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London council leader and CEO step down due to potential ‘conflict of interest’ in Capita deal

The chief executive and leader of a London Borough council have resigned from their positions due to a potential conflict of interest created by a Regional Enterprise deal with Capita.

Council leader Richard Cornelius and CEO John Hooton of Barnet Borough Council stood down from their positions taking effect from 28 June as directors of an outsourcing project with the company, as an upcoming review on the deal could reveal a conflict of interest from the councillors.

Barnet council considered taking back in-house a series of contracts currently outsourced to the private giant in June after identifying services where performance improvement is required. The council outlined undertaking a full review of its partnership with the company, which is due tomorrow.

Council board papers say: “RE (Regional Enterprise) Ltd is a joint venture company that was incorporated on 18th July 2013. 51% of the shares in the company are owned by Capita and 49% are owned by the council.

“Since incorporation, the Barnet (Holdings) Ltd appointees have been those persons holding the roles of leader and chief executive of the council. Councillor Richard Cornelius was appointed as a director on 5 August 2013. Mr John Hooton was appointed on 23 June 2016.”

The paper added that individual persons that are appointed as directors “much act in the best interests of the company and not as representatives of the organisation that has appointed them.”

It continued: “This can, on occasion, create a conflict of interest for those individuals. In the normal course of business, this can be resolved by the individual declaring that interest and recusing themselves from any discussion or vote on the matter, as happens when individual members declare a conflict of interest in a council or committee matter.

“Councillor Cornelius and Mr Hooton considered their positions as directors of RE and concluded that the potential conflict of interest created by this review is such that they should resign their positions as directors of the company so that they can focus solely on the interests of the council.”

Officers are currently considering the most appropriate means of managing the council’s shareholding in the company during the contract review period, Barnet council has said. It concluded that this may or may not include appointing alternative persons, who are not involved in the review, as directors.

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