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Growing anger over Walsall Council’s failure to keep track of more than £3million in European funding has led to calls by a Walsall MP for an investigation into the lack of an adequate audit trail and the likelihood of disciplinary action being taken against those who are considered to be responsible for the blunder.

Under the European Structural Fund Objective 2 initiative, local community groups shared £3.2million in grants intended to improve neighbourhoods. Walsall Council was the “accountable body” responsible for administering the programme and was answerable to the Government Office of the West Midlands. But the accounting fiasco means that the money will not be reimbursed from the EU leaving Walsall council tax payers to foot the bill.

After the true extent of the financial disaster was revealed, Leader of the Council Mike Bird said: “If anything this has made me dislike Europe even more than before. They can come in up to 10 years afterwards and audit the books. However none of this excuses that our officers misled the elected members. I was assured that we were looking at paying back £700,000, which was bad enough.

“I commissioned the independent report because I wanted to make sure that everything was open and honest. Now we’ve got to deal with this at election time but so be it. People have a right to know.”

The Grant Thornton report commissioned by the council investigated the European Regional Development Fund grant allocation round that ran between 2000 and 2006 and discovered that £2.8million was unaccounted for. The report details events from 2003 onwards and makes no reference to the preparations for the bids between 2000 and 2002 when, coincidently, Councillor Bird last held the position of Leader of the Council.

Former council officer Peter Francis became aware of the problem within two weeks of being appointed but was dismissed after blowing the whistle. He was subsequently awarded £650,00 in an out of court settlement for wrongful dismissal.

The debacle has prompted Walsall North MP David Winnick to write to district auditor Jon Roberts demanding an urgent investigation. The veteran Labour MP said: “The position, which has obviously generated much concern locally, is that grants were allocated to various groups on the basis that the monies would be recouped from the European Regional Development Fund. Now it appears that due to an inadequate audit trail it is not possible for this to occur.

“This failure may well mean that council tax-payers will have to foot the bill. In these circumstances I have asked whether he will look into this matter as soon as possible. I think it is important that the district auditor should investigate, and not wait for the annual audit which he would normally carry out.”

The intervention by Mr Winnick provoked a characteristic response from the Council Leader, accusing the MP of “grandstanding”: “We’ve already had an independent audit. We paid Grant Thornton £80,000 to do it, and that was published last week. David Winnick ought to get his act together. He’s just grandstanding.” Mr Bird said.

“There’s a publicly available document with the findings and it’s quite clear that this comes down to failings by Council officials. All those responsible have now left, apart from three who will be subject to disciplinary action.”

Councillor Bird added that “there is absolutely no question” that the ruling Conservative group will take any political responsibility for the scandal. He said: “The report says there is no blame attached to any elected member – it goes straight to the officers.”

Paul Sheehan, Walsall Council chief executive said: “We will consider the implications of the report before taking appropriate action. It is essential we respond to any weaknesses in the council’s processes in order to avoid any repetition in the future.”

It was revealed this week that Mr Sheehan is one of the highest paid council officers in the country, taking home £203,000 a year.

What do you think? you can post a reply... we think this waste of your Council Tax money, the equivalent of a 3.5% rise in Council Tax is a disgrace... the tory cabinet had this reported to them in 2007.