Gentoo director received huge payoff without board approval

This figure was not reported in the 2015/16 accounts and Gentoo blamed “changes to the interpretation of the accounting directions” for the omission.

The highest payment made in 2016/17 totalled between £400,000 and £410,000.

The director in question is understood not to have been either chief executive John Craggs, who left last month, or Peter Walls, who left in 2015.

Keith Loraine, new chair of Gentoo, said: “Our independent investigation into this governance matter found that in certain instances our procedures and authorisation paths had not been properly followed. I can confirm that the Gentoo Group board did not approve this particular severance payment.

“The group is now seeking legal advice about the possibility of obtaining redress or recovery and it would therefore be inappropriate to comment any further at this point.”

The organisation said it was unable to confirm the name of the director for legal reasons.

The failure saw housing regulator the Homes and Communities Agency downgrade Gentoo to a non-compliant G3 level for governance.

It said the Sunderland-based provider “has failed to ensure that governance arrangements were operating at the most basic level”.

“The board has failed to safeguard its reputation, and that of the sector,” it said.

The regulator’s judgement said Gentoo “has so far responded positively and is working with the regulator to agree a plan to resolve the issues”.