Croydon Council used taxpayers’ money to pay a development company up to £2m in legal fees over the Gateway development fiasco.
Developers Stanhope Schroders racked up millions in legal fees when the council, in partnership with Arrowcroft, backed an alternative plan which included proposals to build an arena on the site.
After a 10-year legal battle the Secretary of State ruled in favour of Stanhope’s development and ordered the council pay the winner’s costs.
The council is now trying to recover the money they have paid Stanhope Schroders from losing developer Arrowcroft.
A council spokeswoman said: “Although Stanhope Schroders originally pursued the council for £2m, the council and Stanhope’s ultimately agreed a lesser sum, the precise extent of which cannot be disclosed at this stage.
“Under a development agreement with Arrowcroft Limited the council was indemnified by Arrowcroft for Stanhope’s legal costs.
“The council is now taking steps to recover from Arrowcroft the monies it has had to pay to Stanhope.”
A spokeswoman from Stanhope Schroders said they had been paid in full by Croydon Council and as far as they were concerned the matter had been settled.
She said: “Following our enquiry, the Secretary of State made an order that the council reimburse Stanhope for the costs that we incurred as a result of the public enquiry.
“The council is indemnified against those costs by Arrowcroft.”
Stanhope were engaged in a 10-year legal battle to develop the site they have named Ruskin Square.
Despite being given the go-ahead by the Secretary of State last year in August, they have yet to start building.
Because of the economic situation, they are looking for an occupier who will pre-commit to leasing all or the majority of an office building.
As the economy recovers they hope to proceed with the masterplan for the full five acres.
The original plans included 560 residential units, half of them affordable housing, and four office buildings surrounded by a new Warehouse Theatre, a GP surgery and a park to be open 24 hours a day.
An Arrowcroft spokesman said: “The council's report was correct at the time of publication but since then the amount of legal costs have been agreed at substantially less than £2m.”
It has also been revealed that Phillip Goodwin, the former director of planning, who was in charge during the Croydon arena debacle was paid £45,541 on top of his £102,362 salary in the last financial year.
The council refused to say what this payment was for. Mr Goodwin retired on December 31, 2008.
Mike Davis, the former director of housing, who retired on September 30, 2008 also received additional payments to his salary of £66,164.
He received an ex-gratia or compensation payment of £31,700 and an additional one off payment of £40,170.
A council spokeswoman said the council is precluded by a legal agreement from providing details of what these payments are for.
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