BLAENAU Gwent council may have broken the law over pension payments made on behalf of two senior officers, a watchdog has said.

A long-running investigation into “alleged financial discrepancies” between the council and Silent Valley Waste Services (SVWS) began after Gwent Police were notified of concerns by Audit Wales in 2017.

The council’s financial statements for 2016/17 and 2017/18 have remained unaudited as a result.

Gwent Police’s investigation into the issue has concluded, with no further action to be taken.

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But Audit Wales is continuing inquiries, and says it can now provide a modified audit report for financial statements in 2016/17 and 2017/18.

The public money watchdog says the financial statements “present a true and fair view” of the council’s financial position for these years, “except for pension payments made on behalf of two senior officers relating to directorships of Silent Valley Waste Services”.

Its report says payments made by the council into the Local Government Pension Scheme “appear to be contrary to law” because the council did not have the power to make pension payments on behalf of SVWS.

A separate report says the council “accepts that there were procedural errors in the way in which employer pension contributions were administered, but it considers that these did not have the effect of rendering the payments contrary to law”.

The payments were made on behalf of the council’s then chief finance officer and the corporate director of environment and regeneration who also held positions as directors of SVWS, a wholly-owned subsidiary of the council.

The officers each received remuneration of £11,568.96 for their roles with SVWS.

In 2016/17, pension contributions totalling £4,975 were paid into the Greater Gwent Pension Fund and in 2017/18 payments of £4,814 were made.

These payments “appear to be contrary to law”, the auditor general says.

“For pension purposes, the council treated the remuneration paid to the officers in respect of the SVWS director appointments as though the officers concerned were undertaking the SVWS roles as part of their core council duties,” an audit report says.

It adds: “The council should have disclosed the nature and impact of these additional pension contributions for the financial statements to give a true and fair view, but it has failed to do so.”

Separate pension accounts were not opened and instead “the council treated the two engagements as a single employment for pension purposes,” the Audit Wales report says.

Payments made “appear to be in breach” of local government pension law which requires separate accounts to be opened, it adds.

But a council report says the authority is “of the view that there has been no breach of the Local Government Pension Scheme regulations”.

“However the council agrees that it may appear not to have followed correct internal practices when making the decisions on the remuneration aspect of the nomination to the Silent Valley Board of Directors for the individuals identified,” it adds.

“In addition, the council agrees that it did not maintain separate pension accounts for the two employments (with the local authority and Silent Valley Waste Services).

“This was based upon the treatment of previous appointments to these directorships, where the council agreed that the additional element would be incorporated within the salary of the appointed individual.”

A Blaenau Gwent council spokeswoman said: “We are pleased that, apart from some historical pension related matters, Audit Wales has confirmed that the accounts for 2016/17; 2017/18 and 2018/19 are a true and fair record of the Council’s financial position.

“The matter which has been highlighted by Audit Wales relates to internal governance procedures.

“We have fully taken this on board, and have strengthened these procedures.”