‘SIGNIFICANT failings’ of the purchase of the council’s £41m headquarters will be put under the spotlight this week.

An extraordinary audit and corporate governance will be held on Wednesday, February 22, to discuss external auditors Grant Thornton’s findings on Slough Borough Council’s HQ Observatory House in Windsor Road.

While probing the long overdue and now infamous 2018/19 accounts, Grant Thornton received an objection from a local elector concerning Observatory House, who believed it was an ‘unlawful item of account’.

Slough Borough Council purchased the freehold of Observatory House, mainly through borrowing, from an offshore company called Jersey Ltd for £41m and moved in from their previous HQ St Martins Place in 2019.

The acquisition cost was £39m, plus stamp duty of nearly £2m and a purchaser’s fee of £391,000.

READ MORE: Slough Council could change its mind over HQ move out

The council, which effectively declared bankruptcy in 2021, originally bought the building to move its operations into one place and rent the top two-floors to businesses. It is now considering selling the building and/or moving out.

The local elector demanded a public interest report to be produced on the purchase and to apply to the court.

However, Grant Thornton decided not to do this but did raise concerns of ‘significant failing in governance’ because cabinet councillors in May 2018 made the decision at a public meeting to buy the expensive building with limited information available.

The auditors criticised initial talks at a ‘lead members’ and directors’ group’ of the cabinet’s wish to relocate the council’s HQ elsewhere within the town centre in March 2018, which Observatory House was an option.

While no decisions were made, council officers were given a ‘steer’ to pursue the purchase of the building. Grant Thornton believed this information should have been included in public reports.

READ MORE: Slough Council has "no hope" in renting out HQ top floors

The auditors also criticised the lack of financial risks associated with the purchase, such as VAT and the failure to let the top two-floors. No consideration of alternative options was given to members and there was little information on the council’s own occupancy needs.

While Grant Thornton believed these concerns would have little impact on the ultimate decision to acquire Observatory House, it states a transaction this big should have ‘sound decision-making arrangements’ and appropriate documentation.

It called for sufficient and adequate information to be provided to councillors when discussing major decisions such as this, and any informal discussions, such as at a ‘lead members’ and directors’ group, should be included in the formal reports.

Government-appointed commissioners, who are overseeing the council’s recovery, said this was a “serious issue”. They wrote: “It is important that the council learns from this and ensure proper processes are in place to ensure decisions are properly made against a background of appropriate information to inform that decision.”