Investigators from neighbouring Wokingham Borough Council discovered no senior manager had overall responsibility for Section 106 monies, and that "insufficient council-wide co-ordination, strategic control and direction" meant accounting for significant sums were defined as 'non-material'.
The review was instigated by Reading's then Conservative-LibDem coalition as allegations of a political slush fund operated by Labour circulated, and put on record by Reading West MP Alok Sharma, who described to the House of Commons
"allegations that Reading Borough Council, when last under Labour control, diverted section 106 monies to plug gaps in the general budget and fund unrelated projects."
Cllr Isobel Ballsdon followed up, noting "wildly varying standards of recording these financial contributions and that a number had been misused."
However Labour's Leader of RBC, Cllr Jo Lovelock, earlier rejected such a conclusion stating, "There is no evidence that the previous Labour administration did anything which was outside due process on Section 106s."
Cllr Warren Swaine agrees that nobody has suggested embezzlement, fraud or corruption for personal gain, but he points out there are deeper concerns about consistent patterns of spending which was not in accordance with legally binding agreements and that this could go much further than s.106 planning contributions.
Yet the story continues to be wrapped in controversy as the suggested complaints about a lack of transparency won't be helped by Labour's promise to release only 'an edited, shortened and diluted version' of the report, backed up with disciplinary threats against opposition councillors who might circulate any further 'leaks' - and this has lead to accusations that the report is being suppressed ahead of an attempted 'whitewash'.
Meanwhile Caroline Bywater raises the national significance of the ruling as she advises councils across the country to take note of the recommendations to ensure sufficient precedural safeguards are put in place to avoid further undermining of public confidence in local government.
You can download RBC's committee report (pp11-16) here.
Auditors drew particular attention to the example of funding for the Prospect Park Multi-Use Games Area, as the 2007/8 accounts clearly showed the allocation had been 'wrongly undertaken'. In all 8 recommendations have been made (7 high priority, 1 medium priority).
Cllr Lovelock's attempts to suggest she innocently 'lost' £325,000 (for starters) and doesn't know where it went stretches credulity to it's limit and puts both the credibility and competence of her and her party in serious doubt. If she is to be believed the public will welcome her repayment of this sum to ensure there is absolutely no question of duplicity or deception.
Update: David Millward reports on the council meeting last Thursday at which the matters were discussed.
Leader of the LibDem group on RBC, Cllr Daisy Benson, commented that she was "horrified" by the findings of the "damning report".
Meanwhile Cllr Lovelock defended her conduct, flatly denying any deliberate misuse of public money or inappropriate spending, adding that although the procedures were 'insufficiently robust' they have already been put right and no further inquiries are required.
Subsequently RBC Chief Executive Michael Coughlin 'bowed to public pressure' with a promise to publish the Wokingham report in full and said that a full spreadsheet of all Section 106 money recieved and spent since 2007/8 would be made available to the public.
However Cllr Ballsdon continues her attack by explaining how Labour is undermining local democracy and rendering effective scrutiny of financial procedures impossible with a disregard for Decision Book reports and by 'trivialising' efforts to make systems more 'transparent' and 'robust'.
According to her the limited scope of the previous audit raises further questions about the scale of malpractise.