A REPORT into why directors and auditors missed NHS Croydon's £28 million overspend will not be published until next month because the panel received threats of legal action.
Publication was delayed a fortnight ago after key figures, who had previously failed or refused to give evidence, made late submissions after being sent draft copies of the report.
The Advertiser now understands those letters included threats that they would sue for defamation.
Councillors on the committee, from five local authorities across south west London, are taking legal advice on whether the report should be amended.
"When the draft was sent out to check for factual inaccuracies the panel received a number of defamation case threats on the basis of its contents," a source told the Advertiser.
"This type of report is quite a rare thing for a council to get involved in and councillors would be personally liable if legal action was taken.
"They could be sued for defamation for what has been said so each councillor is taking legal advice, which makes it incredibly messy.
"When one person gets advice that a particular piece of wording should be changed, this has to be circulated among everyone, which is about 15 people. It's an absolute nightmare.
"I don't think it will change the outcome, but it does mean it will be a couple more weeks before the report is published."
Former chief executive Caroline Taylor, who refused to appear before the South West London joint health and overview scrutiny committee, is one of the key figures to make a late submission.
Another is interim deputy director of finance Mark Phillips, accused by a previous report undertaken by Ernst & Young of making "unwarranted adjustments" to NHS Croydon's agreement of balances.
Following months of public hearings the panel had hoped to publish its findings following a behind closed doors meeting at the Town Hall on March 11.
However, the meeting had to be adjourned and the release delayed after the panel received lengthy documents from Ms Taylor and Mr Phillips. The submissions will not be included in the final report.
Jason Cummings, the committee's chairman, described the delay as "unfortunate".
NHS Croydon, the borough's primary care trust (PCT), posted a £5 million surplus in 2010/11 when it had actually overspent by £23 million.
The scrutiny committee was set up after Ernst & Young's investigation uncovered further details of financial mismanagement but found no one responsible.
The report is expected to be published after Easter, in the week beginning April 15.
