A SPECIAL Caerphilly Council meeting heard that the authority had “acted unlawfully" with regards to setting pay rises for its chief officers.

The meeting tonight was held to discuss the detailed findings of the Wales Audit Office Annual Improvement Report.

It follows the suspension of the council’s chief executive Anthony O'Sullivan and his deputy Nigel Barnett who were arrested earlier this year on suspicion of fraud and misconduct in public office after huge pay rises were awarded to 21 senior officials at the authority.

The report was written by Auditor General for Wales, Huw Vaughan Thomas, and was published earlier this month.

Tonight, councillors were told the pay rises to senior officers between August 1, 2012, and March 31, 2013, were “unlawful expenditure”, with the sum amounting to in excess of £270,000.

The report identified “significant weaknesses in governance” and a special inspection of Caerphilly council will take place later this year as a result of these findings.

Interim chief executive Sturat Rosser gave a presentation before the council, reflecting on the issues facing the council and referred to the findings made in the report.

He said: “At the end of the day, it makes for uncomfortable reading and I might find it particularly harsh in some respects. But I for one feel that we have to move on from what has happened in the past and move forward. I’m happy enough to take it on the chin and move on.

“These circumstances are sad, but it’s very nice to be back.

“I recognise fully that we have issues. The conduct of the members and officers is vitally important – we are in this together.

“We remain strong in particular areas and I hope that elements of this report gives us the confidence that we haven’t got to be fearful of this.”

He added: “We are facing serious financial cuts – we will have to make some very, very serious decisions.”

Caerphilly Council Leader, Cllr Harry Andrews, said: "We welcome the Audit Office's valuable feedback. We have of course taken on board the Audit Office's comments and our Council is working at pace to deliver necessary improvements".

A Labour councillors' spokesperson said: "Our Labour-led Council has acted robustly and promptly to address the Audit Office's recommendations for improvement. And we're on track to meet all of their requirements within the next year".