Brexit and the waning days of the United Kingdom

[Sheilbh]

Anything less that what the Johnson government is doing/proposing would be a dereliction of duty, given the crisis the world finds itself in.*

* posted to forestall/challenge any 'Johnson is doing remarkably well' type of posts. 

I think both can be true at once The devil's in the details but it's not coincidental that London's emergence as a global financial centre happens in parallel with the collapse of the Soviet Union. For 30 years there's been a policy of not scrutinising the City too closely because it's the goose that lays the golden egg.

We'll see with the draft legislation this week but if it is as described I'm not sure what's next because that'll have achieved what campaigners have called for for years (my guess would be the lawfare stuff) - but it'll take time. It's easy to say we seize properties etc - it's difficult to do when we've spent 30 years not asking too many questions about who owns those properties and building that picture for 90,000+ properties held by off-shore companies won't be quick. It's a bit like Germany and gas I think - we need to build new infrastructure and it's a shame it took this for us to move.

Separately - it seems the meeting with Kwarteng two days ago went well

Jim Pickard
@PickardJE
huge breaking news at BP:

- BP to exit its 20% stake in Russian oil giant Rosneft

- BP chief executive Bernard Looney to resign from board of Rosneft with immediate effect
Helge Lund, BP chair, says the company has operated in Russia for over 30 years with "brilliant Russian colleagues" but says the invasion represents a fundamental change:

"Russia's attack on Ukraine is an act of aggression which is having tragic consequences across the region."
"I have been deeply shocked and saddened by the situation unfolding in Ukraine.....our immediate priority is caring for our great people in the region....and looking at how BP can support the wider humanitarian effort"

[Sheilbh]

Looking at the government's pitiful response on Ukrainians trying to get to the UK and again they're so wildly out of touch with public opinion. 80% support visa free travel to the UK and staying for a while plus over 60% want UK resetlling refugees. That's higher than for Afghan interpreters (70%) and Hong Kongers (65%) both of which had the same pattern of government taking a wildly bureaucratic restrictionist approach before having to back down. Yet again the government find themselves being assailed by Tory backbench MPs for being too restrictive on immigration (as with Afghans, as with Hong Kongers)

That thing I said about Germany's actions (now reversed hopefully) being to take a blocking position for long enough to piss people off and then u-turning to do the right thing, but too late to get any credit. This keeps happening on anything to do with immigration/the Home Office where it's not just that they're bad but they're also wildly out of touch with public opinion.

I'm not a full defund the police person - but I genuinely think the Home Office, the Treasury, the Met (also Greater Manchester Police and Cleveland Police) should be abolished and re-built from the beginning

Incidentally - very good piece on the lawfare/respectable Brits who we need to go after (although Downing Street spokesman today specifically called out law firms and said they should "think very carefully if they are still continuing to do anything that props up the Putin regime", which sounds like a veiled threat - get your house in order or we will):

Putin has used British rich man's law to avoid scrutiny, at a crippling cost to us all
Nick Cohen
The price of justice in the UK has helped the Russian super-rich stay fixtures in our culture
Sat 26 Feb 2022 19.00 GMT

Truth is meant to be the first casualty of war, but in Britain the ability to tell the truth about Russia was gunned down before Putin ordered his armies to advance.

You need to write about Russian power to understand fully the anger and shame plutocratic censorship brings. Anger because Britain is our country, and claims to be a free country, and yet foreign oligarchs can manipulate the truth here as surely as Putin can in Russia. Shame because we cannot perform the first duty of journalists and speak in plain English without our newspapers accepting the risk of staggering legal costs.

In the safe space of the House of Commons, Labour MP Chris Bryant quoted from leaked government documents, which stated Roman Abramovich should be watched because of "his links to the Russian state and his public association with corrupt activity and practices". God help anyone who says as much outside when the government has not put him on its sanctions list.

Bear the costs of challenging wealth in mind when you wonder how London became a centre of corruption. Anglo-Saxon law brings class justice rather than real justice. The verdicts of individual judges are not to blame – whatever their faults, they do not take bribes. But the price of reaching a verdict is so high that few dare run the risk of being left with the bill. A system can be rigged even if the people in charge of it are honest, and there is institutional prejudice in the English justice system in favour of wealth that is as pervasive as institutional racism in the police.

Let one example stand for thousands. The Parisian intellectual Nicolas Tenzer tweeted that the French equivalents of George Galloway and Nigel Farage acted as the Kremlin's "useful idiots" when they appeared on Putin's propaganda channel RT. RT sued, claiming that not only had Tenzer libelled the station but that he was guilty of an "encroachment on the dignity" of its journalists – as if security guards did not strip its hacks of dignity every time they went to work. Naturally, the French courts found against RT. Astonishingly to anyone involved in the struggles for free speech in the UK, the cost of the case was just €10,000 (£8,400).

Compare that with the price of writing about the Putin regime in the UK. In January 2021, after Putin's agents had poisoned him but before he was jailed, the Russian opposition leader Alexei Navalny praised Catherine Belton's Putin's People. It is indeed the book of the moment, which shows how KGB men created the world's most dangerous rogue state. Abramovich, three other Russian billionaires and Putin's energy company Rosneft sued.

The case was trivial. Belton's publishers HarperCollins settled it agreeing to make changes to the text most readers wouldn't notice. Yet although it never went to a full hearing, the case, it was revealed to me, cost HarperCollins £1.5m – 178 times the price of the libel trial in France. In effect, HarperCollins was fined a small fortune for publishing an anti-Putin book by the English legal system.

You may not care about journalists when it is the police's job to arrest the corrupt. "Our" rich man's law ensures, however, that the police have pretty much given up. The government introduced unexplained wealth orders in 2018 as a "full-spectrum" assault on illicit wealth being laundered through the property market. It did not realise that the fantastically wealthy could hire London's best lawyers, who are more than a match for the barristers the state can afford.

When the National Crime Agency lost a case against the family of Rakhat Aliyev, a former deputy chief of the Kazakh state security service, it had to pay £1.5m in legal costs, which seems to be becoming a standard charge in the high court. Its annual budget for tracking down money launderers was all but wiped out.

The story of the world in the 21st century is of a rise in the power of dictatorial states and their accomplices and the collapse in the power of democratically accountable police forces and journalists who are meant to combat them.

If we were capable of feeling shame at the misery that Britain's corruption inflicts on the world, we would radically reform the law. We would move closer to a continental legal system. We would make judging a career in its own right and phase out the recruitment of judges from the ranks of barristers and solicitors, who appear to think obscene costs are reasonable. We would stop selling English law as a luxury service in the global marketplace and say its first duty should be to meet the needs of the people of this country. And we would impose limits on the fees the lawyers of the super rich can charge in the high court.

As it is, I suspect nothing will happen. Aside from Private Eye and a handful of patriotic MPs, no one highlights how a section of legal London profits from Russian billionaires. The lawyers who went for Catherine Belton included Hugh Tomlinson, who is on the board of Hugh Grant's Hacked Off, which says it wants to hold "power to account", not act as its servant, and Geraldine Proudler, who until recently was on the board of the Scott Trust, which regulates us here at the Guardian and Observer and ensures we maintain the highest ethical standards.

Get off your high horse, lawyers tell me when I raise an eyebrow. Everyone would do the same if they had the chance.

And if not everyone, then many would and do. It's not only lawyers who simper pieties about respecting human rights while slipping wads of oligarchical cash into their pockets. Politicians, footballers, estate agents, private school head teachers, hedge fund managers, bankers, art gallery owners and whole sections of the professional class are hooked on dirty money.

The Treasury opposes every anti-corruption measure because, I suspect, it sees their dependence clearly. It regards the British economy with deep pessimism. It notes the poor quality of our managers and entrepreneurs, and the self-inflicted wound of Brexit, and concludes that dirty money is better than no money.

As Russian tanks roll across Europe, a true cause for anger and shame is that at no point have we had a public debate about whether we want a future where we are living off immoral earnings and are so frightened of immoral lawyers we no longer dare describe what this country has become.

Nick Cohen is an Observer columnist

I'd just note that the Foreign Office has now publicly confirmed that they've been sent "numerous" letters from lawyers representing potentially sanctioned/sanctionable individuals.

I'm not quite sure Cohen's solutions are the right ones but the problems he's identified are real - this is what I mean by the best sanctions in the world meaning nothing if we don't put money into enforcing them.

[Sheilbh]

After Kwarteng's meeting with BP - looks like similar with Shell - and a push for British companies (including in the energy sector) to divest from Russia:

Kwasi Kwarteng
@KwasiKwarteng
Earlier today I spoke to Shell's chief executive, Ben van Beurden. Shell have made the right call to divest from Russia – including Sakhalin II.

There is now a strong moral imperative on British companies to isolate Russia. This invasion must be a strategic failure for Putin.

New sanctions announced by Truss earlier and Kwarteng introducing an Economic Crimes Bill tomorrow - as I say the devil will be in the detail but at a headline level it sounds good.

Edit: Also Russian vessels banned from UK ports. We imported very little oil and gas from Russia but this means we now won't import any - there was a tanker due in Orkney tomorrow which locals were going to protest but it's now banned.

Edit: And on divestment starting to see the first (public sector) pension funds announce they're divesting - at this point I imagine that's just a very sensible commercial/risk decision but good to see.

[Jacob]

It really feels like a snowball that's gathering momentum at this point.

Is there anyone who wants to be left holding the "why are you still invested in Russia" bag?

I mean... I'm sure there are vulture type folks who think they can get a cheap deal against normalization of relations, but I don't think they're going to be big publicly accountable groups.

[garbon]

Priti was never going to support visa free travel for Ukrainians.

[Sheilbh]

Priti was never going to support visa free travel for Ukrainians.

Yeah - but I give it a week or so before they're forced into a u-turn on that.

[Sheilbh]

Excellent piece from the FT that explains the enforcement issue far better than me

Londongrad will stand so long as enforcement stays weak
There is little point in new rules to tackle dirty money if the UK does not robustly enforce those it has
Cat Rutter Pooley 7 HOURS AGO

Boris Johnson has decreed the end of Londongrad, the UK capital's cosy relationship with Russian money. "There will be nowhere to hide ill-gotten gains," the prime minister says. But that relies on there being someone to look for them.

The UK government is introducing a flurry of reforms to stop "Putin's cronies hiding dirty money in the UK", as the home secretary Priti Patel puts it.

There will be a new register to force anonymous foreign owners of UK property to reveal their identities, a longstanding gap in our disclosure rules. An overhaul of unexplained wealth orders — a previous effort to crack down on illicit wealth that has fallen flat. Changes to make it easier for the sanctions watchdog to impose penalties, because it has only managed to levy six fines in six years. And an upgrade for the overwhelmed and under-resourced Companies House.

That is welcome after years of government ambivalence towards serious economic crime and money laundering. But the reason dirty money in Britain needs tackling in the first place is not because of years of legislative inactivity. It is because of years of failures of enforcement. Until the government gives the agencies meant to police the rules sufficient resources and the political space to do so without fear of blowback, no amount of new legislation will fix the problem.

That is not to say the legislative measures the government proposes are bad. There is no straightforward single measure that would cut off the flow of capital from Russia to the UK. London's relationship with Moscow's oligarchs endures not through the City's capital markets, where Russia's companies have weaned themselves off its pools of equity and debt. Instead it persists through property via the homes of Hampstead and Highgate, the art dealers of Mayfair and the country's network of elite public schools.

Targeting London's overseas-owned property, as the government plans, is therefore a sensible enough step. And the first step to targeting property is knowing who owns it.

The new economic crime bill will extend beneficial ownership requirements to trusts and overseas entities that control UK property. But the inability of Companies House to police dodgy disclosures about who controls domestic companies since similar rules were introduced in 2016 does not give confidence, even if the government is proposing to beef up its powers.

And while failure to comply with property disclosure rules could mean prison or restrictions on property sales, it is hard to imprison an owner who has no intention of coming to the UK in the first place. It is hard to stop an unknown owner from transferring an asset to someone else unknown.

Agencies may benefit from bigger sticks with which to threaten those who are tempted to play the system. More than that, though, they need people to believe they can and will use the powers they do have.

Jason Sharman, a Cambridge academic who works on corruption and money laundering, sums up the problem: "Britain has strong laws and weak enforcement. The US has laws which in many respects are less strong but much stronger enforcement."

The experience of the Office of Financial Sanctions Implementation — the body that has issued six fines for sanctions violations in six years — is a case in point. It was meant to be modelled on the US Office of Foreign Assets Control. But as one London white collar crime lawyer sums it up: "Ofac is a giant of global enforcement. OFSI is a paper tiger."

We don't need a new "kleptocracy cell" in the National Crime Agency, as the prime minister announced last week. As financial crime expert Tom Keatinge of the Royal United Service Institute think-tank points out, the NCA already houses the International Corruption Unit, tasked with investigating money laundering in the UK from corruption of high-ranking officials overseas, which could presumably do the job. The government needs to back the bodies we have properly.

Putting in place rules and then failing to allocate the resources needed to enforce them sends the signal that the UK is only serious about serious economic fraud and money laundering on paper, not in practice. If the UK commits properly to robust enforcement instead, that will act as a deterrent for the next regime that wants to conceal its money in the capital. If it does not, Londongrad will still stand.

[email protected]
@catrutterpooley

This is part of a wider trend as Stephen Bush points out. I think it goes back to at least Blair of British governments creating new levers to pull - but not really caring if those levers actually connect to anything. The same happens with criminal law with "crackdowns" and "tougher penalties" but no practical means (i.e. more money) to enforce or implement them.

It's almost post-modern law making (which we also have) where the law signals something but is not actually given practical direct effect because the people responsible for implementing don't have the resources or agency to do it. This also matches what I've read from Oliver Bullough and others - the UK generally has really good laws on lots of this (property ownership is a blindspot which is now going to be fixed). That isn't the issue, it's that they're not policed and enforced. The US has poorer laws but really robust enforcement.

From what I understand in the world of white collar crime and regulation in general that is true of  Europe v the US generally. Europe has stricter laws and 90% of companies are good actors who make efforts to follow them, but the 10% of bad companies are not overly worried about a European regulator/law enforcement agency popping up because it's quite rare. By contrast the US has more lax laws, but companies (even bad ones) are absolutely terrified of the SEC or any American regulator turning up on their door - not least because they normally have powers of law enforcement (seizing evidence, compelling witness statements etc - which not all European regulators have).

[Sheilbh]

Ooof Tory MP uses parliamentary privilege (and will have checked with the clerks about this) to name a few of the law firms and individual lawyers who've been working for oligarchs to send lots of threatening lawyers to journalists and government

Edit: With the link:
https://twitter.com/jimwaterson/status/1498718003822841864?s=20&t=HD8AjLHSkwnawCXM0wSb9A

Edit: As noted the presence of Hugh Tomlinson QC is particularly striking because he's been on the board of various "media ethics" bodies. I get the cab rank rule exists for a reason with barristers but it is striking for someone to represent loads of victims of phone hacking and Amnesty in suing the security services while also acting for Russian oligarchs threatening to sue any newspaper for libel for merely mentioning his clients. It's the risk of libel and the current trend on privacy - it doesn't just apply to tabloids papping celebrities or Cliff Richards, but to very bad people who should have their misdeeds published.

I'm moving from we need a little re-balancing in this area to a far more fundamentalist free speech position on the media as in the US

[Syt]

[Sheilbh]

On the whole lawfare/sanctions point - increasing reports suggesting that most sanctions for individuals may require legislation in parliament.

Bascially because it's all delegated to ministers, it is subject to judicial review and there are reports that lots of legal letters are going into the FCDO from potentially sanctioned individuals threatening that. Key issue is apparently a lack of legal resource in the government legal department (especially as most of the law firms on the government's panels are likely to be conflicted because they've worked for those individuals - so they can't ask for extra support from them) and challenges around establishing "reasonable grounds" and that sanctions are "appropriate" which requires being able to exlain to the courts the link between their finances and the Putin regime.

The easy way around those issues is to pass primary legislation which isn't subject to judicial review and is probably justifiable in the circumstances.

Separately reports that City law firms are looking at those relationships. There's increasing pressure from a reputational perspective (very good piece on this in the FT this morning) - basically do you really want to be working with clients who are being turned down by the oil, gas and mining companies. But also, as a consequence of the financial sanctions, it's not clear if they'd be able to pay their bills. I can probably guess which concern is weighing heaviest right now

[Sheilbh]

Jesus Christ - been following this story for a while but the lastest news is just unbelievable:

Revealed: money for educating excluded children funded Bolton bar owner's social life
Call for 'seismic change' in social care system after Robert McGuinness's use of funds

Robert McGuinness loaned his bar business £100,000 from the 'community interest company' and spent more than £2,000 on Airbnb stays in a single year. Photograph: no credit
Helen Pidd North of England editor
Thu 3 Mar 2022 17.48 GMT

The owner of a children's home in Bolton shut down for "serious and widespread failures" spent thousands intended for educating marginalised children on drinking, foreign trips and his pub business, the Guardian can reveal.

Between 2015 and 2021, £1.5m was paid by two local authorities to a "community interest company" (CIC) run by Robert McGuinness, the main director of the children's home. The CIC was set up to provide vocational training to children from years 9 to 11 (ages 14-16) excluded from mainstream schools.

Profits from the CIC should, by law, have benefited the community. Instead, McGuinness, a Lamborghini-driving plasterer turned pub landlord, loaned his bar business £100,000 from the CIC. He also spent thousands from the CIC bank account on his own social life, as well as on foreign trips to Spain, Portugal, Belgium and Thailand, the Guardian has learned.

The bar has since gone bankrupt and the liquidator says "there is currently no prospect" of the £100,000 loan being repaid. The case highlights why children's social care experts believe there needs to be a "seismic change" to the entire system.

Bank statements seen by the Guardian show that some nights McGuinness spent hundreds of pounds from the CIC's account in bars and restaurants. More than £2,000 went on Airbnb stays in a single year and almost £5,000 was spent on pub furniture. A total of £182.78 was spent in a branch of Spar in Praia da Luz, Portugal, and just shy of £280 was spent across 2019 in an artisan bakery in Manchester.

Achieve Care Homes Limited was set up in 2020 by McGuinness, 34, and his parents, Alison and Francis. In January, Ofsted inspectors suspended the licence of the children's home run by the firm after finding that a boy had not bathed, changed his clothes or been provided with a home-cooked meal for four months.

It was not the first time Ofsted had expressed serious concerns about a McGuinness-run establishment. In September 2020 he tried to open an independent school in Bolton called Stanley House, charging annual fees of between £22,000 and £40,000 for children expelled from mainstream education.

It never opened, after inspectors found numerous problems including an electricity substation easily accessible to children and the lack of a playground. They also raised concerns that "leaders have not put systems in place to account for the income and expenditure for each pupil who will be funded by a local authority".

Yet McGuinness's children's home business was granted permission on Tuesday to turn eight flats in Bolton into apartments for care leavers aged 16 to 18. It was classed by the council planning committee as a "permitted development", and did not need separate approval. This is despite the local authority's head of children's services having concerns about the company.

Until the Guardian confronted him this week, McGuinness was a director of 11 firms, many using the "Achieve" brand. On Tuesday he resigned from Achieve Training Centre CIC, which still operates two "training centres" in Bury and Bolton in Greater Manchester for children excluded from mainstream education. One is at Stanley House, the site of McGuinness's aborted school.

The Guardian has seen evidence that the CIC's bank account was regularly used to pay staff and contractors working on the renovation and running of the Printer's Apprentice, a bar-restaurant in York city centre. It opened in February 2020, a month before the first lockdown, and went into liquidation in December 2020 owing £411,698.

McGuinness used the CIC debit card to buy groceries, book hotels, eat out and withdraw cash while on journeys to Portugal, Belgium and Spain, and Krabi in Thailand. In 2019 the CIC bank account was used to spend more than £4,600 in pubs and restaurants and £2,264 on Airbnbs.

Payments from the CIC account included £680 for a pub employee who successfully took McGuinness to an employment tribunal for £7,341 in unpaid wages in 2020, almost £5,000 for bar furniture, and £5,680 to LWC, a trade alcohol supplier. A legal adviser who helped with the employment tribunal received £5,000 from the CIC account.

In addition, payments totalling £9,632 went from the CIC to "DMD pay", which stood for Drink Me Dry pay. Drink Me Dry Limited was set up by McGuinness and his father in January 2018 to run the pub.

Bolton and Bury councils were the CIC's biggest clients until very recently. Between 2015 and 2021, Bury council, along with local schools and education providers, spent £904,537 sending young people from the local pupil referral unit (PRU) to Achieve Bury, which is situated on an industrial estate just outside the town centre.

As a result of the Guardian's investigation, a Bury council spokesperson said the local authority would not be placing any further children with Achieve. The PRU was "reviewing the current placements with the provider", they added.

Bolton council said it spent £654,340 sending 32 children to Achieve Bury from July 2017 to November 2019. Bolton's director of children's services, Bernie Brown, said she stopped using Achieve when it became apparent children were "not getting the formal education that had been commissioned, sitting down doing some maths and English and functional skills work". Instead, the children were taken on "tours" of local employers, which did not help them reintegrate into a school setting, she said.

"There's got to be a seismic change and a seismic shift in the way that we approach this," she added.

One witness said the work experience involved labouring on building sites, including at the house in Bolton that McGuinness was in the process of turning into a small children's home.

Asked to explain all of these payments from the CIC account, a solicitor for the CIC insisted they were legitimate, saying: "Robert McGuinness and other members of staff have, on occasion, 'salary-sacrificed', such that our client directly incurred private costs of theirs, which costs were then deducted from their remuneration."

A report from the liquidator in February revealed that Drink Me Dry owed the CIC £100,000. It also owes £125,000 to McGuinness and £52,468 to AMG Properties Limited, which is run by his parents.

The CIC lawyer said the CIC's £100,000 loan came from "profits from its business", despite the CIC annual accounts showing less than £8,000 profit in 2019 and less than £3,000 the year before, when Drink Me Dry was first established.

It was "a normal commercial loan that is being repaid according to its terms", the lawyer said. Yet the liquidator's report says "there is currently no prospect of dividend to the unsecured creditors", including the CIC.

The CIC lawyer said the regulator investigated and considered the circumstances of the loan in 2021 and took no further action.

Councils do not license or regulate children's homes and do not have regulatory power to shut down providers. Neither of the Achieve Training Centres has ever been registered by Ofsted, which inspects individual buildings – children's homes, schools etc – but not the operators. This means that companies can have numerous poor inspections and continue to operate and open new ventures.

A representative for Achieve Care Homes Ltd and Robert, Alison and Francis McGuinness did not respond to a request for comment, but said: "We don't know anything about this – you should ask Achieve CIC."

[The Brain]

Councils do not license or regulate children's homes and do not have regulatory power to shut down providers.

But they pay for them?

[Sheilbh]

But they pay for them?

Yeah - they're regulated by Ofsted (national regulator of schools, all local authority children's services including children's homes or specialist schools etc and basically anything to do with education). Legally those centres should've been registered with Ofsted but weren't.

This is an area (a bit like health) where they may have mandates to provide services and funding (from central government or local revenues) but regulation and licensing will be done nationally.

[The Brain]

But they pay for them?

Yeah - they're regulated by Ofsted (national regulator of schools, all local authority children's services including children's homes or specialist schools etc and basically anything to do with education). Legally those centres should've been registered with Ofsted but weren't.

This is an area (a bit like health) where they may have mandates to provide services and funding (from central government or local revenues) but regulation and licensing will be done nationally.

Is it legal for councils to pay for unregistered facilities?

Regardless of regulator, when you're paying for something you have to constantly check that you're getting what you're paying for. That's just basic stuff whatever organization you are.

[Sheilbh]

Is it legal for councils to pay for unregistered facilities?

Regardless of regulator, when you're paying for something you have to constantly check that you're getting what you're paying for. That's just basic stuff whatever organization you are.

Yeah exactly it seems like basic due diligence to check they're registered and their latest reports.

Apparently some of the "training centres" are in a loophole - basically because they only provide part-time education to kids aged between 14-16 who have been excluded. So for those there's no requirement to register. This is something Ofsted is now saying they want to regulate/want the loophole closed.

The councils are pointing the fingers at Ofsted (with some justification) pointing out that they declined this guys attempt to open a private school for kids who'd been excluded, but licensed one of his children's homes and then shut it down six months later and basically suggesting different parts of Ofsted weren't talking to each other. That seems like a fair criticism and it definitely feels like operators as well as individual properties should be looked at by Ofsted precisely to spot trends across multiple properties that may be dealt with by different departments.

Ofsted blame the legislation and basically say it's focused on the "responsible person" who runs each site (in a normal scheme the head teacher etc) rather than a group of providers. They've called for reform to that and before this scandal government had announced that Ofsted would now be responsible for regulating homes for 16-18 year olds (previously unregulated). But it feels like the whole sector needs a review and a new framework so all the different bits talk to each other.

Having said that I'm not sure the councils are without blame because they can definitely ask for details of other group companies as part of their DD when agreeing a big contract - and they should definitely be looking at the books of a contractor getting £1.5 million which would have flagged lots of odd payments.

Edit: And it should be said this is not the first scandal (though first I can remember in this sector) about councils, regulators and even different teams within them all acting in siloes while the people who need the service suffer.