Sunderland housing company Gentoo begins legal action to claim back executive pay-off cash

The Echo reported last year how the company was seeking legal advice after it emerged that a severance payment was made to an executive without approval from its board.

It followed a report from the Homes and Communities Agency (HCA) in which the Gentoo board was criticised over its handling of pay-outs.

The Sunderland-based social housing group confirmed it had been in contact with Northumbria Police after it was revealed the pay-out was made, despite not going through a process where top members could scrutinise the deal, although police have said that at this stage “no complaint” has been made to the force.

Now, bosses have confirmed that the company is formally trying to reclaim the money through legal action.

In a statement Keith Loraine, chairman of Gentoo Group, said: “We are pursuing civil legal action and are now engaged in formal pre-action protocol.”

A Northumbria Police spokesman said: “We’re aware of the concerns that have been raised and if any evidence of alleged criminal offences is presented to us we will investigate these thoroughly.

“At this stage no complaint has been made to police.”

Gentoo, which manages approximately 29,000 homes, came under fire from the Government’s HCA in October last year as it downgraded the organisation.

The HCA’s report said it “does not meet our governance requirement” and added there are “issues of serious regulatory concern.”

It added: “The board has failed to ensure adequate control and scrutiny in discharging its responsibilities.

“It has lacked effective oversight and an appreciation of risk in discharging its responsibilities in line with its own governing documents and scheme of delegation.

“It has failed to ensure that governance arrangements were operating at the most basic level.

“During a significant period of restructuring the board exercised weak governance and internal control when agreeing executive contracts and severance payments to outgoing executives.”

In response to the report, Gentoo chiefs said the criticism was labelled at one particular pay off - although no details of identity were disclosed by the company.

Gentoo is responsible for homes in South Tyneside, Northumberland and Redcar as well as Wearside.

In 2015 it cut 330 jobs as part of a bid to save £18million by this March.

In addition to the 29,000 homes in its stock, Gentoo has approximately 900 leasehold and affordable home ownership properties.

As of March 2017, Gentoo employed 1,343 full-time staff and its consolidated turnover for the 2016/17 financial year was £193.3million.