When the Equality and Human Rights Commission (EHRC) came into existence on 18 April 2006, it was not "ready for business'', according to the committee of public accounts.
The committee has published its latest report based on evidence from the EHRC and the Government Equalities Office.
"When the Equality and Human Rights Commission came into being, at the beginning of October 2007, taking over the powers of three former commissions, just 10 directors out of the planned complement of 25 had been appointed, the management team lacked the right balance of skills, and its business plan had not been finalised. It was, to say the least, not ready for business," said Edward Leigh, who chairs the committee.
"The process by which this new body had been established, at a total cost to the taxpayer of nearly £39 million, was patently flawed."
One of the main blunders was allowing staff to leave and then re-hiring them as consultants. This meant that not only did the EHRC lose staff with valuable skills but it also cost the taxpayer £11m.
"The re-engagement as consultants by the EHRC of seven senior staff who had taken early severance was carried out without competition or formal approval," said Leigh. "The taxpayer was hit twice: some £630,000 for their severance packages and nearly £340,000 to rehire them."
The report said the chairman of the EHRC was in part responsible for the ineffectiveness with which the board scrutinised the set-up process and challenged management's proposals.
"There are still weaknesses in the EHRC's controls over staff costs, shown by the unexplained payment of £15,000 to one of the re-engaged consultants. This is not the way this committee expects public bodies to be run and reinforces the need in future for stronger controls and proper procedures for managing and using public money," said Leigh.
The committee acknowledged that serious errors were made in setting up the EHRC and it was not helped by three changes of sponsor department in the months immediately before its launch.
Leigh said the EHRC accepts that it was not ready for business when the doors opened on 1 October 2007 and that its set-up process, which cost £39m, was flawed and inefficient.
The EHRC has been without a permanent chief executive since May 2009. When the new chief executive has been appointed, he or she will need to ensure that strong controls are in place to ensure that such errors do not recur, Leigh warned.
