Liverpool Council decided to delay suspending a regeneration boss due to an ongoing criminal investigation.
A judgement handed down when former regeneration boss Nick Kavanagh lost his unfair dismissal case against the council revealed the council delayed suspending him and acting on an internal report due to the involvement of Merseyside Police.
Mr Kavanagh, the long serving director of regeneration at the city council, was arrested at the Cunard Building by Merseyside Police as part of the force's Operation Aloft in December 2019. He was subsequently suspended from his chief officer job and was eventually dismissed in March 2021 following a council disciplinary hearing. He denies any wrongdoing and has not been charged with an offence.
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A judgement handed down by Judge Rachel Mellor has now revealed that the council delayed suspending Mr Kavanagh after they received an internal report into the controversial New Chinatown scheme due to a request from Merseyside Police. The internal report into the New Chinatown scheme was completed by lawyer Simon Goucher and submitted to council bosses in May 2019.
The judgement reads: "The respondent did not act on that report until 19 December 2019 which is the date that Mr Kavanagh was suspended. The reason for the delay in suspending the claimant and investigating any issues arising out of the ‘China Town’ report was Merseyside Police had instructed Mr Reeves not to do anything with the report because they had their own ongoing criminal investigation and wanted Mr Reeves to “hold back on our investigation”.
The judgement sets out the sequence of events that led police to launch an investigation into land and building contracts named Operation Aloft.
Judge Rachel Mellor said that Jonathan Falkingham, Chief Executive of Urban Splash, raised concerns in 2018 over the way in which the tender process for the New Chinatown scheme had been handled. The court heard that Urban Splash owned the site but were told by the council to sell to PHD1.
Judge Mellor said that Mr Falkingham raised his concerns with then chief executive Tony Reeves and elected Mayor Joe Anderson about the transfer of the lease from Urban Splash to PHD1.
The judgement reads: "At this time Mr Falkingham raised a concern that Councillor Anne O’Byrne, Deputy Mayor, had been seen hugging PHD1’s Representative Peter McInnes."
Judge Mellor also said that Mr Falkingham expressed concern about comments made to him by Mr Kavanagh, which suggested that the council would not support the scheme if the rival bid by developers X1 was successful.
Judge Mellor said that the concerns raised by Mr Falkingham led Mr Anderson and Mr Reeves to commission a report into the New Chinatown scheme by Mr Goucher, a local government lawyer who worked for Weightmans.
After Mr Goucher submitted his report , Mr Reeves made contact with police, which led to Operation Aloft, an investigation into land and building contracts.
The judgement reads: "On 16 August 2019 Mr Reeves provided a signed statement to Merseyside Police detailing how and why he became concerned about the awarding of tenders. This referenced both the ‘China Town’ report and an internal audit report; all of the relevant material was passed to Merseyside Police and Operation Aloft commenced."
The tribunal heard that police confirmed that Mr Reeves made contact with them.
The police statement read: "He provided a signed statement to Merseyside Police on 16 August 2019, detailing how and why, he became concerned about the awarding of tenders for the sale of land owned by LCC."
The judge also said that although Mr Reeves liaised with police, he was not involved in the final decision to arrest Mr Kavanagh.
The judgement read: "Providing a statement (and supporting evidence) to the Police is not the same thing as having any ‘involvement’ in the decision to arrest Mr Kavanagh. The decision to arrest the claimant was not something that Mr Reeves could control; that was the decision of Merseyside Police."
In making her decision to dismiss Mr Kavanagh's case for unfair dismissal, Judge Mellor said she believed there were legitimate reasons for the city council to have launched the investigation into the New Chinatown case and the disciplinary investigations that followed it.
She said: "The circumstances and allegations were not manufactured and they were supported by witnesses and documentary evidence. They were subject to a thorough investigation which the claimant was fully able to participate in. The respondent did have a genuine belief in the claimant’s misconduct."
She said there is 'no basis that Mr Reeves colluded or scapegoated' Mr Kavanagh.
Judge Mellor added: "The matters complained of by the claimant, whether viewed individually or collectively, did not result in the respondent acting unreasonably in treating the reason they have found as a sufficient reason to dismiss. The sanction was within the band of reasonable responses. I therefore find the claim is not well-founded and dismiss the claim."
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