Exclusive: Citizens Advice Scotland on the brink of collapse
CAS chair's "obsessive" grip on the organisation is at the heart of the charity's issues
A culture of overbearing interference by trustees has taken Citizens Advice Scotland (CAS) to the brink of collapse, TFN can reveal.
Governance problems at CAS, which supports Scotland’s 61 Citizens Advice Bureaux, are so severe that its core funder, the UK government’s Department for Business, Innovation and Skills (DBIS), could jettison the beleaguered organisation following the outcome of a root and branch review.
A number of senior sources linked to the organisation from the recent past and present told TFN problems stem from unpaid chairman Dominic Notarangelo’s “obsessive” grip on decisions, much of which are outwith the chair’s remit.
Sources paint a picture where Notarangelo, who also chairs Glasgow Maryhill Citizen's Advice Bureau, bizarrely calls himself “Il Padrino” (The Godfather) while allegedly colluding with a cabal of Citizens Advice Bureaux he dubs "the Glasgow Mafia" to ensure re-election every three years.
Eight governance reviews have been forced on the organisation since the 1990s with the latest probe due to be published at the end of next month.
Now government ministers have decided enough is enough and are set to take decisive action in a bid to bring the organisation into line.
Insiders say civil servants at DBIS are furious with the way CAS is being governed and one option could be for Westminster to drop its core funding – which last year amounted to £3.5 million – leaving it at the mercy of the Scottish Government.
A separate tranche of non-core funding– worth 4.5m – this week become the responsibility of the Scottish Government under the terms of the Scotland Act.
DBIS itself insisted that there are “no plans to transfer responsibility for this [core] funding to Scottish Government.” However, a spokesman added: “We will consider our next steps in light of the outcome of the governance review in July.”
One senior source insisted: “UK government ministers are actively looking to offload CAS. Despite repeated warnings, the trustees are bent on their own personal agendas. It is effectively a farce that has become a constant embarrassment.
“Ministers originally wanted to pull funding altogether. That may be an option if the governance isn’t sorted."
The source added: "If the problems continue, and funding is pulled, CAS will collapse in its current form. It simply cannot sustain having its funding suspended for any longer than six months."
The government department announced in March it would hold back six months-worth of funding until CAS got it house in order.
The chair's interference in the running of the organisation has become so pervasive that Notrangelo insisted his own design company undertook pro-bono consultancy work on some nine different Citizens Advice Bureaux despite repeatedly being warned by executives he is dangerously close to falling foul of OSCR’s governance guidelines.
Although this work was being undertaken on a free basis, he has so far refused to answer TFN's questions about whether he had a business relationship with any of the contractors who were employed to deliver work.
Citizens Advice's revolving door of chief executives
Kaliani Lyle (2009)
Susan McPhee (Acting 2009-2010)
Howard McKenzie (2010 – lasted less than one week in post)
Lucy McTernan (2010-2011)
Susan McPhee and Beth Corcoran (Joint acting) (2011-2012)
Margaret Lynch 2012-2016 (Suspended October 2015; dismissed March 2016)
An entire confidential report into sacked chief executive Margaret Lynch's expenses was leaked to a national newspaper with one source telling TFN leaks are being used as a weapon against anyone who challenges the board.
Lynch is just one of six chief executives – both permanent and acting – who have attempted to lead the organisation during Notarangelo’s chairmanship since 2009 (see box).
Stephen Brown, treasurer at North Ayrshire Citizens Advice Bureaux, resigned from his role as treasurer and director at CAS in March after he claimed Notarangelo made his position untenable after he raised concerns about how the organisation’s Development Fund was being administered.
He told TFN: “Do I think CAS is a going concern? Not under these circumstances. Do I think it is fit for purpose? Absolutely not. Do I feel that the people of Scotland are getting a service that they deserve? No."
Brown said in his opinion the current governance review being undertaken by Deloitte is being heavily steered and its outcome a foregone conclusion.
“My guess of the outcome will be a recommendation to be a members association, with an elected board drawn mainly from those members – probably about nine of them, with maybe three independents,” he said.
“The crazy point here is that many of the characters already steering this fiasco will remain.”
He added: “My view is the people of Scotland deserve better than this. The (Citizens Advice) brand has been so weakened from cutbacks at the front end, and downright bad governance at the top end, a completely new agency is needed that bring back some ethical standards in the independent advice offered to Scottish Citizens.”
A CAS spokesperson said: “CAS has appointed Deloitte to undertake an independent governance review to take stock of our current governance model and assess this against recognised best practice. We expect this to be concluded and recommendations made by the summer.
“We welcome the involvement of both UK and Scottish Governments in this process, and value the views that they will bring in ensuring that as the recipients of public funds, we create a governance landscape which ensures good value for taxpayers’ money.”
OSCR said no active investigation is being made into CAS’s governance.
How board interference is costing CAS dear
CAS's board allocates around 20% from its core funding to form a Development Fund to provide grants to individual member bureaux to help them develop their service.
However questions have been raised over how the allocation of these funds work. Insiders say the fund's committee, on which Notarangelo sits, limits wider scrutiny over grant allocation with decisions often taken on an ad-hoc basis.
Sources have told TFN that the cost of sacking former chief executive Margaret Lynch has been well in excess of £100,000.
The internal audit by chartered accountants Chiene and Tait into Lynch's expenses alone cost around £20,000 while lawyers fees and the cost of her being suspension on full pay for seven months takes the amount to six figures.
Insiders believe huge sums being spent on internal wrangling was the catalyst behind DBIS forcing the latest governance review.
This all comes against a backdrop where many individual CABx services throughout Scotland are being cut through dwindling funds with many fighting for financial survival.