The leaking of a complaint by six councillors relating to the conduct of David Clark left the SIC exposed to being sued by the former chief executive, according to evidence from convener Sandy Cluness during a public inquiry into the crisis-ridden local authority today.
On the first morning of a two-day hearing by the Accounts Commission, Mr Cluness said advice from external lawyers was that Mr Clark may have had a case against the council due to critical remarks contained in the complaint by councillors about him once its details became public. Mr Clark was given a £285,000 payoff to leave the SIC in February after only nine months in the job.
Mr Cluness and other senior councillors were quizzed over the circumstances surrounding Mr Clark’s appointment and departure. Asked how the council could have got itself into the mess, Mr Cluness responded that the “once in a lifetime episode” was as a result of “considerable difficulties” between some members and Mr Clark which “showed no sign of diminishing” by the turn of the year.
Councillor Betty Fullerton said that, following legal advice and the intervention of local government organisation Cosla, she was “convinced that [the payoff] was the only route we could go down” to enable the council to move on following the damaging collapse in relations between Mr Clark and a number of other elected members.
Under questioning from the five-strong Accounts Commission panel in Lerwick Town Hall, councillors admitted to “surprise” at the amount of money they were being asked to pay out given how long Mr Clark had been employed. Councillor Allan Wishart said “every possible option” was looked at during a private meeting on 19th February, including that of dismissing Mr Clark.
Mr Cluness accepted that the council was “under considerable pressure” and was “anxious to see an end to the difficulty we were in”. He was reluctant for public money to be used in this way but was advised that pursuing any other route “might be considerably worse”.
Six members – Gussie Angus, Allison Duncan, Andrew Hughson, Gary Robinson, Cecil Smith and Jonathan Wills – made a complaint to Mr Cluness containing several allegations of misconduct against Mr Clark in December.
Mr Cluness explained the complaint had been hand-delivered to him in a sealed envelope by Mr Robinson, but details had appeared on The Shetland Times website within 24 hours. That, according to legal advice, meant the council could find itself liable if Mr Clark submitted a claim, Mr Cluness said.
Having tried to be fair to everyone involved in the debacle, he was now being criticised “by both sides”, which Mr Cluness felt suggested he may have got the balance just about right.
Earlier in the morning, Audit Scotland controller Caroline Gardner told the panel that the poor state of working relationships had made it “much more difficult” for the SIC to make decisions to ensure that the traditionally high level of services, provided at significant expense, can be maintained sustainably in the future.
Ms Gardner said there was a lack of trust within the council which appeared to date back to the contentious departure of Nick Reiter back in 1999. She noted there was a serious lack of confidence in the local authority among members of the public and suggested that the isles’ remoteness meant the council was suffering from a “lack of contact” with the way things are done elsewhere in Scotland.
Audit Scotland’s portfolio manager Martin Walker said he had been “struck” by the extent to which relations between councillors had fallen apart and noted that some members appeared to be focusing on “blame”. “That set it apart from any other councils I have audited over the years,” he said.
The settlement with Mr Clark was negotiated on a “reasonable basis”, Audit Scotland said in a report earlier this year. Ms Gardner said there were question marks over the way Mr Clark was appointed.
In particular, Ms Gardner said the council could have acted “more decisively and more clearly” over the complaint about Mr Clark’s conduct. She noted there had been a “delay in communicating what action had been taken”.
The council could also have avoided landing itself in the position of making the payoff had it put proper procedures in place to appraise his performance in the £97,000-a-year post, she suggested.
Members of the panel queried whether there was “too much expectation” being placed on the impending appointment of an interim chief executive to serve until 2012. Orkney Islands Council chief executive Alistair Buchan has been formally approached to take the job and could be appointed later today.
Ms Gardner said an appointment was “necessary but not at all sufficient” to address the shortcomings of a council which is not functioning well. She said the council faced huge financial challenges and it was essential that these were approached in a “much more corporate and collegiate” manner.
Mr Cluness was also grilled over leadership and he explained why he feels the structure of the council’s committees makes it a difficult task. He said members were resistant to any form of cabinet government while in an independent council it was “difficult to tell in advance how people are going to vote”.
Referring to the drive to find £10 million in savings and this month‘s vote on school closures, Mr Cluness said he felt the council had been “working well in recent times”. He accepted the cutbacks being planned by the Tory/Lib Dem coalition would mean many tough choices for the SIC, adding: “In the main I think we’re capable of making them.”
Senior councillors accepted that the process to recruit Mr Clark was a flawed one, with human resources advice not followed, no probationary period put in place and a panel of all 22 councillors conducting interviews.
“I hold my hand up and say that was wrong,” said Mr Cluness, adding the council had learned from its mistakes and had engaged Cosla to help with the appointment of an interim chief executive.
“It was a once in a lifetime episode as far as I’m concerned and I dealt with it in the best way that I could,” he continued. “I can assure the commission [that] lessons will be learned. Any recommendation [following the inquiry] will be followed to the letter.”
Mr Cluness assured Accounts Commission chairman John Baillie that he would take legal advice on whether full disclosure of the settlement would be possible. “Clearly it was distressing that such a sum would have to be paid,” he said, adding: “Nothing would please me better than having this whole information in public.”
Mr Angus said the council had had a proper appraisal system in place for every employee except the chief executive and “that was our fault”. Members were given “very clear and unequivocal advice” and agreed a sum “of the order of” what was eventually paid out in February’s meeting, he said.
This afternoon, council officials are to be questioned, as are the six councillors responsible for making the complaint about Mr Clark. Mr Clark himself will then answer questions tomorrow, as will assistant chief executive Willie Shannon, MP Alistair Carmichael and MSP Tavish Scott.
It is expected that Mr Cluness will be called before the panel for further questioning tomorrow afternoon before the hearing draws to a conclusion.