An independent trustee of Shetland Charitable Trust has lambasted councillor-trustees after they agreed in principle to fund the £50 million new Anderson High School through a purchase and leaseback arrangement with the council.
Trustees agreed by a margin of 9-8 to the idea of spending the huge sum, through its property arm SLAP, at the charitable trust meeting yesterday.
But after hearing from the trust’s financial controller Jeff Goddard that a five per cent annual rate of return was “if anything kinder to us” than the council, independent trustee John Scott said he could not believe councillor-trustees were willing to agree to fund the new school in this manner.
The investment carries a potential £45 million profit for the trust over the 30-year leaseback period, with the council paying it back at a rate of £3.19 million a year.
But while that seemed a “perfectly sound and sensible” arrangement to him, Mr Scott raised the “achilles heel” of conflicts of interest by addressing those trustees who are also SIC councillors around the table: “What are you playing at? It’s not on, it really isn’t on. Ultimately you could be lined up and asked why you’re doing it. It’s a very serious matter – it could catch up with you.”
Mr Scott said he had been told by the council’s head of finance that there would be no problem with the SIC finding the £50 million to build the school from its own oil reserves other than it would mean breaking their policy of maintaining the reserves at a minimum floor of £250 million. He said it was “not an honest and straightforward or wise deal” and pleaded with councillors to have a re-think.
He found some support around the chamber, with charitable trust chairman Bill Manson agreeing it was perfectly possible for the council to pay for the school and councillor-trustee Gary Robinson saying it would be better for the trust to keep its options open until 2013, when the money would actually have to be drawn down, rather than “tying our hands” now.
Fears were also raised that spending this amount of money in one go might jeopardise the trust’s ability to spend a similarly large sum on the Viking Energy windfarm project.
But councillor-trustee Allan Wishart said it was clear that the community needed a new school and that it was a safe and steady investment for the trust to be making, giving the guarantee of a “copper bottom” return over the next three decades.
Referring to the trust’s reluctance to commit its resources to investment opportunities, he raised the analogy of the harbour master who, when a ship comes in, tells him “you can’t berth here”. When asked why, the harbour master replies: “Because a ship might come in.”
Mr Wishart said that carrying on with the present uncertainty would lead to “a bit of a guddle” and, referring to the independent trustee’s “hint of dishonesty”, suggested that Mr Scott “gets a bit carried away with the words he uses at times”.
Mr Wishart won the day by a single vote, while an attempt by Caroline Miller to get trustees to agree in principle to paying for half of the £50 million was also defeated 11-6.