A Somerset council has been slammed by auditors after it paid a six-figure settlement to one of its employees without its leader or chief finance officer being told.

During the 2020/21 financial year, South Somerset District Council entered into a settlement agreement with one of its senior officers, paying them £109,000 as they left the local authority in 2021/22.

In auditing the council’s accounts, Grant Thornton found that this sum had been approved by then-chief executive Alex Parmley without informing either the chief financial officer, the monitoring officer or council leader Val Keitch.

The council has said there was nothing “wrongful” about the payment and has promised to implement new processes to prevent this from happening again.

The auditor’s report into the matter was published before the council’s audit committee convened in Yeovil on Friday morning (September 2).

A spokesman for Grant Thornton said: “During 2020/21, the council entered into a settlement agreement with a senior officer. This resulted in the officer leaving the employment of the authority with a substantial settlement payment.

“From our enquiries of management, we have concerns that there was a lack of due process, insufficient records were maintained to evidence how the agreement was reached, and that the agreement does not reflect value for money.”

The report also notes that the settlement agreement was not in keeping with either the council’s own constitution or more general financial regulations.

Most damningly, the auditors found that the council did not seek legal advice on the matter, and that the council leader, the monitoring office and the chief financial officer (also known as the Section 151 officer) were not made aware of the agreement.

In a statement released before the committee meeting, chief executive Jane Portman said: “It is our duty to ensure that we deliver value for money for South Somerset. We accept and regret that the management controls that were in place did not operate as they should have done on this occasion.

“The controls have been reviewed by management and a revised procedure that takes these findings into account will be recommended to our next meeting of the full council.

“We are recommending that our members endorse and support all of recommendations included in the report in all areas where weaknesses were identified.

“This matter has been taken extremely seriously and it has been investigated to the fullest possible extent to ensure we can move forward with confidence that such incident cannot occur again.

“We remain absolutely committed to delivering the best possible future by providing value for money and investment in South Somerset through the remaining lifetime of this council and as we look to 2023 and the creation of the new Somerset Council.”

The council said it will not be naming the officer who received the settlement or discussing the situation in any further detail.

Addressing the committee on Friday morning (September 2), Ms Portman added the council was “not hiding behind” its policies in refusing to identify the officer, citing the terms of the legal agreement it had signed with the individual when the settlement was agreed.

She said: “The chief executive at the time asked payroll to pay the amount, and then it was paid.

“Nobody is claiming this was a wrongful payment. The process was not followed appropriately, the control arrangements were not put in place appropriately and they should have been. That is not to say that the payment was wrongful.”

Ms Portman confirmed that her predecessor, Alex Parmley, was not paid a similar settlement when he left the council in July 2021.

Councillor Robin Bastable was deeply critical of the council, including its refusal to name and shame the individual to whom the settlement was paid.

He said: “We are dealing with public money. The council is a public organisation, and yet we’re told there are non-disclosure clauses in agreements with employees or ex-employees, [so] that we’re not allowed to be told who did this to whom and why.

“I actually wonder is that is legal. This is public money – it should be in the public domain as to how it’s spent and who it’s given to.”

Derek Yeomans – a former councillor who now sits on the audit committee as an independent member – made comments which hinted at the former council director Clare Pestell, who was dismissed in October 2021 following an independent investigation.

Ms Pestell has “consistently denied” allegations that she breached the council’s code of conduct by failing to declare council staff and resources had been used on her land – with Avon and Somerset Constabulary announcing in April 2022 that she would face no further action.

Mr Yeomans said: “It seems extraordinary to me that when we have a director who has committed absolute fraud, and possibly almost a criminal act – dereliction of duty comes to mind. I’m an ex-naval officer and that is a very serious offence.”

Ms Portman responded: “I don’t think you can make the assumption that those two things [Clare Pestell and the officer settlement] are linked.

“You are making an assumption about who the individual is who received that payment, and that is an assumption you should not be making.”

Councillor Mike Hewitson, who chairs the committee, added: “None of us are happy about the position we find ourselves in.

“We’re all equally disappointed about this situation, from the leader of the council down.”

The next full council meeting, where this issue will be discussed further, will take place at the council’s Yeovil headquarters on Brympton Way on September 15 at 7:30pm.