CONCERNS over the financial position of Mouchel were being expressed before Bournemouth Council “outsourced” four of its departments to the company at the end of last year.

A meeting of the audit and governance committee heard that Cllr Ron Whittaker sent an email at the beginning of November 2010 stating that the company appeared to be in “dire straits” because of the recession.

Cllr Roger West said: “I fully remember we were being advised that the company was in financial difficulties even then. It isn’t something that suddenly happened.

“The position with regards to Mouchel was a concern that we raised at the time of the original contract. From then on, shares have been sliding. We have a responsibility to make sure any staff transferred to another company have a good career path in front of them. It’s not a question of shares collapsing. It’s a question of whether we assessed that Mouchel was suitable for our staff to be transferred there.”

Earlier this month, a senior council officer was suspended after warning of “serious doubts about the value for money” of transferring a further two departments – human resources and financial services – to Mouchel, which was last week reported to be £87million in debt.

Despite the warning, the cabinet gave the green light to the deal, subject to a risk assessment, with the departments’ 100 staff due to transfer on December 1.

Council bosses are now waiting to see the results of an independent report by management consultants KPMG.

Cllr Ben Grower, chairman of the audit and governance committee, said: “The eagerness by councillors and some officers to progress this matter as quickly as possible was in conflict with what was good practice and good governance.

“Nobody sat back and used common sense. I think (the cabinet) should have waited until they had the risk assessment and up to date financial situation.”