By NEIL RIDDELL
The future direction of the controversial Viking Energy windfarm project is shrouded in doubt after councillor-trustees again deferred a decision on sanctioning spending of £2.25 million of charitable trust money on taking it to the stage of a planning application amid continued concerns over a potential conflict of interest.
The money was to have reimbursed Shetland Islands Council for its expenditure on the project to date. Trustees had initially deferred the decision in December after several raised their concerns about whether they could legitimately vote for the transfer – part of a previously agreed £3 million investment budget – without a conflict of interest arising.
Council chief executive Morgan Goodlad has made clear that the SIC cannot continue financing the project and it is unclear where things go from here, but some have voiced a fear that the community’s stake in the project to build 150 turbines could be lost.
Trust general manager Ann Black told The Shetland Times yesterday afternoon: “I’m disappointed with the turn of events this morning and will be meeting with my chair at the earliest convenience to discuss a way forward.”
After a shambolic meeting of the trust in the Town Hall chamber yesterday morning, chairman Bill Manson said it was a “shame that folk that are meant to be taking decisions don’t seem to be willing to take them” and that the trust would either have to “think of a plan B or resuscitate plan A”. But he stressed that in the meantime the project was “soldiering on” towards a consent application. He said the logical time for a financial changeover would be the end of the current financial year in April and he hoped something could be sorted out before then.
Mr Manson added that while he understood a project of Viking Energy’s size would inevitably be high up in the headlines, in his view it was a matter of “bureaucracy and shifting the shares”.
Meanwhile, trustees have approved a 2.4 per cent inflationary increase in the charitable trust’s annual budget to £12.35 million by 13 votes to five after an attempt by councillor-trustee Rick Nickerson to set a standstill budget with no inflationary increases for any of the organisations it funds.
Councillor-trustee Jonathan Wills failed to find a seconder for his attempt to get the budgets of the recreational trust, amenity trust and Shetland Arts cut by 10 per cent to save £590,000 and the only saving made yesterday was £309 when trustees decided not to give a Christmas bonus to a disabled person who had failed to submit her application form for 2007 on time.
It means the trust is continuing to dip into its capital reserves to fund spending on different organisations and needs to cut its overall budget by 11 per cent to bring it down to the £11 million level which financial controller Jeff Goddard estimates would be sustainable “forever”.
Legal advice from solicitors Turcan Connell on the matter of Viking Energy stated that it was essentially up to individual trustees to decide whether they felt they could vote on the project while still putting the interests of the trust first. A report from the trust’s financial controller Jeff Goddard recommending approval of the £2.25 million budget stated: “I believe that given this project’s potential to financially benefit the trust and Shetland, that trustees will be putting the interests of the trust first in making such a decision.”
Mr Manson read out a declaration of interest on behalf of all the councillor-trustees, which did not preclude them from taking part in a vote, and further verbal advice was given by Simon Mackintosh of Turcan Connell via video conference during the meeting. Following that, 11 of the 20 trustees present decided that they could take no part in the vote, meaning the meeting was not quo rate and the item again had to be deferred.
Those who felt unable to take part were Viking Energy chairman Mr Manson and director Allan Wishart, independent trustee Valerie Nicolson who said she had a family member who stood to gain from the project, and councillor-trustees Cecil Smith, Andrew Hughson, Iris Hawkins, Frank Robertson, Jonathan Wills, Gussie Angus, Florence Grains and Allison Duncan. Four councillor-trustees – Sandy Cluness, Jim Budge, Betty Fullerton and Robert Henderson – were absent from the meeting.
Mr Wishart – who declared an interest as a company director but said otherwise he would have taken part in a vote – said he found the situation “absurd” and “very, very worrying”. Having been appointed to the trust and Viking Energy by virtue of being elected as a councillor, he felt trustees were now excluding themselves from fulfilling their public duty.
“I have no financial gain from the appointments, I’m hamstrung by this rule supposedly governing conflicts of interest,” he said. “[We’re having to] sit on our hands instead of leading the community as we were elected to do. We have to review this situation, which is now absurd, otherwise we are sitting in a worthless and sterile chamber. We have a common interest to do the best for Shetland, which is what I was elected to do.”
Other councillor-trustees took a similar view, with Caroline Miller saying she had “no problem” putting the interests of the trust first, Mr Manson saying “were I not a director [of Viking Energy] I would have no hesitation in taking part” and Mr Nickerson backing Josie Simpson’s belief that they were being “prevented” from doing the job they were voted in, and by extension appointed, to do.
Independent trustee John Scott said it was now clear that the initial decision to transfer the SIC’s stake in Viking Energy, taken back in September 2007, was a “serious mistake” and should now be reversed. “This is an enormous project – it should be dealt with by councillors,” he said. “I think we should look at ways of handing [the project] back to the council.”
Mr Goddard’s report informed trustees of a letter from Mr Goodlad last month stating that the delay in taking on the development costs, now amounting to £1.74 million, was “a matter of some concern” to the council. The trust took on 90 per cent of the shares in Viking Energy Ltd from the SIC 17 months ago and Mr Goodlad wrote: “The council simply cannot continue to meet these expenses for a company it has no locus in and we require to be reimbursed for the expenses accrued, as agreed at the time of the sale of shares.”
Following yesterday’s decision, or lack of, Mr Goodlad told The Shetland Times there would have to be a report to councillors asking them how they want to proceed. “We cannot continue to pay the costs on something if there is not a clear return,” he said.
“What are the council’s options? To pursue this debt with the company and the shareholders, or come to a separate agreement in relationship to the future ownership of the company. If the trust are not willing to take forward [the project] and if the council is asked to take it forward the ongoing future of Viking Energy and the potential income from it doesn’t necessarily have to go back to the charitable trust.”
Councillor-trustee Gary Robinson said there was a grave danger that trustees were “prevaricating too long” and could end up with a windfarm without any community involvement or potential benefits. “If Viking Energy Limited dropped out the application would still come in with SSE’s name on it,” he said. Dr Wills said all possible options would have to be looked at: “We have to resolve this as soon as possible.”
Sustainable Shetland chairman Billy Fox attended the meeting as an observer and, speaking afterwards, said he felt the future of the project was now “a bit of a mystery” and it was clear that the council and trust had “got themselves in a real pickle”.
He said: “I really don’t know where they go from here – presumably that’s as much advice as they can have in place to convince the councillors that they can genuinely take a decision on this. It’s high time the council actually invoiced Viking Energy for the money – questions have to be asked that public money is being given to a private company.
“It’s frustrating – we’re obviously pleased because it’s another setback for the project, but it’s quite vexing to see just how incompetently the trust and the whole council is being run – it’s quite unbelievable, actually. Whereas we can take a Pyrrhic victory, in the long run it’s quite worrying because we’re not being governed properly.”
Mr Wishart told this newspaper he was growing more and more concerned about the “fundamental” problem of councillors and trustees running scared at the mention of either state aid or conflicts of interest and he hoped the working group created to look at the running of the trust would address the matter as soon as possible.
“It seems to be that everything stops,” he said. “I don’t have any problem at all [but] we have to sort out the councillors’ fears – we just have to satisfy the remaining ones that they can declare a conflict of interest but carry on with the discussions.
“This trust is quite unique in that it’s not set up with taxation, public money, a collection can, no wealthy patrons – this is money that’s come out of the oil industry, it’s Shetland’s money, and I don’t think OSCR’s advice or legal advice is applicable. This really has to be discussed and challenged rather than blindly accepted.”
Mr Wishart did say he detected a “certain urgency” among fellow members to resolve the difficulty and “keep the impetus” behind the project going, which he said was imperative because “it’s getting to be embarrassing”.