Deed of Novation available to you shortly. There is no doubt that the contract has been validly novated to NSL. The reason that I have delayed responding to you is that you have raised queries over the decision-making process, and I am anxious to ensure that the information I give you in response to those queries is accurate and appropriately detailed. I expect to be able to respond to you by the close of play tomorrow. Regards Peter Large Email – 28 Aug 2009 at 14:02 – PL to WD – cc AG, DC, KG, DB, PD

Mr Warren Djanogly 9 Railwayside LONDON SW13 OPN Dear Mr Djanogly PARKING ENFORCEMENT - CONTRACT NOVATION I am writing further to my message to you by email dated 31 July. I am responding to the various requests for information you have made in connection with the above issue, including those on 29 July, and 3rd and 17th August. The position is as follows. 1. An agreement for the provision of Parking Enforcement Services was entered into on 12 February 2003 between the City Council and National Car Parks Limited. 2. National Car Parks Limited was part of the National Car Parks Group. The Group separated on 12 March 2007. The car park business was sold to Macquarie Group and a new entity, NCP

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Services Limited received a transfer of the business of inter alia, the parking enforcement business. All staff, assets and property interests used prior to the separation date on the Westminster contracts were transferred to NCP Services Limited to enable the ongoing provision of the services to the Council. 3. By an agreement entered into on 13 March 2008 between the City Council, NCP Services Limited and National Car Parks Limited, the agreement referred to in paragraph 1 above was novated and transferred from National Car Parks Limited to NCP Services Limited. I attach a copy of the Deed of Novation as requested. The effect of the novation was to novate and transfer all rights and obligations under the contract to NCP Services Limited with effect from 12 February 2003, the date of the original contract. 4. The novation of a contract does not, as a matter of procurement law or otherwise, require a tendering exercise. It does not involve the creation of a new contract. 5. I understand that NCP Services Limited changed its name to NSL Limited at Companies House on 27th April 2009. The change of name of a company has no legal effect on its contractual obligations. 6. For the avoidance of doubt, there are two contracts, originally between the City Council and National Car Parks Limited and now novated to NSL Limited. In addition to the contract referred to in paragraph 1 above an agreement for the provision of Removals, Relocations and Pound Management Services was entered into on 21 July 2003 between the City Council and National Car Parks Limited. That agreement was also novated on 13 March 2008, and I attach a copy of the Deed of Novation for information. 7. The process by which the City Council entered into the Deed of Novation was, as you have suggested, flawed, and that is a matter of concern to me as the City Council's Monitoring Officer. However, as I have said there is no doubt from a legal perspective but that the contract has been validly novated. I will explain those statements. 8. The City Council is required by Section 135 of the Local Government Act 1972 to make standing orders with respect to contracts. Our standing orders are available on our website, and our contract standing orders are contained in Standing Order 47, which provides that all contracts entered into by the City Council must comply with that Standing Order and the Procurement Code. Our Procurement and Contract Management Code contains numerous provisions, but the most important one in this context is paragraph 2.29, which deals with Assignments and Novations. That provides as follows: "2.29 Assignments and Novations 2.29.1 There are occasions when contractors are taken over by another company. If retaining the status quo is not possible due to commercial or legal reasons NPOs must assess whether the contract should be novated to the company acquiring the business, considering the capability and financial standing of the proposed contractor. If the new company is a subsidiary company consideration must be given as to whether a parent company guarantee is needed. If the new company is not suitable, or if the NPO does not agree with the terms to novate, the contract will need to be re-tendered. 2.29.2 A report must be presented to DCB seeking approval to novate the contract. If the remaining contract value is more than £1.5 million this report will need to be considered by the relevant Cabinet Member. For contracts valued at £30,000 or more any new legal documentation such as a Deed of Novation or Parent Company Guarantee must be placed in the Deeds Registry."

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9. The remaining contract value of the Parking Enforcement Services contract was more than £1.5 million when the decision to novate was taken. Accordingly and as you have suggested the decision should have been taken by the Cabinet Member. It was not. 10. The proposed novation was considered by the Central Services DCB (Departmental Contracts Board, an officer body which advises the relevant Chief Officer on procurement and contract management issues) on two occasions, in August 2007 and February 2008. As required by the provisions of the Procurement Code referred to above, those reports did consider whether the contract should be novated, the capability and financial standing of the proposed contractor, and whether parent company guarantees were needed (it was decided they were). The report in August 2007 also flagged up the issue of whether a Cabinet Member decision was required. However it does not appear to have been appreciated that one was, and the February 2008 report recommended, as the DCB agreed, that the Director of Customer Services be recommended to enter into the Deed of Novation. 11. Before a Deed is executed, I require the solicitor handling the matter to certify that they have examined the minute of the decision which authorises the Deed, and satisfied themselves that the Deed has been properly authorised. In this case Messrs Sharpe Pritchard were the solicitors handling the matter, and they gave such a confirmation, wrongly in my opinion for the reasons I have explained. Accordingly the Deed was executed. 12. The reason that this defect in the decision-making process has no effect on the validity of the contract is that Section 135(4) of the 1972 Act, which I refer to above, expressly provides that non-compliance with contract standing orders does not invalidate any contract entered into by or on behalf of a local authority. 13. Nevertheless and as I have said this process failure is a matter of concern and I am grateful to you for drawing it to my attention. I have informed Councillor Chalkley of what has occurred and I am recommending to the parking service that a report be submitted to him recommending that he notes and ratifies the decision to novate the contract for the record. I am asking the Head of Procurement and Contract Management to consider in consultation with myself and the Director of Finance whether any changes to our procedures are necessary I will be considering in due course whether my duties under Sections 5 and 5A of the Local Government Act 1989 require me to report formally as Monitoring Officer. Yours sincerely Head of Legal Services

Email – 07 Sep 2009 at 12:09 – WD to PL – cc AG, DC, KG, DB, PD

Dear Mr Large, I am thankful for your letter attached to your email August 28. However, I have not received a copy by post which I presume contained copies of the Deeds of Novation. As there would appear to be numerous, and very serious issues contained therein, to allow me to prepare a considered response, can I ask you to email them as a matter of urgency together with:- 1) copies of the minutes & reports of the Central Services DCB meetings of Aug 2007 & Feb 2008 2) a listing of the Officers that comprised the Boards on both occasions

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3) the name & position of the "relevant Chief Officer" as referred to in Point 10 as the one being advised by said DCB Can I inquire as to whether:- 4) it is normal for Officers of any department to contract the services of outside Lawyers without any reference to the City Council's own legal department? If so, can you please provide other examples. 5) Having established that an entry was made in the 'Forward Plan' of decisions for September-December 2007 regarding said novations (ie between the dates of the 2 DCB reports), which by definition confirms to all that a "Cabinet Member" decision would be required, can you please explain exactly what you mean under Point 10 of your letter when you state: "...the issue of whether a Cabinet Member decision was required. However it does not appear to have been appreciated that one was,..." 6) from a legal point of view, how does a Limited Company incorporated in december 2006, and with a trading commencement date of March 2007, obtains the transfer of all rights and obligations of a contract from 2003, a full 4 years before the company came into being as a legal entity, as explained in Point 3 of your letter? Many thanks in advance for your co-operation and explanations, and I look forward to copies of the Deeds & DCB reports. Yours Warren Djanogly

Email – 07 Sep 2009 at 14:31 – PL to WD – cc AG, DC, KG, DB, PD

Dear Mr Djanogly I am sorry if my letter has not reached you - it left here. However I have arranged for a copy to be put in the post to you this afternoon. I will need to consider whether I can release the information you request in paragraphs 1 and 2 below, and I will revert to you on that issue as soon as I can. On the other points you raise, the relevant Chief Officer at the time was the Director of Customer Services, as I in fact stated. It is not normal for officers to engage external lawyers without reference to my department, and that is not what happened in this instance. Sharpe Pritchard are engaged to provide legal advice to the City Council in relation to contract and procurement issues under a contract let by my department. On your point 10, I am aware that there was an entry in the Forward Plan relating to the proposed novation. The fact remains that both the DCB and Sharpe Pritchard failed to appreciate that such a report was required under the Procurement Code. On your point 6, a company takes on the rights and liabilities of a contract, even rights and liabilities first arising before its incorporation, by novation. That is what novation is. Regards

Peter Large

Email – 07 Sep 2009 at 14:37 – DB to PL – cc AG, DC, KG, DB, PD

On 7 Sep 2009, at 14:31, Large, Peter wrote:

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On your point 10, I am aware that there was an entry in the Forward Plan relating to the proposed novation. The fact remains that both the DCB and Sharpe Pritchard failed to appreciate that such a report was required under the Procurement Code. Peter - could you expand on this? It wouldn't be surprising that Sharpe Pritchards, being external lawyers, were unaware of the need for a cabinet member report because that's not their business. Am I right that it is not a function of the DCB to determine whether a report has to go to a cabinet member? But the fact remains that in this case, someone was aware that there was a requirement for a cabinet member report or otherwise no entry would have appeared in the Forward Plan. What are the arrangements for adding an item to the Forward Plan? -- Cllr David Boothroyd (Westbourne Ward, Labour)

Email – 07 Sep 2009 at 15:23 – WD to PL – cc AG, DC, KG, DB, PD

Dear Mr Large, With regard to the release of information, to save you "considering", perhaps you would be so kind as to release them to either Cllr Boothroyd or Cllr Dimoldenberg, whom we all can trust will maintain the integrity of their office and that of the City Council before defying any restrictions on disclosure to third parties. You apparently reiterate that the Chief Officer was also the Director of Customer Services, however, I am unaware as to who exactly you are referring. Do you mean Alastair Gilchrist, or another under his direction? Can you advise further in line with Cllr Boothroyd's request to expand on your assertion regarding a failure to appreciate a report has to go to the Cabinet Member. I have made no secret of my alerting, and copying-in the District Auditor to this matter, and bearing in mind that this would be one of the largest contracts that the City Council would be party to, coupled with the chronology of events i.e DCB Report Aug 2007; Entry in the Forward Plan Sep-Dec 2007; and a further DCB Report thereafter in Feb 2008, clearly establishing the need for the Cabinet Member to make this decision, your explanation of this blatant procedural flaw as being a "failure to appreciate" is rapidly becoming unmeritorious. Furthermore,in your letter of Aug 28, having thanked me for bringing it to your attention, you allude to now "informing Cllr Chalkley of what has occurred". As it was Cllr Chalkley who would have made the entry in the Forward plan nearly 2 years ago, there can be no disputing that he was aware of his obligation regarding this matter. Mr Large, I reiterate, this is a multi-million pound contract. What explanation has Cllr Chalkley given to you as to why he allowed this procedural flaw, which he cannot in any way claim to have had no knowledge of, to go unchecked or unreported? Finally, whilst I am thankful for your explanation as to what "novation" means, could I ask for your legal interpretation of the activities of NCP Services Ltd from March 2007 to March 2008 (when you claim the contract was novated)? It would appear to a layman such as I that they were conducting the performance of parking enforcement without any legal right to do so., whilst giving

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the motorists to whom they have issued PCN's no indication that they were not in fact National Car Parks Limited. I am advised that the activity of a Company passing themselves off as another Company is unlawful, and I am also advised that NSL Services Limited are currently being investigated by Companies House on this very matter. Yours Warren Djanogly

Response by Westminster City Council to FOI Request for information from Mr Blue, Westminster Resident

Blue [email protected]

Customer Relations Westminster Parking Services Asst Director of Parking: Kevin Goad This matter is being dealt with by: Alex Duggan Date: 10th September 2009 Tel No: (020) 7641 1743 Fax no: (020) 7641 1744 Email:[email protected] My ref: FOI/4208

Dear Blue

Freedom of Information Act 2000: Request for information Thank you for your request for information that was logged on 10th August 2009 relating to FOI/4208. I apologise for the delay in my response. This is due to the unexpected time taken to collate the answer to your question number 3. We do not have the information available at this stage; however, a separate response will be sent to answer that question as soon as possible. You have requested the following information: “As has been confirmed with Companies House, and with Tim Cowen of NCP Services Ltd, that National Car Parks Ltd and NCP Services Ltd (now trading as NSL Services Group after rebranding in March 2009) are two separate companies, separated in March 2007.”

1) When did the contracts between National Car Parks Limited and Westminster City Council cease?

2) When did the contract for NCP Services Limited and Westminster City Council commence?

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3) Did a Councillor or committee sign of the novation agreement, please provide the name of the Councillor or committee?

4) If the novation agreement has been signed off, please provide a date? 5) Have any terms and conditions been changed from the original contract made with NCP

car parks Limited? 6) Why was the contract not put back out to tender?

In response to your request, I can advise you of the following: The National Car Parks Group was separated on 12th March 2007. The car park business was sold to Macquarie Group and a new entity, NCP Services Limited received a transfer of the business of inter alia, the parking enforcement business. All staff, assets and property interests used prior to the separation date on the Westminster contracts were transferred to NCP Services to enable the ongoing provision of the services to the Council. Novation Deeds were completed for both contracts on 13th March 2008. NCP Services Limited changed its name to NSL Limited at Companies House on 27th April 2009. The change of name of a company has no legal effect on its contractual obligations.

1) The Contracts between National Car Parks Limited and the Council did not cease. They were novated as set out above. These contracts will expire on 31 March 2010.

2) There are two Contracts with Westminster Council. The Enforcement and Clamping contract commenced by NCP on 1 April 2003 and the Removals and Pound Management Contract commenced by NCP on 4th July 2003 were both novated to NCP Services on 13th march 2008.

3) Parking Services are currently awaiting the requested information to this question. I apologise for the delay in providing this information; however, a response to this question will be provided in due course.

4) The novation deeds, as stated above, were executed on 13 March 2008. Prior to the finalisation of the novation, the contracts were performed by NCP Services Limited on behalf of National Car Parks Limited.

5) None of the terms of the original contracts have been changed from the original contract made with NCP Car Parks Ltd.

6) The Contracts were not re-tendered because they had not expired - and are not due to expire until 2010.

Yours sincerely Gordon Deas Departmental Records Officer

Email – 14 Sep 2009 at 12:57 – WD to MM – cc PD, PL, AG, DC, KG, DB, NTBPT, NH, SE

Dear Mr More, (1) Serious violations of WCC & EU Codes of Procurement and anti-competition activity by WCC Parking Department Officers & the Member. (2) Lack of appropriate action by internal monitoring personnel & Members

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We write to you seeking your immediate investigation into the following, and sincerely hope that you can provide suitably reassuring explanation to render our assertions baseless. In response to our examinations regarding the novation of the Westminster City Council (WCC) Parking Enforcement contracts, Mr Peter Large expressed "thanks" for being alerted to, and "concern" at the discovery of the blatant procedural impropriety perpetrated by Mssrs Gilchrist & Goad (or their Officers) following the DCB meeting in Feb 2008. Astonishingly, in his capacity as Monitoring Officer, instead of taking the offending Officers to task via the proper channels, he elected to invent, on their behalf, the excuse of a "lack of appreciation" of the requirement for approval by the Member. This lack of appreciation is claimed by Mr Large to extend to not only Mssrs Gilchrist & Goad, but also the advising "contracted-in" firm of solicitors Sharpe Pritchard; the DC Board; and more incredulously, the Member himself, Cllr Chalkley. We say "invent" since Mr Large would have been fully aware of the Member's "appreciation", since the Member had signalled his intent in this regard by his entry in the Forward Plan of Decisions Sep-Dec 2007. Were this procedural improriety by these Officers , in consort with the Member, an isolated incident, then Mr Large's reluctance to instigate procedure against them could almost be understood. It is our assertion that these 3 individuals (Mssrs Chalkley, Gilchrist & Goad) are the architects of a scheme to not only confer anti-competition bias in favour of Verrus UK Limited to ensure that they would be the recipient of the Pay-By-Phone contract with Westminster City Council, but are also actively encouraging other Local Authorities to confer the same bias via a "tender-process" circumvention offered as an incentive of "joining", by way of a fee the Partnerships-In-Parking Consortium. In short, this would appear to be one-step better than Mr Gilchrist's predecessor who, having overseen the award of contracts to Drake's Bailiffs, promptly left WCC to take up a seat on the Board of that private Company, since this form of engineering to confer said bias can only result in a surge in the balance sheet of Verrus UK Limited. To achieve this end, it is becoming increasingly apparent that these individuals conduct their dealings with impunity, which appears to result from levels of both "scrutiny" and "monitoring" so poor as to almost suggest complicity. Having witnessed Cllr Angela Harvey orchestrating her colleagues on the B & E Scrutiny Committee to simply ignore the incontrovertible evidence presented to them of misrepresentations, incorrect procedure and phoney justifications with respect to the MCS, Mr Large's lack of explanation as to his defending these individuals requested by both me and Cllr Boothroyd can only render any future investigations by him unreliable and his position as untenable. With the District Auditor asking to be kept fully abreast of our investigations, we would hope that you as Chief Executive would see fit to instigate a proper internal investigation, prior to their external one into how the following procuderal improprieties and blatant breaches of the City Council's own Code of Procurement as well as the EU's Codes by the same individuals how gone unchallenged by you or the members of the Council's scrutiny committees. 1) Contract valued in excess of £500,000 awarded, without tender to Brooklands Executives According to this agency, having supplied the services of a Mr Stephen Lawrenson in the capacity of Interim Head of Parking, his services were then "re-hired" to head up a "unique project redefining a Council operation as a commercial, revenue-generating business". With the

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knowledge that deliberate "revenue-raising" by a Council Parking department is a blatant breach of the rules and guidelines regarding parking enforcement, the fact that a £500k contract was awarded without a full tender process can only be seen as a breach of both WCC & EU Codes of Procurement. 2) Contract valued at £186,000 awarded, without tender, to Verrus UK Ltd for the Pay-By-Phone Pilot Scheme Having alerted Mr Large in our letter before action to the lack of a tender process for this contract, he either failed to investigate the claim, or chose to ignore the evidence clearly minuted in the DCB report regarding its extension that admits to the breach of both codes of procurement, by stating by way of response that the value of the contract was too low to warrant a tender process. A further request into a breakdown of the £408,000 expenditure "appoved" alongside the award of this contract to help support his claim that its value was less than £10,000 (the lowest limit undo WCC's Code) has hitherto been unanswered. We are also advised that copies of the signed contract, requested under FOI, have been refused 3) Award of "framework" Pay-By-Phone contract to Verrus UK Ltd With the project created by Stephen Lawrenson at (1) and charged to the London Centre of Excellence and thus "paid for" by, and without any benefit to the UK Taxpayer, the Partnerships-In-Parking consortium, heavily influenced by Mssrs Gilchrist & Chalkley, having no authority to procure, required the City Council to procure on its behalf, thereby keeping under Mr Large's watch. With the actual contract being drafted by Sharpe Pritchard, their defective advice regarding the aforementioned novation pales into significance compared to the failure to identify, and therefore advise against violations of Directive 2004/18/EC of the European Parliament and of the Council of 31 March 2004, specifically Article 32 (2) regarding Framework Agreements, where (i) the Notice and tender documents do not sufficiently identify the contracting authorities to benefit from the Contract, and (ii) the Contract is of excessive duration and prevents or restricts competition. The continued promotion to other Local Authorities (neither previously identified nor originally party to the framework agreement as stipulated in Article 32) of access to this contract in exchange for a Membership fee to join PIP is a continuing violation, as laid out in the Commission's Explanatory Note "...framework agreements constitute a closed system which no-one else can enter, either as a purchaser or a supplier", by encouraging the joining Member to opt-out of the normal procurement regime and not even publish tender notices, thereby conferring an unfair competitive advantage to Verrus UK Ltd. Most serious is the suggestion that Article 53 (1)a and (2) of the Directive are violated because Westminster evaluated the tender offers received in violation of the principles applicable to the determination of the most economically advantageous tender, hence, we have asked Cllr Dimoldenberg to request under FOI, full explanations as to how all the tenders were evaluated. Suffice to say, should an examination of the evaluations of these tenders be so markedly different as to have conferred an unjust bias toward the Verrus tender, such a level of unlawfulness could well see the City Council exercising its rights to hold the individuals responsible for any financial penalties imposed as a direct result. 4) Contract value of > £250,000 awarded to West One, without tender. In response to a request under FOI for a breakdown of the published "expenditure" of £401,000 for the provision of additional motorcycle parking bays and security, with the specific aim of trying to identify the proportion truly expended on the same as opposed to creating the charging scheme to reimburse these, it clealry shows West One as being the recipient of over £250,000 for works carried out regarding "design & consultation", drafting of TMO's and handling "Objections". This would appear to be a blatant contravention of WCC's own code at Point 2.1 "Rules for Contracts" where it states: "Contracts must not be split into smaller value agreements to avoid

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having to meet tendering & contractual requirements imposed for larger contracts by this Code or the EU regulations." We have openly declared our intention to bring all matters relating to the introduction of charges for on-street parking of Motorcycles by WCC before the High Court, but can only do so as a direct challenge to the scheme being made permanent, a decision that remains frustratingly delayed. In the interim, having brought this highly-pressing matter to your attention, and to save the Council's having to explain in Court why no action was taken to rectify these blatant, and on-going violations, nothing short of a proper internal investigation following a suspension the Officers & Member concerned would seem an appropriate course of action. Furthermore, we feel confident that you will also submit the Contract for Pay-By-Phone for a re-tendering process ensuring full compliant with EU Code of Procurement in all aspects. I await your response prior to taking these findings to the appropriate authorities. Yours sincerely Warren Djanogly On behalf of the No To Bike Parking Tax Campaign

Email – 23 Sep 2009 at 10:18 – WD to MM – cc KG, PL, PD, AG, DC, NH, SE Dear Mr More, I appear not have received any acknowledgement of receipt of my email sent Mon Sep 14 2009, a copy of which I append below. Can I now ask for the same and an indication as to any action implemented by you as a result, bearing in mind the seriousness of the content. There would also appear to be a great reluctance to forward copies of crucial documents relating to these matters, amongst which are: 1) A signed copy of the Contract, not "awarded" but merely given to Verrus UK Ltd for the "Pay-By-Phone" pilot scheme, 2) Copies of the minutes from the 2 DCB meetings regarding the Novation of the Parking enforcement contracts, 3) Copies of ALL the tenders submitted regarding the main Pay-By-Phone Contract together with the evaluation process applied to each. As Mr Large will be able to confirm, when Cllr Chalkley makes his reviled & unjustified attack on motorcycles "permanent", we will be able to demand these documents be made available under pre-action protocols (supported by a Court Order should non-compliance of the protocols occur). So it would appear a somewhat futile course of deliberate obstruction that they are not released, and again, we must ask for your intervention. Yours Warren Djanogly Chairman

Email – 23 Sep 2009 at 13:33 – MM to WD – cc KG, PL, PD, AG, DC, NH, SE, NTBPT

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Dear Mr Djanogly Thank you for your e mail and my apologies that I did not respond last week. I have asked for initial facts to be provided to me and on basis of which I will form judgement on how best to take forward. This reflects the seriousness of the concerns you raise. I would propose to let you know at the end of next week as to how I then take forward. Once again, I apologise for not having acknowledged your message. Yours Mike More

Email – 24 Sep 2009 at 14:26 – PL to WD – cc MM, PD, AG, DC, NH, SE Dear Mr Djanogly I know that the Chief Executive intends to respond to the substantive points made in your email of 14 September next week. In the meantime I will take up the invitation to comment on your final paragraph below. It is not the case that you will be able to demand the documents you refer to under "pre-action protocols". That is for two reasons. The first is a technical one. There is no pre-action protocol which has the effect you suggest. The second reason is a more fundamental one. Whatever the merits of the allegations you have made about "violations of EU Codes of Procurement", if any, they are irrelevant to the legality of whatever decision Councillor Chalkley may take with respect to Motorcycle Parking Fees. The duties with respect to procurement imposed upon the City Council by EU law and by the Public Contracts Regulations 2006 are duties owed to, and enforceable by "economic entities", not individuals, and they are enforceable only in certain circumstances and within certain timescales. The criticisms you make will simply not be justiciable in the proceedings you say you intend to bring under the Road Traffic Regulation Act 1984. I make that point not in order to avoid disclosing documents you and others have requested. Those documents should and will be disclosed to the extent that no exemption under the Freedom of Information Act properly applies, and I accept that whether or not the Council has complied with the law is a matter of legitimate public interest. But I am aware that you are seeking financial contributions from your supporters for your prospective litigation, and I am sure that in doing so you will not want to mislead them about the nature of the challenge that can be brought Regards

Peter Large

Email – 28 Sep 2009 at 13:53 – PD to PL – cc DB Mr Large

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I would be grateful if you could let me know from whom invoices were received from March 2007 – March 2008 in respect of the £13.1 million Parking Enforcement Contract and to who whom payments were made in respect of these invoices. I understand that this contract was monitored monthly so I expect that this information is readily available. Please could I know, also, from whom invoices were received prior to March 2007 and post March 2008 in respect of this contract. Thanks Paul Dimoldenberg

Email – 28 Sep 2009 at 17:51 – PL to PD – cc Councillor Dimoldenberg I am told the answer is: Prior to March 2007 - NCP 21 Bryanston St London W1H 7AB April - December 2007 - NCP Services 21 Bryanston St London W1H 7AB January 2008 - March 2009 - NCP Services Ltd 21 Bryanston St London W1H 7AB April 2009 - Present - NSL Limited (Services Group) Westgate House Westgate London W5 1YY

Email – 29 Sep 2009 at 17:03 – WD to PL – cc MM, AG, KG, PD Dear Mr Large, Once again I thank you for your guidance by way of your legal opinion, of which I do take great stock. With regard to Mr More's response, there is greater than anticipated interest, and I would like here to reiterate that our central role is to ensure that charges for motorbike parking are abolished. That is the sole objective of our organisation and any communications we issue on behalf of the thousands of motorbike riders who are relying on us to achieve this aim. However, it is difficult to ignore the unforeseen consequence that, with the blatant megalomania displayed by the cartel known as Partnerships-In-Parking, (so heavily influenced by Mssrs

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Gilchrist, Goad & Chalkley), our ranks are daily being swelled by other malcontents from a multitude of quarters, all victim in some form of the same, seeing our Campaign's challenge against the City Council's Parking Department as a long-awaited conduit to unleash deep-held grievances. I am advised that Mr Gilchrist's meteoric rise through the WCC ranks is as equally well-known to have been aided by Mr More (who is now asked to comment on his protege's possible digressions) as it is despised by others inside the Council. I am also advised to anticipate a surge following a planned purge of Officers, by Mr Gilchrist's decree, that is imminent, and with an projected over-spend of £10m, one can only presume the Parking Department will suffer the most of these redundancies. I only mention this so you can better understand that, with so many all too ready to offer various forms of advice, it is reassuring to receive it from one not only from "the other side" (for want of a better expression, but also dealing with these matters daily) if only to bring some balance to the argument. However, could I ask for your clarification on some elements, if only for my better appreciation of your advice. When you state: "The criticisms you make will simply not be justiciable in the proceedings you say you intend to bring under the Road Traffic Regulation Act 1984.", do you mean that "the criticisms" would not be justiciable "under RTRA 84", or do you mean that the "proceedings we intend to bring" are "under RTRA 84". With relation to your final line of us not wanting to "mislead", this would appear an important distinction to clarify since we have been advised that, whilst Cllr Chalkley's decision of permanence would require TMO's compliant to the RTRA 84 and thus any challenge would be under the same, the option of a Judicial Review would afford examinations under a much wider set of principles. Additionally, I am advised that it would be for the Court to decide on relevance of any elements. If your experience of such matters could explain where this advice is erroneous, I would be most grateful. With no decision as yet taken as to whether our challenge would be a Schedule 9 Claim; Judicial Review; or both, I would genuinely appreciate an expansion of your concern regarding our "misleading" of its nature. Furthermore, in your letter to me dated 28 August 09, you refer to paragraph 2.29 of the WCC Procurement & Management Code, listing the regulation 2.29.1 & 2.29.2. Your following narrative explains where a failure to comply with 2.29.1 has occurred to which you express concern and the remedial course of action with respect to the Member's ratification. However, you fail to mention whether or not similar non-compliance of 2.29.2 has occurred. In other words, you fail to state whether at the time, or subsequently the "new legal documentation", in this case the Deed of Novation as copied to me, and any checks of Financial Probity/Parent Company Guarantee have been placed in the Deeds Registry. Can you please confirm whether this has been done, and exactly what date, and where in the Deeds Registry it can be located, and advise whether its non-entry could invalidate the contract. In my email of 7th September, I sought your legal interpretation of the activities of NCP Services Ltd from March 2007 to March 2008, the date when you claim the contract was novated, to which I am yet to receive a reply. Many thanks once again for your assistance. You rightly “accept that whether or not the Council has complied with the law is a matter of legitimate public interest”, and with the public’s trust being bestowed upon the Members, so it must be upheld by the Officers, and more so, the monitors appointed to ensure this trust is not abused by either party. Whether we, as members of the public, or as “individuals” have the right to legally contest any violations may be questioned,

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but our rights to examine and question to ensure that our trust is not being misplaced cannot. Yours Warren Djanogly

Email – 02 Oct 2009 at 15:51 – MM to WD – cc Dear Mr Djanogly As promised I have looked into the points you make in your message below. I will deal firstly with what you say about lack of action by the Council's Monitoring Officer and members. I have looked at the correspondence between yourself and Peter Large about the novation of the Parking Enforcement Contract, and I have discussed the matter with Mr Large himself. In my opinion Mr Large has acted appropriately. I cannot see that he has sought to excuse what has occurred. As set out in his letter to you of 28 August, the actions he has taken include advising that a formal report on the matter be submitted to Councillor Chalkley by Mr Goad, and beginning discusions with the Head of Procurement and Contract Management and the Director of Finance about changes to the City Council's procurement code to ensure this does not happen again. He will also be reporting formally on the matter himself to the Council's Cabinet, in his capacity as Monitoring Officer. Mr Large acknowledged in his letter of 28 August that there had been a failure of process and this will be reported to Cabinet. Mr Large tells me that he has also considered whether any further action is necessary, either in relation to officers in the parking service, the officers who comprised the Departmental Contracts Board which approved the novation, or Sharpe Pritchard. He has raised the matter with Sharpe Pritchard at a senior level, but considers no further action is warranted. Having discussed the matter with him, I accept his judgment. You also mention the Built Environment Policy and Scrutiny Committee in this context. That Committee was of course considering the merits of Motorcycle Parking Fees rather than any of the procurement issues you have now raised. I appreciate that you disagree with the Committees conclusions, and with some of the points made in the course of discussion, but I am sure you will accept that that members of the Committee are entitled to their own views. The position of a Council is clear in matters of this sort; it is elected councillors who take the decisions, on the basis of advice and information. It is not in fact the role of Mr Large, or me, to "defend" them. For those reasons I am satisfied that it is not the case that there has been a lack of appropriate action by internal monitoring personnel, or by members. I turn to your request for an investigation into four particular procurement exercises, and the allegations you make about Councillor Chalkley, Mr Gilchrist and Mr Goad. It may help if I begin by setting out the information I have been given in each case, so there is no misunderstanding. 1. Brooklands Executives Brooklands Executives is, as you are aware, an executive recruitment agency. Stephen Lawrenson was engaged through Brooklands Executives as an Interim Head of Parking by the City Council, as you say, from July 2004 to November 2004. The arrangement with Brooklands Executives was at a cost much lower than £500k, and it was approved in the correct way at the

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time by a Departmental Contracts Board. Mr Lawrenson's role as Interim Director ended in November 2004. The £500k figure appears to relate not to a procurement exercise at all, but to the set up costs of the Partnerships in Parking project. Stephen Lawrenson was involved in establishing the Partnerships in Parking agreement, but not at the cost of the City Council. His work was funded by the government (the Office of the Deputy Prime Minister) through the London Centre of Procurement Excellence. Partnerships in Parking was formalised by an agreement approved by the then Leader of the Council on the basis of a report submitted to him on 1 June 2006 which is available for inspection. As that report sets out, the purpose of PiP was (and is) not to raise revenue, but to cut cost, as recommended by central government, through joint procurement. In summary therefore there was no £500k contract entered into without competition, and no contract entered into for unlawful purposes. 2. Verrus UK Ltd and the pilot scheme I do not believe it is the case that the contract for the pilot scheme was awarded without a tendering exercise. It is true that a full tendering exercise was not carried out, because one was not required by law or under the Council's procurement code. However, a strategy for identifying a provider was approved by the Contracts Review Board, a "mini" -tendering exercise was carried out in which seven potential providers were asked to put forward a proposal, those proposals were evaluated in the normal way, and the decision to appoint Verrus as the provider was agreed by the Central Services DCB, and subsequently by the Cabinet Member. The process followed complied with, and in some respects exceeded, that normally required for a contract of such a size and value. So far as the value of the pilot scheme contract, as extended, is concerned, the advice I have been given is that, notwithstanding the figures of £186k and £405k you refer to, if the contract is valued correctly, and in the way required by procurement legislation, its value was below the threshold for which an EU compliant tendering exercise would have been required. I have asked Mr Large to write to you to explain the position in more detail. 3. Verrus UK Ltd and the Framework contract I have been shown the OJEU advertisement for this contract, and, simply as a matter of fact, it is not correct to say that it does not identify the public authorities who may benefit from it. It clearly identifies the contract as a framework agreement, "for any local authority with parking functions in the United Kingdom". I take your reference to the contract being of "excessive duration" as a reference to the fact that the term is five years rather than the usual four. The four year period can be exceeded where there is justification, and the view taken at the time in this case, on the basis of legal advice, is that there was such a justification given that this was an emerging market. The other point you make about this contract is that the tender evaluation may have been biased or flawed. I do not know on what that suggestion is based, and you may wish to consider that point further when you receive a reply to the request you have made for information about the evaluation process. It is perhaps telling, however, that none of the unsuccesful bidders in the exercise, who of course had substantial financial interests at stake, chose to make the challenge at the time that would have been available to them if your point was well-founded. 4. WestOne The City Council has a term contract with WestOne that was awarded after a full tender exercise carried out in compliance with the Public Contracts Regulations.

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The substance of your criticism of Councillor Chalkley and Messrs Gichrist and Goad, as I understand it, is that they have sought to confer an improper advantage on Verrus UK Ltd, and that the Pay-byPhone parking contract with Verrus is in some way intrinsically improper. The former allegation, as I understand what you say, is made on the basis that the tender processes for both the pilot contract and the main contract were flawed. On the information I have, that is not the case. The latter allegation is based on two legal points, and those advising me do not agree with your analysis. Against that background, I do not see any justification for the investigation you have asked for. I do not intend to submit the Pay-by-Phone contract to a re-tendering exercise - my advice is that that is not legally possible in any event. If I have misunderstood any of your points, please let me know. I have asked Mr Large to ensure that any outstanding FOI requests from yourself are responded to as quickly as possible . Mike More Chief Executive

Email – 12 Nov 2009 at 12:28 – MHW to WD – cc SE Dear Mr Djanogly I am emailing further to last week's meeting. I would like in the first instance to thank you and Mr Jones for attending. I thought it was a very helpful meeting. I thought it would also be helpful, as agreed, to email to set out how I see the way forward following that meeting. You have raised a number of matters concerning the City of Westminster Council (the Council) during the course of your ongoing telephone conversations and email exchanges with Sally-Anne. You have previously agreed with Sally-Anne that it would be sensible to exhaust your enquiries with the Council before referring the matters to me for consideration in the context of my responsibilities as external auditor. You outlined the current position with regards to your enquiries – and your current concerns - at our meeting. Those concerns, insofar as you are seeking action on my part, fall into four main areas: - Partnerships in Parking; - the novation of the NCP contract; - the award of the contract to Verrus UK Ltd for the pay-by-phone pilot scheme; and - the award of the 'framework' pay by phone contract to Verrus UK Ltd. As I made clear when we met, I will consider all the information you have drawn to my attention in the context of my responsibilities as the Council's external auditor. It is not my intention to cover that detail here, but I think it is helpful to summarise - and agree - the main areas as above. Please let me know as soon as possible if these do not cover the main areas of your concerns. I would encourage you and the Council to continue your discussions with a view to resolving the issues between you. However, I believe it is now appropriate for me to review all the information you have drawn to my attention to date in order to make an initial assessment of whether the matters fall for my consideration within the constraints of my responsibilities under the Audit Commission Act 1998 and the Audit Commission's Code of Audit Practice. In that regard, I should remind you that those responsibilities are limited.

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As external auditor, I operate within the duties and powers and discretions given to me under the Audit Commission Act 1998, as amended, and the Code of Audit Practice approved by Parliament. Essentially, I am concerned with the Council's accounts, on which I give an opinion, and its arrangements for securing economy, efficiency and effectiveness in its use of resources, in which I give a conclusion. In addition, I have certain other powers concerning the legality of items in the accounts and the consideration of matters brought to my attention by members of the public, in particular local government electors from within the borough. These include making recommendations for improvements to the Council through a range of reporting options, including reporting in the public interest. I may also seek a declaration from the courts if I believe that the Council's accounts contain certain items which fall outside its statutory powers. In deciding to exercise the powers available to me, I have to weigh up the nature and significance of an issue against the benefits of such an action for the public, given that these are costly processes and any costs incurred would fall on the council-taxpayer. Accordingly, these powers are usually reserved for the most serious and significant matters and, in the case of seeking a declaration, to resolve matters which have a wider significance. I am also only able to consider matters insofar as they concern items of account in the year of audit. In this regard: - I cannot consider the Council's policies, procedures or anything else not relevant to the accounts; and - I can only consider items in open years of account; the audits of the Council for the years up to and including 2007/08 have been certified and I retain no powers with regard to those years. As noted above, I will now review all the information you have drawn to my attention to date. You will appreciate that I am not able to indicate a time scale for the completion of my initial assessment, in particular as I may need to take my own advice. However, I will write to you again by 11 December 2009 with that assessment or to provide you with an update on progress. In the meantime, please contact Sally-Anne or me should you have any queries. Yours sincerely Michael Haworth-Maden

Email – 16 Nov 2009 at 17:08 – WD to MHW – cc GJ Mike, Many thanks for your comprehensive precis of our meeting and the agreed initial first step. Would it be possible to add one more element to the list? Have been victim to a smear campaign orchestrated by WCC Parking Department via representatives of freight logistics group (all of whom were subject to inordinately large numbers

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of PCN's), and now regularly meeting with WCC, our research into their unsolicited bile against our own "fight for our rights" revealed that 2 of these groups were involved in a practiced described as "paying the salary" of a WCC Parking department employee named as Hayley Regan. In return, both categorically attested to significant reductions in PCN's issued against their members, and minutes from their meetings with WCC reveal the application of a "light touch" approach. My reason for bringing this to your attention is that, as described, there would have been funds incoming to the WCC Parking Department from these logistics groups and I was wondering how this would have been recorded in the accounts (so that during the 20-day inspection open to the rate-payers, it would be indentifiable). Interestingly, when questioned as to the legality of what easily be seen as a "bung", Head of Legal, Peter Large merely states: "they (the freight logistics groups) offered". On the other matters, I will await your response which I hope will allow further investigation, but are indeed mindful of your parameters. On behalf of Mr Jones, may I too thank you and Sally-Anne for your diligence to date. Best Warren Djanogly Chairman

Email – 17 Nov 2009 at 13:51 – MHW to WD – cc GJ, SE Dear Mr Djanogly Thank you for your email. With regard to the additional matter raised, I will of course consider all information that is brought to my attention insofar as it falls within the scope of my statutory responsibilities. To do so, however, I would need supporting evidence for the concerns set out in your email. Can I therefore ask you to write to me (or email me) setting out your specific concerns, attaching relevant supporting information. It would be helpful if you could also let me have your permission to share that letter (or email) and its attachments with the Council’s Chief Executive in order to obtain the Council’s views on the matters raised. As your email raises some potentially serious issues, I should also remind you that, should you believe you have evidence of a crime, it should be properly referred to the police. Yours sincerely Michael Haworth-Maden

Email – 17 Nov 2009 – WD to MHW at 15:16 – cc GJ, SE Dear Mr Haworth-Maden, Firstly, can you accept this email as my expressed permission for you to use any document I have attached/posted/handed to/referenced/linked to.

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As to the additional matter, the main thrust of our concerns is detailed in the following article that appeared in Road Transport magazine:- “…agreeing to jointly fund Westminster City Council’s parking guru Hayley Regan, for the next 12-months” Source:- article on www.roadtransport.com penned by Laura Hailstone of Reed Business Information. (APP1) http://www.roadtransport.com/Articles/2009/05/19/133784/fta-to-jointly-fund-westminsters-parking-guru.html This was forwarded to us following a "dirty tricks" campaign orchestrated by WCC Parking Department involving both groups mentioned in the article as "funding" Hayley Regan ie The Brewers Logistics Group (BLG) and the Freight Transport Association (FTA). I have attached (APP2) firstly a copy of the "templated" letter received from the FTA, an identical being received from the BLG. I also attach (APP3) a copy of an email I sent to Cllr Chalkley asking for explanations which also includes an email received from the BLG claiming this incredible reduction in the number of PCN's they have received (up to 85% reduction) merely as a result of "funding Hayley Regan". Equally telling, however, is the claim by Mr Parr-Davies of the "UK Express Network Forums" who were NOT involved in "funding" that "...albeit not able to deliver as much as we expected". Further, I attach (APP4) copy of a Letter Before Action sent by us to WCC. At point 3.3 we refer to this very issue concluding that the agreement was a simple exchange of free parking in return for the WCC Funding. It has to be argued that, as Councils cannot make money from parking (R v Camden LBC, ex parte (1995) RTR 346, the divulging of assistance/advice regarding reducing PCN must be given as a free service. Finally, I have attached (APP5) a PDF copy of Peter Large (Head of Legal) response to the Letter before Action. Against this point 3.3, he clearly states: "Members of the forum OFFERED to pay 50% of this post". Surely this cannot be used as an excuse for accepting this illegitimate "funding" of a salary ie in other words, just because they "offered" does not legitimise WCC's "accepting". Furthermore, why has this arrangement NOT been both widely-publicised by WCC as well as OFFERED to other group such as us motorcyclists. I hope you now appreciate why I should wish to understand how this "funding" is registered in the Annual Accounts? Should you need anything more, please do not hesitate to contact me. best Warren Djanogly

Email – 27 Nov 2009 – MHW to WD at 15:06 – cc GJ, SE Dear Mr Djanogly Thank you for your email and for providing your evidence in support of your concerns. I have considered this additional matter within the constraints of my responsibilities as the Council’s external auditor. As you are aware, those responsibilities are closely defined. Essentially, I am concerned with the financial transactions of the Council in the year of audit and its arrangements for securing economy, efficiency and effectiveness in its use of resources. I do not have a general power to review actions taken by the Council and would in general only become involved in individual cases if there is evidence of illegality or fraud and/or corruption.

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http://www.roadtransport.com/

http://www.roadtransport.com/Articles/2009/05/19/133784/fta-to-jointly-fund-westminsters-parking-guru.html

http://www.roadtransport.com/Articles/2009/05/19/133784/fta-to-jointly-fund-westminsters-parking-guru.html

In considering this matter, I have had regard to your email and its attachments, in particular to numbered paragraph 3.3 of your letter before action dated 8 June 2009 and to the same numbered paragraph of the Council’s response dated 30 June 2009. On the basis of my consideration and the information currently before me, and without fettering the exercise of my discretion, I am not persuaded that further enquiry is appropriate on my part having regard to my responsibilities. In particular, I have not identified any evidence of illegality or inappropriate use of public funds by the Council. If you have any further information that you wish me to consider in this context, please send it to me and I will consider it carefully.

This view is, of course, without prejudice to:

· the rights of members of the public as part of the formal audit process; and

· my consideration of any further information coming to my attention, whether from you (as above), or by way of a question about, or an objection to, the Council’s accounts, or otherwise.

Thank you for drawing this matter to my attention. I am continuing to consider the other matters you have raised with me in accordance with my email of 12 November 2009 and will write to you again in that regard by 11 December 2009. In the meantime, please contact Sally-Anne or me should you have any queries.

Yours sincerely

Email – 11 Dec 2009 – MHW to WD at 10:54 – cc SE Dear Mr Djanogly I am writing further to my email of 12 November 2009. I am continuing to consider the information you have provided on the issues discussed at our meeting. I am also taking such advice as I consider necessary to support that consideration. You will appreciate that I remain unable to indicate a time scale for completion of my initial assessment. However, I will write to you again by 29 January 2010 with that assessment or to provide you with an update on progress. In the meantime, please contact Sally-Anne or me should you have any queries.

Email – 11 Dec 2009 – WD to MHW at 12:11 – cc GJ, SE, NTBPT Mr Haworth-Maden, Many thanks for your update. To assist your investigations, I have attached a copy of a Demand for a Public Inquiry submitted by our Campaign to the Department for Communities & Local Government, centred primarily on the awarding of both the Pilot Scheme and Framework Agreement for Pay-by-Phone services from Verrus UK Ltd. Furthermore, we have been advised that a complaint on this very issue had been lodged with the EU Commissioners, such a complaint having to be filed against the Member State, ie the United Kingdom of Britain & N. Ireland, and that they have opened an investigation, case no SG-CDC-2008A-7695 --- GESTDEM 2009/5139. We are also advised that a letter was handed to the UK Representative in Brussels who has actioned it via the OGC.

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We have seen confirmation from WCC Chief Executive that they have been made aware of the EU investigation and that Officers from the OGC are due to meet with WCC in the near future. I look forward to hearing the results of your inquiry in the new year. Best

Email – 30 Dec 2009 – MHW to WD at 16:39 – cc SE Dear Mr Djanogly Thank you for your email, with my apologies as I do not believe I have acknowledged receipt until now. I will be in touch again in the new year as per my email of 11 December 2009. In the meantime, please contact Sally-Anne or me should you have any queries. Yours sincerely Michael Haworth-Maden

Email – 29 Jan 2010 – MHW to WD at 12:03 – cc SE Dear Mr Djanogly I am writing further to my emails of 11 December 2009 and 30 December 2009 in order to keep you informed of the progress on my consideration of the matters you have raised with me with regard to the above. I am continuing to consider those matters carefully in accordance with my responsibilities as appointed auditor and am making appropriate enquiries, which remain in progress. I anticipate that I should be able to let you have my assessment of whether the matters call for further action on my part within the next few weeks and by 26 February 2010 at the latest. In the meantime, I hope you find this update helpful. Please contact Sally-Anne or me should you have any queries. Yours sincerely Michael Haworth-Maden

Email – 29 Jan 2010 – WD to MHW at 15:07 – cc GJ, SE Dear Mr Haworth-Maden Many thanks for the update, and I am encourage to read that you are making appropriate enquiries. Would it be possible for me & Mr Jones to arrange a brief 30 minutes with you & Sally-Anne. So much has happened since we met and there may be elements of discovery that should have been passed to you to assist your investigations, and perhaps "vice versa" may apply. I very doubt you would need schedule as long a meeting as last time, but I am confident it would assist all.

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Yours Warren Djanogly

Email – 01 Feb 2010 – MHW to WD at 17:31 – cc SE, GJ Dear Mr Djanogly Thank you for your kind offer of a further meeting. I believe, however, that such a meeting at this stage of my work is unnecessary. We have already had one meeting, allowing you the opportunity to explain your concerns to me, and you have had the opportunity to send to me any information in support of the matters you have referred to me. If you have any further information that you believe I should consider in relation to the issues you have raised, then please send it to me via email or the post and I will, of course, consider it very carefully. I am sure you will also understand in this context that there are statutory restrictions on appointed auditors in sharing information obtained in the conduct of their audit, although I will, of course, be writing to you once my enquiries are completed with my general conclusions. If you therefore have any further information that you wish to draw to my attention, please send it to me by 12 February. I will otherwise write to you again in line with the approach set out in my email of 29 January. Yours sincerely Michael Haworth-Maden

Email – 01 Feb 2010 – WD to MHW at 17:39 – cc Dear Mr Haworth-Maden I write to confirm receipt of your mail, and to let you know that the contents are noted and understood. Kind regards Warren Djanogly

Email – 17 Feb 2010 – WD to MM at 10:53 – cc All WCC Councillors, NH, AS Ladies & Gentlemen, Complaint of Offences under the Fraud Act & Gross Misconduct in Public Office - crime no 6507270/10. Could you all please note that there is a small, but significant typo error in the Report which our printers are now amending.

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Amendments needed are: Page 2 - 2nd Para - Point (a) - second line - should read ".....novation took place on 13 March 2008" and NOT 2009 as printed Page 4 - Point 15 - first line - again should read ".....novation took place on 13 March 2008" and NOT 2009 as printed These corrections bring the date in line with that stated by Mr P Large in his letter dated 28 August 2009, appendix 5, and with the report's summary, page 7. Furthermore, this should now explain the allegation of false representation by placing it within the accounting year ended 31 March 2008. Apologies for any confusion these may have caused. Should you have had cause to pass this report to other parties, could I ask you forward this email to them as well. Yours Warren Djanogly

Email – 22 Feb 2010 at 12:49 – WD to MM – cc PL, AG, NTBPT, All WCC Councillors Dear Mr More, I write to confirm receipt of your email of Feb 17, and have noted both its contents, and that of your response to the press. Further, I am informed that you too circulated it to all the Councillors, so it would be amiss of me not to do the same. I am at a loss to understand what "betraying a basic misunderstanding" means, however, when it comes to "reflecting on potential consequences", it would seem more apparent that it is you who has not "reflected" on your total inaction. For clarification's sake, this case has only 2 possible outcomes, Scenario 1 - The Deed of Novation dated 12 March 2008 was indeed a forgery perpetrated to time-bar any potential claim being lodged with the District Auditor, or Scenario 2 - The Deed of Novation dated 12 March 2008 was genuine, yet deliberately concealed from the Cabinet by its non-appearance in the report prepared for the Audit & Performance Committee Meeting of February 2009 lest it became known that (a) Mr Gilchrist had actioned it without any delegated power, (b) that neither the brand new entity, NCP Services Limited or its supposed Parent Company met the strict criteria required to become party to a public works contract, and (c) that this transferring or responsibility instead of re-tendering was a blatant violations of principles laid down by the ECJ. Furthermore, Mr Large's failure to submit a full report to Cabinet, as part of his own suggested remedial action, can only be seen as exacerbating this deception. As to Mr Large's admission to Cllr Dimoldenberg that prior to payments being made to NCP Services Ltd in January 2008, the same were being made to a certain NCP Services from March 2007. Undoubtedly authorised by Mr Gilchrist as Head of Parking, the fact that Mr Large makes

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the distinction between NCP Services & NCP Services Ltd is evidence enough of his knowledge, and inaction as Monitoring Officer, that they are considered in law as 2 very separate legal entities, and thus, were it NCP Services Ltd who were party to a novation, any payments to NCP Services must be deemed as illegitimate. It is impossible to perceive that none of the above would not warrant, at the very least, suspension if not dismissal of both these individuals. Yet the record now shows that, rather than taking any appropriate action against them, you personally have:- 1) Dismissed evidence previously presented to you concerning these same individuals' violating WCC, UK & EU Procurement and Framework Agreement Directives, which have now become subject to a full investigation by the EU Commissioners 2) Resorted to intimidatory emails to me for alerting you to their behaviour. 3) Conveyed to the press your confidence that the contracts were properly let in direct contrast to Mr Large's own written assertion that the procedure was flawed, 4) Intimated that the fact that the allegations have been made by a "motorcycle protest group", is enough for you not to instigate any form of internal review or investigation. May I say that, in my own limited dealings with your Officers, I have found the lack of integrity emanating from all utterly flabbergasting. From Peter Nixon laughable attempt to avoid revealing the true value of the Pay-By-Phone Pilot Scheme contract merely handed, rather then awarded to Verrus UK Ltd, where he claims "I have been unable to ascertain the precise figure for the estimated value of the contract ... I can confirm that it was below the then OJEU level for advertising as it was also at the time that the contract was let.".... To Martin Low's most recent deception of the press regarding his supposed discovery of an old GLC document that gave authority to WCC to enforce PCN's on diplomatic bays, whilst fully knowing that without any supporting map or indications as to where those diplomatic bays were situated, the document was worthless, further evidenced by WCC need to apply for the same last November. Ironically, from our Campaign's perspective, we are most thankful to Mr Low as it was his deception that has resulted in a raft of newly-acquired media interest in us, a point you allude to your email to me. In the same vane, I have received a somewhat desperate letter from Mr Large threatening a private libel action, (notably written whilst being paid by WCC to handle Council matters; on WCC letterhead; on a WCC computer; put in a WCC envelope; and postage franked from a WCC machine), in which he displays scant regard for the responsibilities that would automatically come with the title "Head" of Legal Services, said title so prevalent on the page, preferring to blatantly pass-the-buck in asserting: "I was not personally involved in any way in the novation of the NCP contract. The legal work in connection with the novation was carried out by Messrs Sharpe Pritchard (outsourced lawyers)." Whilst it would seem incredulous that the WCC Head of Legal would not be party, or even consulted in the novating of a £14m annual public contract, his failure to take any responsibility, as Head of the relevant department, for what he himself has admitted was a flawed procedure, and more crucially, he failure to take any action in his capacity as Monitoring Officer refusal to take action against Mr Gilchrist in his capacity as Monitoring Officer adds more credence to the allegations of his conspiring. Your own refusal in the same regard is rapidly being seen by me as equally conspiratorial. Therefore, the question to you Mr More is simple. Does this lack of integrity stem from the top?

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No doubt the multitude of interested parties will be able to draw their own conclusions from the "reply to the substance of my claims" that you aver is imminent. For information's sake, I append a copy of a press statement, due for release today demanding your immediate resignation should no statement from WCC regarding sanctions against these two officers be received by 4pm today. Further, this statement will also be forwarded to all the WCC Resident Associations as well as our own growing number of resident supporters (bolstered in no short measure by Mr Chalkley's announcement regarding extended hours of paid parking) so that they might ask the same of their ward Councillors. Yours sincerely Warren Djanogly Chairman

Email – 26 Feb 2010 – MHW to WD at 15:23 – cc SE

Dear Mr Djanogly I am writing further to my email of 1 February 2010 to keep you informed of progress on my consideration of the matters you raised with me with regard to the above. I had hoped to be able to let you have my assessment of whether the matters called for further action on my part by now. However, having reviewed my files, I am making some further enquiries. I will continue to keep you updated on progress and will write to you again by the end of the March 2010 at the latest. In the meantime, please contact Sally-Anne or me should you have any queries. I should finally take this opportunity to acknowledge that you have lodged a complaint with the police, against two City of Westminster Council officers, and that the complaint relates to the novation of the NCP contract, one of the issues that you have raised with me. Yours sincerely Michael Haworth-Maden

Email – 26 Feb 2010 – WD to MHW at 16:10 – cc SE, GJ Dear Mr Haworth-Maden To say that "your ears must have been burning" is an understatement as both Mr Jones & I were discussing the timing of your reply not an hour ago. Once again, thanks for keeping me up-to-date. However, could I ask you to look at 2 other crucial issues.

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Gross Misconduct In addition to the Complaint of Offences under the Fraud Act & Gross Misconduct in Public Office, I have indeed filed a comprehensive report, a copy of which I attach for reasons I will explain. Whilst I am aware of the implication surrounding the alleged date of novation would place in within a set of accounts already signed off, and therefore cannot be challenged, there are still a host of questions surrounding the legitimacy of the revenue collected, but more crucially, suppliers payments made between March 2007 & March 2008 (date of novation). The final appendix to my report to the Met shows Mr Large being asked by Cllr Paul Dimoldenberg which legal entity was PAID for performing the Parking Enforcement contracts during this time, and the answer is most interesting in that Mr Large makes a very cclear, distintcion when he states that: from April 2007 to December 2007, payments made to a certain (unauthorised and definitely non-contracted) entity known as NCP Services. It is not until Jan 2008 that payments get made to the recipient of the Deed of Novation, ie NCP Services Ltd. As I say, for Mr Large (Head of Legal) to make the distinction is evidence of his knowledge that, from a legal point of view, these 2 entity cannot ever be viewed as one & the same. Furthermore, the authorisation for such payments to be made to NCP Services must again have come directly from the Officer, Alastair Gilchrist (then titled Head of Parking). Can you, as DA, please revisit the legitimacy of these non-contracted disbursements of tax-payers' money. Our High Court Challenge, and WCC's defence thereof:- One of the main thrusts of our High Court Challenge against WCC is that the Motorcycle Charging Scheme (MCS) was purely motivated by profit. In trying to defend this claim, WCC have produced financial tables (attached) which claim that, to assess the profitability of the scheme, they need to apply the enforcement of it as well. This is where it gets interesting, and we would like you, as Auditor about to review the accounts to March 31st 2010, to verify. According to Kevin Goad (Asst Head of Parking), as at 31st March 2009, enforcement cost was running at 75% of enforcement revenue. Furthermore, you will see in this report that the author starts his narrative claiming this figure to "historically" be 80%. Yet, amazingly, for the purposes of applying it to the revenue potential of the MCS, they are now claiming that it is running at 134% - in other words, WCC are claiming that Parking Enforcement is now LOSING tax-payers' money. This is a point that needs to be fully investigated for substantiation. To do so, I am afraid we have no alternative other than to request the Auditor investigates this claim, as it should appear somewhere in the accounts. Also, no-one else would be better placed, or more familiar with the financial principles employed by the Council in determining how such percentage calculations are formulated. Demand for a Public Inquiry (for your info sake only) Finally, as I am sure you are aware, an element of the concerns we brought to you centred on the legitimacy of both the Pilot & main contract awards pertaining to the out-sourced Pay-By-Phone Parking system. With the latter now under investigation by the EU Commissioners, the former and other abuses have been detailed by us as demanding a Public Inquiry. For information sake, I have attached a copy of that, but would reassure you that, whilst appearing a most cumbersome documents, the factual part is small. It is the supporting documentation , appended to allow the reader access to the source, that makes it far less inviting.

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Email – 26 Feb 2010 – WD to MHW at 16:43 – cc SE Dear Mr Haworth-Maden, Further again to be last email, could I make a most important correction. When referring to WCC's "Defence", I meant to say ..... "WCC's Response to our Letter Before Action" Please accept my apologies if the original was misleading. Yours Warren Djanogly

Email – 10 Mar 2010 – WD to Andrew Potter at 12:00 – cc Dear Mr Potter We have been investigating the legitimacy of the Parking Enforcement contracts being performed by NSL Ltd (formerly NCP Services Ltd) with specific regard to the Westminster City Council (WCC). You will see from the attachments that, under FOI, we inquired of WCC as to the legal status of these contracts between March 2007, when your company was split to facilitate the acquisition by the Macquarie Group, and March 2008, when WCC claim to have "novated" the contract to NCP Services Ltd. At Point 4 of the response, WCC have stated:- "The novation deeds, as stated above, were executed on 13 March 2008. Prior to the finalisation of the novation, the contracts were performed by NCP Services Limited on behalf of National Car Parks Limited." However, the Second attachment - being a letter to The Echo penned by you, ie National Car Parks Ltd Chief Executive Andrew Potter - which I am informed was in response to a similar response made by Sunderland District Council as to the status of their contracts, would seem to contradict this version of events. Furthermore, when we inquired of WCC as to the name of the entity that was being paid for performing these contracts, Head of Legal, Mr Peter Large states that between March & December 2007, payments were made to an entity known as NCP Services, following which in January 2008, payments were made to a seemingly separate entity known as NCP Services Ltd. Either way, were these contracts being performed on behalf of your company, National Car Parks Ltd, it must be assumed that payments would be made to you, for your own disbursement to third party assignees. Clearly, Mr Large's statement runs contrary to this assumption. Would you be able to assist us by clarifying National Car Parks Ltd version of its involvement with the Parking Enforcement Contracts awarded to it by Westminster City Council in 2003, since, if we are understanding the gist of your letter to the Echo, it would appear that you have nothing to do with NSL, formerly NCP Services Ltd? If, as we believe, your company vacated these contracts upon acquisition by the Macquarie Group, what involvement did your company have in relation to these contracts thereafter?

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Many thanks in advance for your assistance in this matter. Yours Warren Djanogly

Email – 12 Mar 2010 – WD to Mark Underwood, CEO of NSL Ltd at 12:02 – cc Dear Mr Underwood As you will be aware, we have been investigating the legitimacy of the Parking Enforcement contracts being performed by your company, NSL Ltd (formerly NCP Services Ltd) with specific regard to the Westminster City Council (WCC). You will see from the attachments that, under FOI, we inquired of WCC as to the legal status of these contracts between March 2007, when National Car Parks Ltd was split to facilitate their acquisition by the Macquarie Group, and March 2008, when WCC claim to have "novated" the contract to your company, then known as NCP Services Ltd. At Point 4 of the response, WCC have stated:- "The novation deeds, as stated above, were executed on 13 March 2008. Prior to the finalisation of the novation, the contracts were performed by NCP Services Limited on behalf of National Car Parks Limited."

However, the Second attachment - being a letter to The Echo penned by National Car Parks Chief Executive Andrew Potter - which I am informed was in response to a similar assertion made by Sunderland District Council as to the status of their contracts, would seem to contradict this version of events. Furthermore, when we inquired of WCC as to the name of the entity that was being paid for performing these contracts, Head of Legal, Mr Peter Large states that between March & December 2007, payments were made to an entity known as NCP Services, following which in January 2008, payments were made to a seemingly separate entity known as NCP Services Ltd.

For these contracts to have been performed by your company "on behalf of" National Car Parks Ltd, it must be assumed that payments would be made to National Car Parks Ltd, for them to disburse to you as third party assignees. Clearly, Mr Large's statement runs contrary to this assumption. Would you be able to assist us by clarifying National Car Parks Ltd version of its involvement with the Parking Enforcement Contracts awarded to it by Westminster City Council in 2003, since, if we are understanding the gist of Mr Potter's letter to the Echo, it would appear that his company has nothing to do with NSL, formerly NCP Services Ltd? If, as we believe, his company vacated these contracts upon acquisition by the Macquarie Group, what involvement did his company have in relation to these contracts thereafter? Many thanks in advance for your assistance in this matter.

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Email – 12 Mar 2010 – DB to KG at 16:08 – cc MM, PD Kevin - I have just seen on BBC News online a story that says that the whole process of awarding a new parking enforcement contract has had to be scrapped because of what appears to be a basic error in assessing the bids. Can you confirm this is true? I guessed it might be when I looked for the press notice about Mouchel's appointment and found that it had been deleted from the council's website. As a member of Audit and Performance Committee I am very concerned if such a high profile contract has to be retendered because of such a basic mistake - especially after the contracting process has been the subject of detailed external scrutiny and investigation. The existing contract is supposed to run until 1 April which leaves no time to retender before then. What will happen on 1 April? Will NSL continue until a new contractor replaces them, or will Mouchel take over on a temporary basis? Cllr David Boothroyd (Westbourne Ward, Labour) 07738 952409

Letter – 15 Mar 2010 – MM to Mark Field MP Mark Field MP House of Commons London SW1.

Date 15th March 2010 Dear Mark Thank you for your letter of 24th February attaching letter of 17th February from Mr Blue. As you are no doubt aware, concerns were registered publicly by the No to Bike Tax campaign about alleged fraud by officers in the novation of the Parking Enforcement contract in 2007. You will understand that, given that the campaign decided to refer straight to the Police, I now have, like you, to let the Police investigation take its course. However, I'm happy to give you my commentary on the case. I should emphasise that this is my private viewpoint. The accusations of fraud and competence rest on the proposition that the contract was not capable of novation and that the contract register was falsely amended so as to.make it appear that the novation. took place in 2007. My public silence on this matter is simply to respect that the police are investigating as they are bound to do. However, I am absolutely satisfied that no fraud or corruption has taken place, on the following grounds:

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1. The City Council's Contract with NCP dated 12th February 2003 contains a clause which enables novation of the contract, therefore makes it lawful to do so. 2. In relation to contract law, during the interim period between contract novation (13/3/2007) and legal novation (13/3/2008) there was an enforceable lawful contract. 3. There was no motivation, therefore, to retrospectively alter the contract register and given the nature of systems around the compilation of the register it is not in any case remotely possible to alter the register. 4. The individuals named in the fraud and corruption charges werr not involved in the case or made the decision claimed. You will, I hope, understand that I have not made any public statement for precisely the same reasons you have given Mr Blue in regard to his concerns about councillors and MPs. However I am very happy to talk further if that helps. Yours sincerely Mike More Chief Executive

Email – 16 Mar 2010 – WD to MM at 12:30 – cc PL, AG, KG Dear Mr More, WCC Parking Enforcement Contracts - NSL Limited Having presented to you a copy of the report submitted to the Metropolitan Police in support of my complaint against Mssrs Gilchrist & Large, you responded on 17 February 2010 thus: "I will reply to the substance of your claims in the next few days." However, over a month has passed and yet I have received nothing from you. Please make careful note that I am copying in DC Andrew Stanley, CID at Charing Cross Police Station, who has been appointed to handle this case. In the interim, could you explain the following anomaly regarding the legal status of the contract between the date National Car Parks Ltd was sold, 12 March 2007, and the "claimed" date of novation, 13 March 2008, by which these contracts are now being performed by NSL Ltd (formerly NCP Services Ltd). Unfortunately, having already asked Mr Large for an explanation in an email dated 3 August 2009, he chose to ignore the request. Therefore, under FOI, we inquired of WCC as to the legal status of these contracts on 7 August 2009 and finally received the attached response on 10 September 2009. At Point 4 of the FOI response, WCC have stated:- "The novation deeds, as stated above, were executed on 13 March 2008. Prior to the finalisation of the novation, the contracts were performed by NCP Services Limited on behalf of National Car Parks Limited. "

However, in response to a similar claim made by Sunderland Council, and duly reported by the Sunderland Echo, National Car Parks Chief Executive Andrew Potter wrote under the heading of "Car parks mix-up" thus:-

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"I am writing in relation to the article published on November 12 in which you published that my company, National Car Parks Limited (which trades as NCP), has a contract with Sunderland Council for providing off-street parking services which will be brought back to the Council when the contract with my company is at an end. My company does not have a contract with Sunderland Council and therefore the article is wrong in that regard. National Car Parks Limited was de-merged in 2007 into two distinct companies. National Car Parks Limited and NCP Services Limited. It is NCP Services Limited who currently have a contract with Sunderland City Council, and not National Car Parks Limited. I think it is a matter of deep concern that a newspaper would publish articles refering to my company when my company was not called to comment on the same in order that the matter could have been dealt with prior to publication. I also wish to make it very clear that comments by Sunderland councillor, Mr Martin, as quoted, should never have been made by him as he should have ensured his facts were correct in order to ascertain which company has a contract with Sunderland Council in relation to off-street parking enforcement. I reiterate that it is not my company, National Car Parks Limited." Furthermore, when we inquired of WCC as to the name of the entity that was being paid for performing these contracts, Head of Legal, Mr Peter Large states that between March & December 2007, payments were made to an entity known as NCP Services, following which in January 2008, payments were made to a seemingly separate entity known as NCP Services Ltd.

For these contracts to have been performed by NSL Limited "on behalf of" National Car Parks Ltd, it must be assumed that payments would be made to National Car Parks Ltd, for them to disburse to any third party assignees. Clearly, Mr Large's statement runs contrary to this assumption. Therefore, either Mr Potter's version of National Car Parks Ltd non-involvement with the Parking Enforcement Contracts awarded to it by Westminster City Council in 2003, is correct based on his company vacated these contracts upon acquisition by the Macquarie Group, or, the response under FOI is correct, in that Mr Potter's company did indeed have a contract, albeit being performed by NCP Services Limited on his company's behalf. Could you please provide a comprehensive explanation in a timely manner Yours Warren Djanogly

Email – 17 Mar 2010 – MM to WD at 17:11 – cc PL, AG, KG Dear Mr Djanogly, Thank you for your e mail. With your having referred the matter to the police, you will, I am sure, understand that I need to honour the integrity and impartiality of any Police investigation. Purely in order to uphold the impartiality and in agreement with the police, I cannot provide any further comment before these inquiries are concluded. Yours sincerely

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Mike More

Email – 17 Mar 2010 – PL to MM at 21:56 – cc PL, AG, KG Mike Thanks for your response to Mr Djanogly. I appreciate what you say in the context of his complaint to the Police. However, I asked for a copy of your as I wanted to know the Council's position. Could you or Mr Large explain to me the anomaly listed in Mr Djanogly's email as to whether NSL Ltd (formerly NCP Services Ltd) were "performing the contract on behalf of National Car Parks Limited", or, as suggested by the NCP's Chief Executive Andrew Potter, that his company did not have a contract with WCC from March 2007 onwards. Thanks Paul

Email – 30 Mar 2010 – WD to MM at 10:26 – cc KG, AG, PL, PD, DB. GJ, MHW, SE, NH Dear Mr More, Now that the Police Investigation is concluded, could you accept the following as a request for information under the FOI ACT and thus could you ensure that a response is received in the obligatory 20 days, ie by 19 April 2010. WCC Parking Enforcement Contracts - NSL Limited Having presented to you a copy of the report submitted to the Metropolitan Police, you responded on 17 February 2010 thus: "I will reply to the substance of your claims in the next few days." However, over a month has passed and yet I have received nothing from you. Could you ensure that your reply fully explains the following anomalies:- 1) Legal status of the contract prior to novation (part 1). Between the date National Car Parks Ltd was sold, 12 March 2007, and the "claimed" date of novation, 13 March 2008, by which these contracts are now being performed by NSL Ltd (formerly NCP Services Ltd), in response to a prior FOI (copy attached), WCC have stated:-

"The novation deeds, as stated above, were executed on 13 March 2008. Prior to the finalisation of the novation, the contracts were performed by NCP Services Limited on behalf of National Car Parks Limited"

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However, in response to a similar claim made by Sunderland Council, and duly reported by the Sunderland Echo, National Car Parks Chief Executive Andrew Potter wrote under the heading of "Car parks mix-up" giving a totally contrary view (Mr Potter's Letter is attached). Could you indicate which is the correct version? 2) Legal status of the contract prior to novation (part 2) - Performance Payments. When we inquired of WCC as to the name of the entity that was being paid for performing these contracts, Head of Legal, Mr Peter Large states that between March & December 2007, payments were made to an entity known as NCP Services, following which in January 2008, payments were made to a seemingly separate entity known as NCP Services Ltd. For these contracts to have been performed by NSL Limited "on behalf of" National Car Parks Ltd, it must be assumed that payments would be made to National Car Parks Ltd, for them to disburse to any third party assignees. Clearly, Mr Large's statement runs contrary to this assumption.

3) Legitimacy under EU Regulations to Novate. In the report submitted to you, full details were availed regarding the ruling in the ECJ clarifying that a vacated public authority contract must be re-tendered. However, A/DS Andrew Stanley made it known to me that WCC Legal Department were of the opinion that this ruling did not apply until a year after this novation. Could you please clarify whether A/DS Stanley's interpretation of the WCC opinion is correct? Could you also explain how this particular novation is exempt from the EU Directive that a re-tender should prevail? 4) Legitimacy to novate from National Car Parks Ltd. Again, the first Appendix in the report presented to you is the Auditors' notes to the Financial Statements of National Car Parks Ltd claiming that the company's "on-street assets", being its Parking Enforcement Contracts awarded by WCC, were transferred to a holding company called NCP Topco Ltd (co.no. 6033001) in March 2007. Can you therefore please explain exactly from a legal point of view how National Car Parks Ltd could be party to a novation agreement for contracts that it had already transferred to another Company 11 months earlier? 5) Legitimacy to backdate a novation. Could you clearly explain the legal principle by which you claim to be able to back-date to any chosen prior time (referred to in the Deed as "the effective date")? Could you also explain the legal ramification such a backdated novation would have for a third party that may have had a claim against National Car Parks Ltd during the time it was performing the contracts? I look forward to your response within the 20 days allowed under FOI


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http://co.no/

Email – 30 Mar 2010 – WD to MHW at 10:38 – cc KG, AG, PL, PD, DB. GJ, MHW, SE, NH Dear Mr Haworth-Maden Just a quick note of explanation as to why I copied you in on my FOI request to WCC Chief Exec Mike More. Could I ask you to make careful note of point 4 which asks:- Legitimacy to novate from National Car Parks Ltd. Again, the first Appendix in the report presented to you is the Auditors' notes to the Financial Statements of National Car Parks Ltd claiming that the company's "on-street assets", being its Parking Enforcement Contracts awarded by WCC, were transferred to a holding company called NCP Topco Ltd (co.no. 6033001) in March 2007. Can you therefore please explain exactly from a legal point of view how National Car Parks Ltd could be party to a novation agreement for contracts that it had already transferred to another Company 11 months earlier? I have sent you the copy of the "Offences under the Fraud Act & Gross Misconduct in Public Office" Report and it is the first appendix in it to which I refer. When I inquired of National Car Parks Ltd themselves as to the anomalies at (1) & (2), the reply I received is below for information's sake:- Dear Mr. Janogly, I have been provided with a copy of your correspondence below addressed to Andrew Potter and have been asked to respond on behalf of National Car Parks Limited (NCP). I must first of all point out that, as a private company, NCP is not subject to the Freedom of Information Act and does not publicly disclose the commercial terms of its contracts. Secondly, it is not NCP’s policy, nor indeed NCP’s place, to comment upon a contract which is being operated by a totally separate company. I would suggest that any concerns over how this contract operates is, therefore, more appropriately addressed to NSL Limited and to WCC. Regards Aaron Campbell Legal Counsel NCP Limited. As you can see, if NCP Services were performing the contracts on behalf of National Car Parks, as suggested by WCC, why were payments made to firstly "NCP Services" prior to "NCP Services Ltd". More crucially, how did National Car Parks Ltd become party to a novation for contracts (assets) they had already transferred to another company, a pre-requisite to facilitate the sale of National Car Parks Ltd to the Macquarie Group. Regards Warren Djanogly

Email – 01 Apr 2010 – MHW to WD at 13:39 – cc SE

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http://co.no/

Dear Mr Djanogly Thank you for your email. I have noted the point in your email to Mr More to which you have drawn my attention and the further information obtained from NCP. I will consider this in the context of my continuing consideration of the matters you have raised with me with regard to the novation. I will continue to keep you updated on progress. In the meantime, please contact Sally-Anne or me should you have any queries. Yours sincerely Michael Haworth-Maden

Email – 06 Apr 2010 – WD to MM at 10:13 – cc PL, MF, AG Dear Mr More, I have been shown a copy of your reply to inquiries made by Mark Field MP, as attached. Unfortunately, whilst written in most reassuring tones, it carries little in the way of substantiation, and I am concerned that without the same, it is hard for the reader to fully understand the claims you make. I am sure that Mark Field, along with his constituent, Mr Blue, myself and many other interested parties would be grateful if you could properly expand, especially bearing in mind that any restriction with regard to a Police Investigation is no longer applicable. Assuming this to be a request under the FOIA, could you please provide, within the FOIA time limits, further information to support your claims by answering the following observations? Point 1 You refer to a clause in the City Council’s Contract with NCP.

I. Can you please supply a copy of that clause in full, and if it should be conditional on certain actions, for example, the requiring of “written permission”, can you also provide properly dated documental evidence that these conditions were properly met in March 2007, the date when NCP Services commenced performing the contract?

II. Could you also explain how this clause supersedes the EU Directives imposing the requirement in such circumstances for these “vacated” contracts to be re-tendered?

Point 2

III. Could you please provide an explanation as to the difference between “contract novation” and “legal novation”?

IV. Prior to your explanation at (i), it has been assumed that the “contract novation” is the effective date when National Car Parks Limited vacated the contracts and NCP Services commenced performing them. In Mr Large’s letter of 28 August, and the Deed of Novation, it is implied that this “effective date” be 12 February 2003, yet you now seem to imply it to be 13 March 2007. Can you please explain why this has now changed?

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V. Could you explain how National Car Parks Ltd were party to a Deed of Novation dated 13 March 2008 for a contract that they openly admit was transferred to another holding Company called NCP Topco Ltd on 29 March 2007, as detailed by their auditors as a note their financial statements to December 2006?

“there was an enforceable lawful contract”.

VI. Can you please confirm the name of the contracted party to this “enforceable legal

contract” that was prevalent between March 2007 & March 2008, together with their company number and date of incorporation?

VII. Can you please confirm how this company was selected over all its competitors to be awarded the contract?

VIII. Can you please confirm what checks were made on this company by way of financial

probity and ability to perform a Public Works Contract?

IX. Should a Parent Company Guarantee had been required, can you please supply the name of that Parent Company, its company number & date of incorporation, together with evidence of the checks that were made by WCC to assess its financial probity and capacity to fulfil a Public Works Contract, as guarantor?

Point 3 You state that the “legal novation” was enacted on 13 March 2008, and claim the same to be incontrovertibly evidenced by its entry in the City Council’s Registry. However, in February 2009, the City Council’s Audit & Performance Committee met to review all the contracts prevailing during the Council’s financial year to 31 March 2008. In the report prepared for this Committee, the contract you now claimed to have been novated to NCP Services Ltd was listed as still being preformed by National Car Parks Ltd, and a supporting list of all variations & extensions makes no reference of any novation. Furthermore, a sub note is affixed to this particular contract in the listing classifying it as being monitored on a monthly basis, thereby negating any chance of such a prominent variation such as a novation being missed. X. Can you now provide a definitive explanation for this most pertinent of anomalies. Point 4 You state that neither Mr Large nor Mr Gilchrist were “involved in the case” or “made the decision”. Yet, in the letter from Mr Large to me of 28 August 2009 (copy attached), he implies that the decision to enter the Deed of Novation was made, without any delegated power from the Cabinet Member, by the Director of Customer Services. Furthermore, it was made following advice from both the Departmental Contracts Board (DCB) and outside Solicitors, Sharpe Pritchard, both of whom, according to Mr Large failed to appreciate that the same Cabinet Member delegated power was obligatory in such a situation.

X. Can you please explain as to whom Mr Large was referring as the “Director of Customer Services?

XI. As contracted solicitors only act following a letter of instruction, can you please provide a copy of that letter?

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XII. Could you please provide copies of the minutes of the DCB meeting, referred to at point 10 of this letter, highlighting where it is advised that the Director of Customer Services enter the Deed of Novation?

XIII. Also at point 10, Mr Large suggests that no one “appreciated” that this decision had to be

made by the Cabinet Member. However, in the WCC “Forward Plan of Decisions” for Sep – Dec 2007, someone has clearly entered that the decision needs to be made by Cllr Chalkley. Can you please explain this most baffling of anomalies, along with who made this entry?

XIV. Could you please provide a copy of the advice given by Sharpe Pritchard, referred to

at point 11, again highlighting where they give their professional opinion that the Deed had been correctly authorised?

Payments for the performance of the contracts

XV. During the period between “contract” & “ legal” novation, as per your point 2, can you

confirm that payments for the performance of the contracts was made to the new party to the contracts, and not National Car Parks Ltd, the original party?

XVI. Can you confirm who would have alerted the WCC accounts department as to the

change, and, more crucially, if not the Head of Parking, Mr Gilchrist, who would have authorised these payments to a new supplier?

XVII. Can you also explain why payments were being made to an entity called NCP

Services between March and December 2007, before payments were made to another entity called NCP Services Ltd from January 2008, as detailed by Mr Large in an email response to Cllr Dimoldenberg?

Finally, whilst I am sure unintentionally on your part, your reply would seem to imply that you had no knowledge of our inquiries into this matter before going to the Police. To avoid any confusion, below is an extract from an email from you to me dated 2 October 2009. “I have looked at the correspondence between yourself and Peter Large about the novation of the Parking Enforcement Contract, and I have discussed the matter with Mr Large himself. In my opinion Mr Large has acted appropriately. I cannot see that he has sought to excuse what has occurred. As set out in his letter to you of 28 August, the actions he has taken include advising that a formal report on the matter be submitted to Councillor Chalkley by Mr Goad, and beginning discussions with the Head of Procurement and Contract Management and the Director of Finance about changes to the City Council's procurement code to ensure this does not happen again. He will also be reporting formally on the matter himself to the Council's Cabinet, in his capacity as Monitoring Officer. Mr Large acknowledged in his letter of 28 August that there had been a failure of process and this will be reported to Cabinet.”

1. Can you please provide a copy of the “formal report” submitted by Kevin Goad to Councillor Chalkley

2. Can you please provide copy of the minutes of the meeting between Mr Large and the Head of Procurement & Contract Management and the Head of Finance showing its date, items discussed, conclusions reached, and how the agreed changes were/have been implemented?

3. Can you please provide copy of the formal report prepared by Mr Large, as Monitoring Officer to the Council Cabinet together with an indication as to when it was formally presented?

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4. Could you please explain how Mr Large, and thus you have acknowledged a “failure of process” yet you have recently declared publicly your “confidence that the contracts had been let correctly”?

Yours truly, Warren Djanogly

Email – 09 Apr 2010 – MM to WD at 14:58 – cc PL, KG, AG (in response to email of 30 Mar)

Dear Mr Djanogly Thank you for this. You have asked that I treat your correspondence as a request made under the Freedom of Information Act, and I will do so. I have passed your correspondence to the Council's FOI team, and asked that it be responded to accordingly. I do not intend to respond personally with any information or explanations which go beyond what you are entitled to under the legislation you rely on. The matter has now been investigated at your behest by the police, and considered by the City Council's external auditor. You have the right, which you have exercised, to bring proceedings in the High Court if you are aggrieved, and those proceedings, in which you are legally represented, are ongoing. In those circumstances it is not appropriate to continue correspondence of this kind Yours sincerely Mike More Chief Executive

Letter – 27 May 2010 – MM to WD Dear Mr Djanogly Freedom of Information Request 5374 Thank you for your recent request to the Council. You asked to be provided with information relating to the council contract for Pay and Display machines and its relationship to Partners in Parking (PiP). Response Please find attached a copy of the Statement of Decision regarding the Parking Equipment Supply Contract – Tender Evaluation Result (Appendix 1) as it relates to the award of the contract for Pay and Display machines by the Council. I note in your request that you refer to the original OJEU notice to tenderers in 2005. In respect of the OJEU advertisement for the tender, please be advised that under section II.1.6 it states the following with reference to the Partners in Parking agreement:

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"There is a potential for a framework agreement with other London borough councils and public parking authorities within London for the supply of the London standard parking meters (see additional information below for further details)" Section VI.4 Additional Information expands this further: "The contracting authority is Westminster City Council however the contract will also make provision for other London borough councils and other public parking authorities in London to purchase the parking meters under the contract. A framework agreement will be contained in the contract to provide for this. Tenderers will price for the supply of Pay and display equipment to these London borough and other parking authorities. "Westminster City Council will be acting as a central purchasing body but individual contracts will be let under the framework agreement between the contractor and the relevant public body making the purchase." As the contracts made reference to the framework agreement as outlined above, there is no Statement of Decision or Deed with regard to this matter as there was no requirement under the contract to novate. I can therefore confirm that the council does not hold the information you have requested. I hope that this information clarifies the council's position with regard to the framework agreement. Should you have any queries, please contact me at the address above. Yours sincerely Mike More Chief Executive Email – 01 Jun 2010 – GJ to MHW at 13:09 – cc SE, GJ Dear Mr Haworth-Maden I note that it has been sometime since we have had any update on your investigations. I did see recently that you had not signed off on Westminster City Council's accounts due to your investigation. Please could you give an update on your enquiries and when we can expect your general conclusions. Kind regards Graeme Jones

Email – 10 Jun 2010 – MHW to WD at 15:09 – cc SE, GJ Dear Mr Djanogly I am emailing further to my email to you of 1 April and to Mr Jones, which I copied to you, of 2 June, with regard to matters raised with me concerning City of Westminster Council. Profitability of the MCS I have been making enquiries in the context of my audit responsibilities with regard to the matters you have raised with me on the above. I understand that you have made an application to the

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High Court under schedule 9 of the Road Traffic Regulation Act 1984 on related matters. The subject matter of that application appears to me to be directly relevant to the matters you have raised with me. I will therefore need to have regard to any decision of the Court in my consideration of those matters. In the circumstances, I have formed the view that it would be inappropriate for me to proceed further with my consideration of the matters raised pending any decision of the Court. I have asked the Council to advise me of the progress of the case and will write to you again in light of any decision of the Court. Other matters I am currently concluding my consideration of other matters you have referred to me with regard to PiP and the novation of the parking enforcement contract. I intend to write to you substantively within the next couple of weeks – and by 25 June at the latest. I hope you find this update helpful. Yours sincerely Michael Haworth-Maden

Email – 10 Jun 2010 – WD to MHW at 15:36 – cc SE, GJ Dear Me Haworth-Maden Many thanks once again for your update. However, with regards the matter before the High Court, I hope I made you aware that the Council, in defending a claim of mere revenue-raising, have made numerous claims as to "previously unidentifed" costs associated with collection & enforcement of the MCS. As you, being the Council Auditor, would be the most reliable independent verification to these claims, I would have hoped that, rather than awaiting the outcome of the trial, you would be sufficiently prepared, should the Court request the same, to provide such verification. You will appreciate my concern that, having provided evidence to its own Scrutiny Committees that costs of PCN enforcement were "historically" running at 80% of income, and to have further stated as recently as March 2009, that, in respect of the MCS, this had dropped to 75%, the Council wishes the Court to believe that this has now rocketed to 134% of Income for the financial year ended 31 March 2010. It must be tacit that there can be only one independent source of verification, and that is your office, since the same must be presented, or easily identified in the accounts before you. As to the "novation" issue, I will await your substantive reply. Many thanks for your diligence in these matters, Yours Warren Djanogly

Email – 14 Jun 2010 – WD to MM at 13:10 – cc PL, PD, DB

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Dear Mr More Despite numerous requests, you have chosen to ignore my email of 6 April 2010 pertaining to a request for information under the FOIA emanating from your response to Mark Field MP. Please find below that I have now had no alternative but to refer the matter, under "complaint" to the ICO. Yours Warren Djanogly

Email – 15 Jun 2010 – PD to PL at 08:16 – cc MM Peter For the third time of asking, please can I have copies of the Sharpe Pritchard invoices since 2006? Thanks Paul

Email – 15 Jun 2010 – PL to PD at 08:36 – cc Paul That is quite a tall order, because Sharpe Pritchard do a range of different work (including conveyancing and Parliamentary work) as well as contract work for the Council, and the invoices are not held or paid by me but by numerous client officers across the Council. There will be thousands of invoices since 2006. Since your email to Mike a couple of weeks ago I have been trying to track down the invoices rendered by Sharpe Pritchard for the work they did on the NCP contract novation, in case that is what underlies the request. We have found that and the invoice is attached. If you want something more I need to ask you to be more specific please. PL

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Email – 23 Jun 2010 – MHW to WD at 09:56 – cc SE, GJ

Dear Mr Djanogly

I am writing further to your e-mail of 10 June and my acknowledgement of 17 June.

I have given very careful consideration to the points you make. However, as I am sure you will appreciate, I am required to plan and perform my audit for the purpose of discharging my statutory and professional responsibilities, rather than for the purposes of any actions commenced by third parties. The approach set out in my email is in line with those responsibilities. On the basis of the information currently before me, I therefore remain of the view that it would be inappropriate for me to proceed further with my consideration of the matters raised pending any decision of the Court. I will consider thereafter what further work, if any, I should undertake having regard to my responsibilities.

I will write to you later this week on the matters you have referred to me with regard the PiP and the novation of the parking enforcement contract.

Yours sincerely

Michael Haworth-Maden

Letter – 25 Jun 2010 – MHW to WD – cc MM Dear Mr Djanogly City of Westminster Council: audit of the 2008/09 accounts: partnership-inparking and the novation of the parking enforcement contract I am writing further to our ongoing correspondence to provide you with an update on the matters you have raised with me with regard to the City of Westminster Council (the Council) and the above. I have written to you separately on the matters raised with regard to the motorcycle charging scheme (my latest email of 23 June 2010 refers). I think it would be helpful in the first instance if I briefly reminded you about my role. As external auditor, I operate within the powers and discretions given to me under the Audit Commission Act 1998 as amended, and the Code of Audit Practice approved by Parliament. My role is concerned with the Council’s accounts, on which I give an opinion, and its arrangements for securing economy, efficiency and effectiveness in its use of resources. I also have other discretions and powers concerning the legality of items in the Council’s accounts and the consideration of matters brought to my attention by members of the public. These include making recommendations to the Council, reporting in the public interest and applying to the courts for a declaration that an item in the Council’s accounts is unlawful. In essence, my role is concerned with issues relating to the Council’s accounts rather than its policies, which are matters for the Council in the lawful exercise of its discretion.

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It is also important to note that I carry out my role as external auditor in relation to the years of account that that I am appointed to. Once I have carried out my functions as auditor in respect of a year and have certified that audit as complete, I have no further role in relation to that year of account. This means I have no ability to go back into that year or exercise any of my discretions or powers in respect of that year. The audits of the Council for the years up to and including 2007/08 have been certified as complete. You will recall that I mentioned this in my email to you of 12 November 2009. The audit for 2008/09 is, however, open and the audit of 2009/10 has yet to commence. Against this background, I set out below my current assessment of the issues that you have raised with me. Partnership-in-parking (PiP) - consultancy contract The first point I must make is that the circumstances of this issue fall into years of audit that are certified as complete. This means that there is no function for me to discharge for these years and no action I can take in relation to this issue. I have, however, briefly considered the issue for completeness and insofar as it is relevant as background and context to the Council’s ongoing arrangements for securing economy, efficiency and effectiveness in its use of resources. It appears to me that Mr Lawrenson was engaged by the Council in an interim post from May 2004 to November 2004. It then seems that Mr Lawrenson (through Brooklands Executives) was engaged to set up the PiP for almost two years from 2005 to June 2007, paid for with government funding through the London Centre of Procurement Excellence. I am advised that this contract is not subject to requirements for OJEU advertisement and competition under EU procurement rules, whether it is an employment contract or a contract for personnel placement and supply services. PiP – pilot Again, the first point I need to make is that the pilot ran from October 2006 until January 2008. The relevant years of audit are certified as complete. I therefore have no functions to carry out in respect of these years and there is no action I can take in relation to this issue. Again, however, I have briefly considered the matters raised. It appears that the contract for the pilot was let without advertisement. I am advised that there should have been some form of competition as this appears to be required by the Council’s standing orders and to ensure value for money and comply with the general principles of openness, transparency and fairness. I note that the Council says that a ‘mini’ tendering exercise was carried out, with seven potential providers being invited to put forward proposals. Although this was a competitive process, an advertisement would have demonstrated clearer compliance with the general procurement principles and the Council’s own rules. I am awaiting some further information from the Council regarding the extension of the pilot. I will write to you again, for completeness, once I have received and considered that information. PiP – framework agreement Whilst the framework agreement was entered into in a year of audit which is certified as complete, there are entries in the accounts in 2008/09 relating to the ongoing contract. I have therefore taken advice on the procurement issues that you have raised. In relation to the length of the framework agreement, you believe that it has been entered into for a period which is longer than that permitted by law. Normally, framework agreements cannot be entered into for a period longer than four years. However, they can be for longer if there are exceptional circumstances. If a framework agreement

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period is longer than four years, the reasons for the additional period should be stated in the OJEU notice. In this case, the framework agreement was awarded for five years, with an option to extend for a further two years. It was advertised on this basis in the original OJEU advertisement. The justification given by the Council in the advertisement was that ‘this is an emerging market and sufficient time is needed for traction and volume to realise the business benefits’. Whilst there is currently no case law setting out what constitute ‘exceptional circumstances’, the Office of Government Commerce guidance states that a longer term could be justified if it would ensure effective competition where four years would not provide an adequate return on investment. On the evidence before me, I am not therefore minded to challenge the Council’s approach. You have also suggested that the Council broke the procurement rules by not correctly advertising the contracting authorities that would ultimately use the framework. Authorities must be named or adequately described in the OJEU notice. There is no case law about this either, but the prevailing view is that description of contracting authorities can be by ‘class.’ This is because the European Commission’s explanatory note to the procurement directive indicates it may be possible to use a ‘class descriptor.’ It must, however, be clear which authorities are inthe class. In this case, the advertisement states that the framework is for use by all parking authorities. Parking authorities are defined by statute and there is a fixed number. Contractors bidding for the contract would understand what parking authorities are and be able to establish how many - and which - bodies could use the framework. Again, on the evidence before me, I am not therefore minded to challenge the Council’s approach. I should note, however, that I intend to revisit the matters raised with regard to the framework agreement when the outcome of the complaint currently before the EU is known. Novation of the parking enforcement contract In summary, this issue concerns the contract that the Council let in 2003 to NCP Limited under which that company provided services to the Council in respect of parking enforcement. In March 2007, NCP Limited assigned the contract to NCP Services Limited. (I have checked with the Council and it has confirmed that there were only ever two parties to the contract). The years of account prior to 2008/09 are certified as complete, but I note that there are relevant items in the 2008/09 accounts and that there will be in the 2009/10 accounts. Again, I have therefore taken advice on the issues raised. Your concern is that the Council did not follow its own procedures to approve the novation of the contract from NCP Limited to NCP Services Limited and, in any event, that the novation was dated March 2008. As a consequence, you question the legality of income received from penalty charge notices issued after March 2007. You also question whether the Council should have embarked on a formal tender process rather than ‘award’ the contract to a new company. The Council has acknowledged that it did not follow the requirement in its procurement code to report the issue of the transfer of the contract to Cabinet for decision. Nonetheless, in March 2008, a novation agreement was agreed which recognised the transfer of the contractual rights and obligations from NCP Limited to NCP Services Limited. In the meantime, I understand that services were delivered by NCP Services Limited and payments in accordance with the terms of the contract continued to be made. Whilst it is arguable that the failure to comply with the Council’s internal rules and obtain authorisation for the novation may result in the novation agreement being found void, in such cases the courts have often found that private contractual rights remain enforceable. It is also arguable that if a contracting party has good reason to suppose that an officer of the Council has the power to enter into an agreement, then the agreement is binding on the Council. The courts are reluctant to disadvantage contractors that are reliant on the implied authority and have no

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way of knowing whether an authority has complied with its internal rules. In addition, section 135(4) of the Local Government Act 1972 provides that non-compliance with contract standing orders shall not invalidate any contract entered into by or on behalf of the authority. In my view, in this case, authority to accept the transfer of the contract and enter the novation agreement can be implied and hence that agreement is valid. In addition, I am advised that in terms of the enforcement of on-street parking, the legislation requires only that there be an ‘arrangement’ in place between the Council and the provider. In my view, notwithstanding the flaws in the process for entering into the novation agreement, there does appear to have been an arrangement in place and that this was authorised can be implied from the behaviour of the Council’s officers toward NCP Services Limited. It is my initial view, based on the information I have seen, that the Council did not manage well or in accordance with its internal rules the transfer of the contract from NCP Limited to NCP Services Limited. The Council has acknowledged this and I understand that the Monitoring Officer is intending to report the matter to the Council’s Cabinet. In the circumstances, taking into account the information currently before me, the initial legal advice I have received and the Council’s actions, to date and intended, I do not believe it would be in the public interest to use my formal powers at this time to report or apply to the courts for a declaration that there is an item of account contrary to law. I have considered separately your concern about whether in fact the change of provider meant that there should have been a tendering exercise rather than a novation of the contract. I am advised that the assignment of a contract between two related companies where the material contract terms such as payment and duration remain unchanged is unlikely to give rise to a new contract. As such, a tender exercise under the procurement rules is not required. In addition, I note that the contract expressly provided that it could be novated. The way forward As stated above, some of the issues you raised are matters that fall into years of audit that are certified as complete and I have no power to take any action in relation to them. I have given a more detailed response to the other matters to set out and explain my initial views. Based on the information before me and the advice I have received, I do not currently intend to take any formal action on these matters, subject to the EU’s consideration of a complaint in relation to the framework agreement where I intend to review the matters raised with me when the outcome of that complaint is known. In the meantime, I will not certify the completion of my 2008/09 audit. As noted, for completeness, I will also be writing to you again with regard to the extension of the PiP pilot. I appreciate that you may be disappointed by my response to the concerns that you have raised. I trust, however, that this letter demonstrates how carefully I have considered them. I am grateful for your interest and time and trouble in bringing them to my attention. I should finally note that the views set out in this letter are, of course, without prejudice to the rights of members of the public as part of the formal audit process. Further information on these rights is set out in an Audit Commission publication that can be found via the following link: http://www.auditcommission.gov.uk/SiteCollectionDocuments/Downloads/councilsaccounts202006.pdf I have copied this letter to Mr Jones and to the Council for information. Yours sincerely Michael Haworth-Maden

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Email – 28 Jun 2010 – WD to MHW at 13:02 – cc SE, MM Dear Mr Haworth-Maden Re: your letter dated 25 June 2010 (copy attached) Suffice to say, you have indeed given all the matters raised your fullest consideration for which I am most thankful. I have noted all your comments regarding PIP and, in light of new allegations soon to be presented to the EU Commissioners with regards to far more marked "framework contract violations" pertaining to the award by WCC of Pay-and-Display Machines a full year before PIP was incorporated, and the subsequent use of this WCC contract by PIP members thereafter, no further comments need be made. However, with regards the Deed of Novation pertaining to the Parking Enforcement Contracts, there are a small number of areas I would seek further clarification from you before you deem them unworthy of further exploration, lest you have been mis-informed or ill-advised. Therefore, could I respectfully seek your comments on the following:- In your letter, you make the following observations:- "Nonetheless, in March 2008, a novation agreement was agreed which recognised the transfer of the contractual rights and obligations from NCP Limited to NCP Services Limited. In the meantime, I understand that services were delivered by NCP Services Limited and payments in accordance with the terms of the contract continued to be made." Further on you state:- "I am advised that the assignment of a contract between two related companies where the material contract terms such as payment and duration remain unchanged is unlikely to give rise to a new contract. As such, a tender exercise under the procurement rules is not required. In addition, I note that the contract expressly provided that it could be novated." I attach, for reference sake, the following documents:- a) The actual "Deed of Novation" dated 13 March 2008 b) Copy of report (originally sent to you by me on Feb 26) entitled "Offences under the Fraud Act 2006 & Gross Misconduct in Public Office" c) Copy of letter sent to Sunderland Echo by NCP Ltd Chief Exec, Andrew Potter Questions:- 1) "Novation" & "Assignment" - As there would appear to be the need to use both terms in WCC's Code of Procurement, could I ask what your understanding of the difference between them from a legal point of view? 2) "TRANSFER...from NCP Ltd to NCP Services Ltd". At (a), the Deed lists the parties company numbers as being 253240 & 06033060 respectively. However, at (b), Appendix 1 Pg 9 is supplied an Auditors' Report to the Accounts for NCP Ltd 253240 which states that this company had, on 29 March 2007, "transferred" its "contractual rights & obligations" to another company, NCP Topco Ltd 06033001. It would appear that without such a "transfer", NCP Ltd would have been unable to realise the value of these "assets" which they fully intended to sell to NCP Services Ltd for £45m as opposed to merely handing them over. Therefore, notwithstanding all the legal arguments as to whether any such a Deed of Novation could be binding, could I ask you to explain how, in your opinion, this particular deed could be declared valid when the party on which the contractual rights & obligations had been conferred i.e. NCP Topco Ltd (co no 06033001) is neither listed as being party to the same nor listed as a signatory?

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NB:- I have drawn your attention to this in my email of 30 March 2010, yet you seem to have overlooked it in your responses. 3) "Services delivered...payments made" Notwithstanding the issue raised at qu.2, if you were prepared to accept that the "arrangement" prior to novation would have validated payments by WCC to NCP Services Ltd, do you not agree that payments to separate, and legally-unentitled entity known as NCP Services, as highlighted and differentiated from NCP Servcies Ltd by WCC Head of Legal Peter Large in his email of 28 Sep 2009 to Cllr Dimoldenberg, evidenced at (b) Appendix 11, pg 53 must now be declared illegitimate by you, the District Auditor? 4) "the assignment of a contract" As suggested at qu.1, this was not an assignment but a novation for which, pending your response to qu.1, can only be assumed to be legally different. Can I ask if you received similar advice pertaining to the "novation" of a contract? 5) "between two related companies" At (c), when the Sunderland Echo implied a "relationship" between NCP Ltd & NCP Services Ltd, you will note that the former's Chief Executive, Mr Andrew Potter emphatically denies any "relationship" between the 2 companies. in light of this, do you still stand by your assertion that the "performing" of a parking enforcement "arrangement" by the latter could still be deemed as not giving rise to a new contract? 6) "A tender exercise....is not required" At (b), Appendix 3, Pgs 15-34 and summarised at 35, you will see the ECJ case authority which amplifies the requirement for a re-tendering process as a direct result of a "material change" in one of the parties. Since it is now tacit that neither was this an "assignment", nor were the 2 companies "related", do you still hold by your assertion that a tender exercise was still "not required"? 7) "expressly provided that it could be novated" (i) Could you please indicate where within the original contract, or on what page, or what paragraph number this provision allowing a novation is situated? (ii) Could you please confirm that "novation", as either opposed to, or together with "assignment" is the "expressed" term? (iii) Could you please indicate as to any provisos that may have accompanied such a "novation" to take place, eg written permission from WCC? (iv) Could you confirm that you have seen evidence that all provisos were fully and properly adhered to as per the terms of the clause? I look forward to your comments on the 7 points above and once again thank you for you assistance, diligence, and dedication in these matters. yours Warren Djanogly

Email – 01 Jul 2010 – WD to MHW at 13:21 – cc Dear Mr Djanogly I acknowledge receipt of your email (and your subsequent email of the same date). I will consider the matters raised in the context of my responsibilities and respond in due course.

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Yours sincerely Michael Haworth-Maden

Email – 01 Jul 2010 – WD to MHW at 16:25 – cc GJ Mr Haworth-Maden, WCC: audit of the 2008/09 accounts: PIP & the novation of the parking enforcement contract - CRUCIAL NEW EVIDENCE Many thanks for the acknowledgement, and confirmation that you will reconsider the matters in light of the points I raise. To that end, I have now uncovered further crucial information that casts great aspersions on your original assessment of the novation, with particular regard to your being advised that the legislation requires only that there be an ‘arrangement’ in place between the Council and the provider. As you are now aware from Mr Moss's circulated email, various other District Auditors have been alerted to these allegations of invalid novation agreements in favour of NSL Ltd (formerly NCP Services Ltd), and it would appear that in fact this notion regarding "the legislation" requiring only an "arrangement" was a desperately cobbled together excuse made by Bolton District Council in response to their DA, Mr Kevin Wharton, and is easily proved erroneous and unfounded. Below is a link to the actual legislation referred to by Bolton DC, it being section 63 A of the Road Traffic Regulations Act 1984. This is the only legislation that refers to an "arrangement", and that arrangement is solely for the purposes of defining what constitites a "Parking Attendant". As you will either be aware, or can have confirmed, the RTRA 1984 has nothing to do with the issuing of contracts. The legislation pertaining to contracts is in the various Local Government Acts, the one of 1972 you refer to yourself. http://www.statutelaw.gov.uk/content.aspx?showProsp=1&LegType=All+Primary&PageNumber=6&NavFrom=2&parentActiveTextDocId=0&linkToATDocumentId=2223956&linkToATVersionNumber=4 When questioned only these lines, Bolton's DA, Mr Wharton wrote to Mr Moss confirming the above as follows. "9 June 2010 Dear Mr Moss Thank you for your letter of 29 May. As I have said before, the legislation is clear that for privately employed parking attendants to issue PCN's there must be an "arrangement" in place between the Council and the employer of the parking attendant. That is what s.63A of the Road Traffic Regulation Act 1984 says: "(1) A local authority may provide for the supervision of parking places within their areas by individuals to be known as parking attendants. "(2) Parking attendants shall also have such other functions in relation to stationary vehicles as may be conferred by or under any other enactment. "(3) A parking attendant shall be - (a) an individual employed by the authority; or (b) where the authority have made arrangements with any person for the purposes of this section, an individual employed by that person to act as a parking attendant." I do not think there is anything further I can add on this point. Yours sincerely"

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http://www.statutelaw.gov.uk/content.aspx?showProsp=1&LegType=All+Primary&PageNumber=6&NavFrom=2&parentActiveTextDocId=0&linkToATDocumentId=2223956&linkToATVersionNumber=4



To assist your further assessment of this crucial information, I have attached a copy of a letter sent yesterday from Mr Moss to Bolton DA, Mr Wharton clearly and unequivocally laying out how the term "arrangement" has no bearing on local authority contracts and their requirement to comply with EU Procurement Directives, especially with regards the requirement to "re-let" or "re-tender" in the event of a material change in one of the parties to a local authority contract. I trust you will now appreciate why I, and my colleagues around the country, are adamant that the Audit Commission employ its powers to now declare these novations as illegitimate. I look forward to your considered comments Regards Warren Djanogly

Email – 05 Jul 2010 – PD to PL at 15:12 – cc Mr Large Many thanks for the copy of the Sharpe Pritchard Invoice for the Deed of Novation on the Parking Enforcement Contract. A couple of issues do arise. Bearing in mind the complexities in novating a £14m local authority contract, does it not seem to you that the hourly rate is low, indicating that a very junior member of staff undertook this work? I ask this since your letter of 28 August 2009 to Mr Djanogly makes reference to the wrong advice being given. Indeed, I did email you on 30 August 2009 asking what action you proposed to take in light of it, for which I am yet to receive a reply. Further in that letter, you mention there being two separate DCB meetings in Aug 07 & Feb 08, following which the Director of Customer Services was "recommended to enter into the Deed of Novation". Can you please confirm that Vic Bayliss, did indeed enter the Deed, and can you please provide me with copies of the minutes from the two DCB meetings. Lastly, I am been passed the following extract from a letter to Mr Djanogly from the District Auditor:- "It is my initial view, based on the information I have seen, that the Council did not manage well or in accordance with its internal rules the transfer of the contract from NCP Limited to NCP Services Limited. The Council has acknowledged this and I understand that the Monitoring Officer is intending to report the matter to the Council’s Cabinet." Can you confirm that such a report is in preparation and give me some indication as to at which Cabinet or Scrutiny Committee meeting you are proposing to present it? Many thanks

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Letter – 19 Jul 2010 – MHW to WD Our reference 20100719 – Parking enforcement contract 19 July 2010 Mr W Djanogly Dear Mr Djanogly City of Westminster Council: audit of the 2008/09 accounts: partnership-inparking and the novation of the parking enforcement contract Thank you for your emails of 28 June 2010 and 1 July 2010. I believe my letter of 25 June 2010 demonstrates the care and consideration I have given to date to the matters you have raised with me having regard to my responsibilities as auditor. I have given further careful consideration to the matters raised in your emails, again in the context of my responsibilities and with the benefit of advice. Your emails have provided no additional information or arguments that I was not already aware of. On the basis of my consideration and the information currently before me, I am not therefore persuaded that I should change the conclusions that were set out in my letter of 25 June 2010, in particular with regard to my current intentions for further action as set out in ‘the way forward’ section of that letter. On a similar basis, I am not currently persuaded that the further meeting you have requested via Sally-Anne is necessary. I would of course be happy to reconsider this. If, on reflection, you believe such a meeting to be necessary, please write to me setting out your reasons and I will review my decision. I appreciate that you may be disappointed by this response, but I trust that you recognise that, in the context of my responsibilities and the need for me to act proportionately, I have given (and continue to give) fair and reasonable consideration to the concerns you have raised. As noted in my letter of 25 June 2010, I will be writing to you again, for completeness, with regard to the extension of the PIP pilot, once I have received and considered some further information from the Council. I have copied this letter to the Council for information. Yours sincerely Michael Haworth-Maden District Auditor cc Mr M More

Email – 19 Jul 2010 – WD to MHW at 16:33 – cc PL, MM Dear Mr Haworth-Maden

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I am not disappointed with your decision as detailed in your letters of 25 June & 19 July – I am utterly appalled & truly astonished. Therefore, should satisfactory responses not be received to the anomalies listed hereunder, I must now advise you of my intention to apply to the Court myself for a declaration, for which I will have little recourse other than to bring action against you for dereliction of duty. Whilst I had hoped to discuss the anomalies below at a meeting, should you feel it unproductive, can I now ask for your definitive statement that you do NOT intend to seek a declaration. I am advised that there is a time restriction for me to seek the same, for which I would ask you to inform me of my rights, time-limits & any other legal recourse open to me. As with the preposterous notion, supposedly advised to you, that a clause from the RTRA can be applied to Local authority Contract Procurement whereby the "legislation requires only that there be an ‘arrangement’ in place between the Council and the provider" (for which I am yet to receive your comment), whatever “advice” you have been taking, it is clearly wrong or, I would wager, deliberately misleading. You are either clearly uneducated in the difference between “novation” & “assignment”, or are deliberately muddling the two. Yet in law, there is a huge difference. An assignment is a transfer, recognised by law, of a right or obligation of one person to another. Assignment differs from novation in so much that the parties to the contract do not change. Most rights and obligations are capable of assignment. Novation is a mechanism whereby one party can transfer all its obligations under a contract and all its benefits arising from that contract to a third party. The third party effectively replaces the original party as a party to the contract. When a contract is novated the other contracting party must be left in the same position as he was in prior to the novation being made. A novation requires the agreement of all three parties involved. Furthermore, I am advised that the word “novation” comes from the latin “nova” meaning new, and thus, any novated contract is deemed, without exception, to be a “new” contract, and, as such, indisputably requires retendering as per EU Directives. I think it fairly safe to say, given the presence of a “Deed of novation” and an indisputable change in the parties, the ONLY relevant matters are

1. the ability to Novate, 2. the entitlement of the three parties required to enter therein whereby it can be seen as a

legal document 3. the effective date that the “new” or novated contract started

Yet, in spite of the above, you make the following statements:- “It is my initial view, based on the information I have seen, that the Council did not manage well or in accordance with its internal rules the transfer of the contract from NCP Limited to NCP Services Limited. I have considered separately your concern about whether in fact the change of provider meant that there should have been a tendering exercise rather than a novation of the contract. I am advised that the assignment of a contract between two related companies where the material contract terms such as payment and duration remain unchanged is unlikely to give rise to a new contract. As such, a tender exercise under the procurement rules is not required. In addition, I note that the contract expressly provided that it could be novated.” Hence, you will now understand my utter astonishment, for the following reasons:- “….transfer of a contract from NCP limited to NCP Services Limited.” –

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I have clearly demonstrated to you that, by their own admission (Auditor remarks to the Accounts 31 December 2006), NCP Limited had already “transferred” the contract on 29 March 2007 to another company, NCP Topco Limited. Therefore, NCP limited had NO entitlement to enter the Deed of Novation dated 12 March 2008, it had to have been NCP Topco Limited for it to be binding. Can you clearly explain why you disagree? “I am advised that the assignment of a contract…” Already established that this was NOT an assignment, but a Novation – huge difference. Can you advise if you disagree? “….between two related companies….” I have also demonstrated to you by a letter penned by NCP Limited Chief Executive Andrew Potter, that there is absolutely NO relationship between the 2 companies. The mere fact that former staff of NCP Limited set up a new company at the old trading address of NCP Limited does not establish any “relationship” between the two, very separate companies. Can you please explain how you make the assumption? “In addition, I note that the contract expressly provided that it could be novated” Despite numerous requests, WCC have refused to allow me to see the contract, and thus I cannot vouch for the wording. However, I am advised that the contract in fact expressly provided for an assignment & not a novation. Could you please forward the copy of the clause as has been shown to you, highlighting therein the EXPRESS PROVISION to NOVATE? Finally, I note that you have placed a reliance on an "intention" by Mr Large, the Monitoring Officer, to prepare & present a Report to Cabinet concerning these issues. Could you note that Mr Large promised a similar undertaking in his letter to me dated 28 August 2009 which never materialised, and further, having been asked by Cllr Dimoldenberg as to when this report would be presented, Mr Large has declined to respond. May I suggest that you follow Cllr Dimoldenberg's lead and seek the same from Mr Large, and perhaps reserve your final appraisal until it is presented. Yours sincerely Warren Djanogly

Email – 21 Jul 2010 at 14:17 – PD to PL Mr Large When do you expect your report to go to Cabinet about the NSL Novation issue? Thanks Paul

Email – 29 Jul 2010 at 13:13 – PL to PD Councillor Dimoldenberg Apologies for the delay in responding.

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I agree the hourly rate is low, and that reflects the fact that a junior member of staff undertook the work. At the time, the novation of the contract would not have been regarded by any of those involved as a complex matter. It must be remembered that the Pressetext judgment in the ECJ, which is the case relied on by the motorbike protestors to support their argument that the contract should have been retendered rather than novated, was given in June 2008, after the novation took place. Before Pressetext few if any procurement professionals would have considered any question of a procurement exercise arose in these circumstances - and of course it is not clear that it does even after that case. In the absence of that issue, a novation agreement is, or should be, a straightforward matter. So far as the action I took against Sharpe Pritchard is concerned, I wrote to them drawing their attention to the fact that they had stated in error that the novation agreement had been properly authorised when in fact it had not, and requiring them to put measures in place to ensure such an error did not occur again. Councillor Boothroyd has been supplied with a copy of that letter. Vic Baylis did not personally "enter the Deed". The Deed of novation was entered into under seal, by the Council itself. I attach as requested the minutes of the two DCB meetings. In relation to reporting as Monitoring Officer, I confirm I intend to do that now that the challenge to the legality of the Motorcycle Parking Scheme brought by Mr Djanogly has been dismissed (subject to any appeal), and at the first opportunity. I will let you know as soon as I can exactly when that will be. Finally, can I please make it clear that the attached minutes of the DCB meetings are confidential, and must not be passed to Mr Djanogly. They are confidential in themselves in view of the information they contain. But I am also concerned that the identity of any officers attending the meetings should not be disclosed. Following my passing to you a copy of the Sharpe Pritchard invoice, Mr Djanogly publicly cast aspersions on Bob Poston, the officer named therein. Mr Djanogly has stated that he intends to target individual members and officers as part of his campaign. I do not think it would be fair to subject the officers attending DCB to that treatment. Kind regards PL

Letter – 27 Aug 2010 – MHW to WD 27 August 2010 Mr W Djanogly Direct line 0844 798 2506 By email Direct fax 0845 052 2618 Dear Mr Djanogly City of Westminster Council: audit of the 2008/09 accounts: partnership-inparking and the novation of the parking enforcement contract I am writing further to my letter of 28 July 2010 in response to your emails of 19 and 22 July 2010.

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Novation of the parking enforcement contract I think I should in the first instance remind you that the contract was originally awarded in 2003 and was subsequently assigned from NCP Limited to NCP Services Limited in 2007. The novation agreement is dated March 2008. As I have noted before, the audits of the years of account prior to 2008/09 are certified as complete. This means that there is no function for me to discharge and no action I can take in relation to those years. Nonetheless, I have considered the issues you have raised and have set out my views on the validity of the contractual arrangements, supported by legal advice I have received. To be helpful, I will address the issue you have raised about the use of the terminology of ‘novation’ and ‘assignment’. I am advised that a change in the parties to a contract can be effected by assignment, novation or transfer otherwise. I acknowledge that there are legal distinctions between assignment and novation. However, the practical effect, i.e. that the parties to the contract change, is the same. In the circumstances of the assignment/novation of the parking enforcement contract, I am advised that the principles in the Pressetext case apply and there was no requirement that the contract should be re-tendered given there was no material change to the contractual terms and that the change in parties was due to a corporate reorganisation. I note that you argue that NCP Limited could not novate its rights and obligations under the parking enforcement contract to NCP Services Limited because it had already transferred its rights and obligations to Topco Limited. My understanding of the chronology is that: • the transfer of the parking enforcement contract from NCP Limited to NCP Services Limited took place on 13 March 2007; • the transfer of other contractual rights and liabilities from NCP Limited to Topco Limited took place on 29 March 2007; and • NCP Limited continued in existence and, as party to the original contract, entered into the novation agreement. I am advised that, in the circumstances, the novation agreement is between the appropriate parties. The contract makes provision for possible novation of the contract in that it provides that the contractor shall not assign its rights or obligations without the written consent of the Council; and that the Council is entitled to assign/novate the contract. I have already set out my views on the process of the novation of the contract in my letter of 25 June 2010. I should finally note in this regard that the Council has confirmed that it has no objection to you being given a copy of the relevant clause of the contract. A copy is enclosed. Validity of the arrangements between NCP Services Limited and the Council in 2008/09 I am advised that the agreement is valid for the reasons set out in my letter of 25 June 2010. In addition, in relation to the issue of whether the income received in respect of car parking enforcement is a lawful item of account, I am advised that, as there is an arrangement in place between the Council and NCP Services Limited for the purpose of the enforcement of on-street parking, the related income and expenditure is lawful. Extension of the PIP pilot I now turn to the above extension and whether this took the value of the contract above the threshold at which a compliant EU procurement exercise was required. I would again repeat in

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this context is that the audits of the years prior to 2008/09 are compete and I have no functions to discharge in respect of those years. Nevertheless, to be helpful, I have asked the Council for further information and it has disclosed to me the email from the Council’s Principal Solicitor to you of 23 October 2009 and the supporting legal advice. I have carefully considered all this information and taken my own advice and I hold the view that it is arguable whether there should have been a compliant EU procurement exercise. In the circumstances, I have nothing further to add to the comments set out in my letter of 25 June 2010. Further action In your emails, you raise the possibility that, should I decline to place these matters before the court in order that a declaration be sought, this can be done by other interested parties within a certain timescale of my decision. You ask me to advise you of your rights. As I have stated above, I have no functions to exercise for matters in years prior to 2008/09. Therefore I have no power to make an application to the court for a declaration and there is no decision for me to take as my function for those years has ceased. For matters that fall within the 2008/09 year, I have a discretion under section 17 of the Audit Commission Act 1998 (the Act) to make an application to the court for a declaration that an item of account in the Council’s accounts is contrary to law. However, in respect of the matters you have raised, I do not currently consider this to be the case and therefore I have decided not to make such an application. There is a statutory right of appeal available to a person who has made an objection under section 16 of the Act who is aggrieved by a decision of an auditor not to apply for a declaration. This right of appeal is set out in section 17(4) of the Act. However, you have not made an objection in relation to any matter and this right of appeal is not therefore available to you. I am sure you will understand that it is not part of my role to advise you as to what other legal avenues are open to you with regard to 2008/09 or earlier years. I suggest you seek your own advice in that regard. I note your comments concerning the Monitoring Officer’s intended report to Cabinet. I will continue to have regard to the position on that report in the context of my consideration of the matters before me. Finally, having regard to the circumstances, I remain of the view that a further meeting with you is unnecessary. I have copied this letter to the Council for information. Yours sincerely Michael Haworth-Maden District Auditor

Email – 07 Sep 2010 – WD to MHW at 16:51 – cc PL, MM, AG, DC Dear Mr Haworth-Maden, re: your letter dated 27 August 2010 I too have just returned from vacation, and thank you for your letter.

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Unfortunately, whilst having read it numerous times, I find it utterly confusing and thus would be most grateful for your simple clarification of certain aspects so that I might better understand your reasoning. Transfer of contractual rights & obligations:- Contrary to your advice, the legal advice that I have received is that there are only 2 ways in which such a transfer can be effected, being either an "assignment" or a "novation". Purposefully differentiated in law, an assignment leaves the original parties in situ even though one may have, in a manner of speaking, sub-contracted to a third party, whilst a novation physically replaces one of the parties with a third party, thereby completely removing the original party to the contract. However, you seem to purport to being aware of a third called a "transfer" , and perhaps others. Can either you, or your counsel, please explain how "transfer" is different to "assignment" & "novation" as far as contract law is concerned? "Material Change" Also, you appear the claim the "effect" as being the same in all 3 instances ie, a "change" in the parties to a contract. If this is so, could I ask you, or your counsel to again assist in explaining the need for the law to differentiate? That said, having confirmed that there was a "transfers" between National Car Parks Ltd, NCP Services in March 2007 & NCP Topco Ltd, with what must be, by your own logic the "effect" of changing the parties to the contract, you then claim that there was in fact NO change to the parties, but merely a "group reorganisation". Could I ask:- 1) Which "group" was reorganised? 2) What was its composition prior to and after this "reorganisation"? 3) If the same "group" was performing the contract, why was it "transferred" or assigned or, in fact novated? I ask since, having made you conversant with both the Auditor notes to National Car Parks Ltd accounts which uses the term "disposal" 3 times in one paragraph, together with a copy of a letter penned by National Car Parks Ltd's Chairman, Mr Andrew Potter to a newspaper categorically stating that his company has nothing to do with NCP Services (Ltd), it is rather hard to comprehend how you have arrived at the conclusion that there was a "group reorganisation. Appropriate parties to the novation Finally, with regards your "understanding" of the chronology to justify that the appropriate parties signed the novation agreement, could I ask:- 3) How was the "transfer" of the parking enforcement contract on 13 March 2007 different from either an "assignment" or a "novation"? 4) (a) What "other" contractual rights were "transferred" to NCP Topco Ltd? (b) How again did this "transfer" differ from either an "assignment" or a "novation"? and (c) how did these "other" rights differ from the rights & liabilities already "transferred" on 13 March to NCP Services Ltd? 5) If these "transfers" were legally sufficient, could you offer your opinions as to why all the Councils have expressly stated that the "novations" be back-dated, with Westminster seemingly feeling a legal requirement to back-date to the start of the original contract. As you have been fully legally briefed on these matters, I hope your response to assist will be quite quick.

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many thanks in advance for your co-operation Kind regards Warren Djanogly

Letter – 17 Sep 2010 – MHW to WD 17 September 2010 Mr W Djanogly Direct line 0844 798 2304 By email Dear Mr Djanogly City of Westminster Council: audit of the 2008/09 accounts: partnership-inparking and the novation of the parking enforcement contract Thank you for you email of 7 September 2010. I have considered the content of that email alongside our previous correspondence and in the context of my duties as appointed auditor, having regard to the legal advice available to me. I should stress from the outset that I have given very careful consideration to the matters you have raised with me with regard to the above and to the information you have provided in support. That consideration is clearly demonstrated in my correspondence with you, where I have set out the work I have undertaken, the conclusions I have reached and the basis for those conclusions. That correspondence also demonstrates my willingness to respond to a number of questions you have raised in response to my findings and to a number of requests for further information. Nevertheless, I must be conscious that the costs incurred in my consideration – and in continuing to respond to your ongoing further queries – fall on the council-tax payer. I have made appropriate enquiries of the Council. I have taken into account that the audits of the years of account prior to 2008/09 are certified as complete and that there is no function for me to discharge - and no action I can take - in relation to those years. I have considered whether there is any action I should take in respect of the years of audit that are open. Based on the information before me and the legal advice I have received, I do not consider that I should take any action. My conclusions in that regard are clearly summarised in the ‘further action’ section of my letter of 27 August 2010. It is therefore my view that, having regard to my role as appointed auditor, I have given proper consideration to the matters you have raised and responded to you appropriately. I do not think it is in the public interest for me to consider these matters further, subject to the undertakings I have already given in our previous correspondence with regard to: • the outcome of the complaint currently before the EU with regard to the framework agreement (my letter of 25 June 2010 refers); and • the Monitoring Officer’s intended report to Cabinet (my letter of 27 August 2010 refers). I do not therefore intend to respond in detail to the further questions set out in your email of 7 September 2009. I appreciate that you may be disappointed by this response. I believe, however, that our correspondence demonstrates how carefully I have considered the matters you have drawn to my attention.

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I should finally note that it remains, of course, open to you to pursue your concerns further with the Council. I am sure you will understand that it is not, however, part of my role to advise you in that respect and you would need to have regard to your own advice. Again, my letter of 27 August 2010 refers. I have copied this letter to the Council for information. Yours sincerely Michael Haworth-Maden District Auditor

Email – 17 Sep 2010 – WD to MHW at 15:03 – cc SE, PL, MM, AG, DC, LR Dear Mr Haworth-Maden I acknowledge receipt of your letter dated 17 September 2010. In response I would like it noted for the file that I have, on numerous occasions, given you ample opportunity via indisputable evidence & offers of meetings all of which have either been ignored or declined, to properly assess this situation, and thereafter act in the public's interest. May I remind you that, in your capacity as Auditor, you are supposed to be removed & independent of the Council, yet the "careful consideration to the matters" you claim to have given is clearly demonstrated as being nothing short of conspiring & colluding with the Council to invent the most plausible version of events with little regard to the facts. The conclusions you draw in your letter of 27 August 2010 are so blatantly self-contradictory & knowingly flawed, the resultant evasiveness with regards to providing clarifications to your "findings" & decisions is palpable, if not unexpected. The facts & evdience clearly, and indisputably demonstrate that, in order to realise a cash return for the "on-street assets" (Parking Enforcement Contracts) that had to be vacated as a condition of its sale to the Macquarie Group, National Car Parks Ltd's owners, namely 3i plc and others unilaterally novated them to NCP Topco Ltd, a start-up company also owned by 3i plc and others, with the stated intention of then selling the same to another start-up called NCP Services Ltd for a reported sum of £45m. This was contrary to both UK & EU Procurement legislation. As you are fully aware, there are only 2 ways the rights & obligations of a contract can be "transferred", and they are by assignment or novation. The stated intention was the full substitution of National Car Parks Ltd by new entity, NCP Services Ltd, which has to be a novation. The result of any such novation is, by its very nature, a material change to the parties to the contract, and thus, a violation of the EU Directives pertaining to the same. I have also provided you with written evidence by way of a letter to a newspaper from the Managing Director of National Car Parks Ltd, Mr Andrew Potter in which he categorically refutes any relationship whatsoever with the new entity, NCP Services Ltd. Yet, despite all of this, you still attempt to reclassify you previous conclusion of no material change since the companies were "related" to one of a "Group re-organisation". Little wonder you are now forced to be evasive when asked exactly which "Group" was "re-organised".

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In deeming this a "unilateral" novation, I am actually giving the Council the benefit of the doubt insofar as it was unaware of it, Being cognisant prior and not acting appropriately would be a far worse scenario. However, upon becoming aware, it would appear the Council had 2 courses of appropriate action:- 1) to rescind the novated contracts in favour of a re-tendering (as required by EU Law) 2) to award a temporary holding contract to NCP Services Ltd whilst a re-tendering was initiated They chose neither in favour of a flawed course of attempted internal ratification by way of belated Deeds of Novation that they incredulously feel they have some permission in law to back-date. Your refusal to acknowledge the resultant unjust enrichment via PCN income & illegitimate supplier payments, both a direct result of the Council's incompetence has resulted in this rather pathetic, and clearly desperate attempt to defend the indefensible. In this regard, it is my submission that you have brought shame on both your position & your office. Could you please make careful note that, in October, my colleagues & I will be hand-delivering a petition to the EU Commissioners' requesting that they initiate a full investigation into these blatant violations. My correspondence with your office together with the supposed report that the equally evasive WCC Head of Legal, Mr Large is due to "present to Cabinet" will be pivotal in the evidence we intend to provide in support of our petition. Should your position as a result become untenable, you cannot say that you weren't given every opportunity to do the right thing. Yours sincerely Warren Djanogly cc Gerard Batten, MEP

Report v02

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