THE INTERIM chief executive of Caerphilly council has warned members claiming back potentially “unlawful” payments to senior officers could leave the authority worse off financially.

In a report due to be considered tomorrow, Stuart Rosser hinted the authority might claim back money paid to some senior officers if they are found guilty in criminal proceedings.

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.

Both are under police investigation by Avon and Somerset Police and are on bail until January.

According to Mr Rosser, councillors, residents and staff have been asking him if nearly £500,000, deemed to have been paid ‘unlawfully’, could be recovered.

But Mr Rosser says recovering the payments could restore the previous terms and conditions, meaning allowances would have to be paid.

Mr Rosser states in the report: “In the context of potential recovery then there will firstly be a need to clearly ascertain the facts and then take expert legal advice.

“[I]t should be noted that the determination of ‘unlawful’ by the auditors does not automatically mean that the council could unilaterally recover the payments from individuals.

“If it is determined that the contracts have been validly varied it is unlikely that the agreements can be withdrawn and therefore it is unlikely that the payments can be recovered.

“In addition, any decision to recover the payments is likely to place the council in a worse financial position than if it endorsed the original ‘decision’ because it is inevitable that if the unlawful payments are recovered then there would be a need to reinstate the previous terms and conditions and pay the car allowances (and agree previous leave entitlements) accordingly.

“If the council then wished to harmonise arrangements with the staff (and save costs in the longer term) then there would be a need to renegotiate. In all probability that would be more costly then ratifying the original decision and honouring the previous agreements.”

He added: “The term ‘unlawful’ is a determination by the auditors in the context of the financial accounts and is understandably emotive - particularly given the current circumstances.

"However, as previously indicated it does not of itself mean that the decisions were criminal or unreasonable or that the employment contracts of individual members of staff were not varied appropriately.

“The council will not be able to ascertain all the facts for some time given the ongoing investigations, complexities and potential interaction between the two separate issues.”