The Financial Reporting Council (FRC) has confirmed that it is looking into the “professional standards” of two “individual accountants” in respect of Woking Borough Council’s operations and investment activities for the financial years ended March 31, 2017, to March 31, 2023.

While the FRC has not identified the two people involved, former CEO Ray Morgan has confirmed to the Local Democracy Reporting Service that he is being investigated.  The other is Leigh Clarke, the council’s chief financial officer until 2023. Shortly after her departure, the council’s interim section 151 officer declared Woking bankrupt with more than £2 billion in debts.

Woking’s £2m debt situation has become a thorn in the side of local government reorganisation.

Since then, the council has had to cut many jobs, increase its share of tax by 10 percent, and slash funding for services and facilities. 

 It may be over a year before a decision is reached in Woking.

The FRC’s sanctioning powers range from unlimited fines to a slap on the wrist. It can also strip people of their membership in professional bodies.

Ray Morgan and Leigh Clarke were named in the Grant Thornton report published in November. The report examined the scale of Woking’s borrowing and found a “long and atypical history of borrowing from the Public Works Loan Board” between 1999 and 2020.

Borrowing accelerated rapidly between 2016 and 2019 – primarily to fund regeneration projects such as Victoria Place and Sheerwater, cover running costs at its companies, and make loans to a private school.

Officials say Woking had “no business” handing over millions of pounds in unsecured loans to a private school and was “cosplaying” as a bank.

Greenfield School borrowed millions of pounds from the bankrupt borough but has since approached the authority to say it does “not currently have funds” to fully repay a debt of £2.4 million soon due to maturity.

The council has given the fee-paying school, which charges up to £17,000 a year for Year Five pupils, a total of £13.4 million—despite Woking having “no statutory duties relating to education.”

The school said it needed the money to provide new class spaces, and the council argued at the time that this would also free capacity within the state sector and serve as an investment.

Much of that debt is being paid back over 50 years, but a smaller carry-over loan of £2.4 million is due. The school says it’s about £1.5 million short and will not be able to settle its tab for at least another two years.

The Grant Thornton report said:

“There was a strong message, over many years, from the former CEO, Ray Morgan, that if debt could be serviced it was possible to borrow as much as the council wished, for whatever purposes it chose.”

Will Forster (Lib Dem) said: “As Woking’s MP, I’ve called for those who effectively bankrupted our local council to be held accountable. Pleased to see that the Financial Reporting Council, the UK’s accounting watchdog, is investigating Ray Morgan and Leigh Clarke, two former senior council figures.”

 Cllr Ann-Marie Barker, Lib Dem leader of Woking Borough Council, said: “Since the council fully accepted the recommendations of the independent Grant Thornton public interest report, Government-appointed commissioners overseeing Woking Borough Council’s financial recovery have been liaising with relevant professional bodies.

“As a result, the Financial Reporting Council (FRC) has confirmed investigations into the conduct of two former employees.

“Woking residents deserve complete transparency and for those responsible for the borough’s financial issues to be held accountable. We will, therefore, do whatever we can to assist the FRC in their investigations.”

The FRC statement read: “This press notice concerns the opening of an investigation into the relevant individuals. The investigation does not relate to any persons or entities other than the relevant individuals, and it would not be fair to treat any part of this announcement as constituting or evidencing an investigation into any other persons or entities.

“The Financial Reporting Council has commenced an investigation under the Accountancy Scheme into the conduct of two individual accountants about their compliance with governance, reporting, regulations and professional standards in respect of Woking Borough Council’s operations and investment activities for the financial years ended 31 March 2017 to 31 March 2023.

“The council no longer employs the individuals. The decision was made at the FRC’s conduct committee meeting in December 2024.