Councillors criticised by auditors as details of payoff are confirmed

The performance of Shetland’s councillors has been heavily criticised in a long-awaited report by Scotland’s financial watchdog into the crisis-ridden local authority.

No SIC members are named individually in the brief 12-page document published by Audit Scotland on its website this morning after a short, two-person investigation into issues facing the council, but they bear the brunt of the criticism.

The report suggests that councillors are unable to take clear and consistent decisions, fail to show sufficient respect to SIC officials, lack a coherent leadership strategy and need to make decisions more inclusively.

Based on interviews carried out with councillors, officials and members of the public in March, the report focuses mainly on the circumstances surrounding the appoint­ment and departure of chief executive David Clark. Councillors gave him a tax-free £250,000 payoff to leave the post in February, a move which sparked widespread public anger.

Recruitment procedures used to bring Mr Clark in as chief executive were flawed and “fell short” of good practice, the report suggests, with councillors not taking some of the advice given to them by human resources staff. Members also failed to put in place a “robust process” to set objectives for the chief executive or to appraise and manage his performance.

The financial watchdog suggests that lessons ought to have been learned after the debacle which saw the SIC part company with chief executive Nick Reiter in similarly fractious circumstances in 1999 – particularly as some councillors and senior staff are still in post just over a decade later.

In the first official disclosure of financial details relating to February’s agreement with Mr Clark – first revealed by this newspaper – the report says the deal has cost the council £306,000 so far, not including tax liabilities which are “not yet clear” but are likely to substantially increase the cost to taxpayers.

The report concludes that public criticism of Mr Clark by members while he was in office played a “significant part” in the events leading up to his departure and payoff. The former chief executive, meanwhile, is criti­cised for the way he went about trying to delete assistant chief executive Willie Shan­non’s post – a move which was “not handled well”, Audit Scotland says.

Mr Clark issued a statement on Wednesday based on a draft of the report – circulated to councillors last week and then leaked, after which he was given a copy. He described its findings as “inaccurate, misleading and amateur”, adding that if the final draft was not substantially altered he would be calling on the Accounts Commission to reject it.

The Accounts Commission will meet next Thursday to decide what action, if any, to take. There are already calls from councillors for a public inquiry or, at the very least, the disclosure of further information in order to help the SIC move on from one of the most damaging episodes in its history.

Some have expressed disappointment that the report – by its own admission – does not take a forensic approach to investigating the events of the past year and is based mainly on anecdotal evidence. The report states that feedback following an earlier draft served to “underline the continuing disagreements, the differences of interpretation and the lack of trust that exist within the council”.

In a short statement today, the SIC said the report – and the response from the Accounts Commission next week – would be considered by councillors at a Full Council meeting on 19th May. “The council will not be commenting formally on the report until that time.”

But speaking in a personal capacity, convener Sandy Cluness took exception to criticism of councillors in the report, which stated that there was “little evidence” of elected members “acting in the interest of Shetland Islands Council as a whole”.

“I take exception to that,” he said. “In all my time in the chamber, all the councillors have been keen to do the best we can for Shetland, although we don’t always agree on what the best interests are of course. We are a council that is neither party political or groupings of independents – sometimes councillors change their minds.”

As part of the council’s settlement with Mr Clark, it cannot discuss the exact terms of the settlement, in light of which Mr Cluness agreed the report was unlikely to satisfy many people. He is eager for more details to be made public but is frustrated that the report appears to have “skated over” that.

“All that information was given to Audit Scotland on the basis that they would come out with a detailed report on why the council came to the decision they did,” he said. “We had two meetings and unanimously agreed based on the advice we were given that [the payoff] was the best way forward. I really want the information to be out in the public and they haven’t done that, so I will be asking the Accounts Commission either themselves or through a public hearing if that can be done. Folk really need to understand why that was done.”

Asked whether he regretted elements of the way things had been handled, Mr Cluness replied: “We sat for four hours at two meetings, listened to the advice. The 18 who were there at the end decided to go down that route. In hindsight, there’s a lot of things that we might have done differently.”

In wider terms, the report identified a lack of strategic leadership. With respect to the payoff, Mr Cluness said it was “quite difficult” to give your own steer to other councillors when you are “relying on legal advice”.

Speaking more generally, he said it was difficult to provide leadership because of the SIC’s structure with three big committees – services, infrastructure and development – which individual chairpersons take responsibility for. He did not agree with having the three super-committees which every councillor sits on because it meant the council was “very seldom in a position to alter the decisions of what is, in effect, the Full Council”.

Lerwick South councillor Jonathan Wills, who has featured heavily in the controversy over the past year, said: “The report admits that it is not a forensic investigation. It should be. Sir Robert Black’s investigation into the Reiter affair, which was equally complicated, was a forensic investigation. We therefore need a public inquiry.

“A very interesting point in the report is that some officers and members, who are not named, were involved in the Reiter affair – why aren’t they named? One of the people censured by Sir Robert Black was at that time a legal officer in the council – is that person still with us, and has that person been involved in this debacle?”

Dr Wills once more repeated his view that Mr Cluness and vice-convener Josie Simpson should resign and criticised the report for blaming the 22 independent councillors as a collective body rather than apportioning criticism to individuals.

“Why don’t they state the obvious conclusion, that the elected leadership is responsible for this catalogue of errors? Why does the report instead attempt to smear all of us and assign collective blame, including those members who have done their damndest to point out to the leadership these repeated errors? I don’t accept that blame and I’m sure many of my colleagues do not.”

Mr Clark, meanwhile, was critical of Shetland MSP Tavish Scott and Northern Isles MP Alistair Carmichael, saying he was disappointed the auditors’ report did not mention their “interference” in local government. He described their intervention into council affairs as a “gross abuse of power”, adding that “their widely publicised concerns had no basis”.

Responding to Mr Clark’s remarks, Mr Scott said he had no regrets about asking Audit Scotland to investigate the deletion of Mr Shannon’s post and he was “surprised and disappointed” at what he called a “personal attack” on himself and Mr Carmichael. “Given the widespread concerns this issue raised I have no regrets that Alistair and I acted as we did. If the circumstances were repeated, I would do the same again.”

Mr Clark’s statement went on to express his annoyance that the report made no mention of the “hysterical campaign waged against me” during his nine-month tenure. “This was in fact the main issue affecting Shetland’s reputation,” he suggested.

The 44-year-old defended his performance, stating the council had confirmed in writing that claims there were issues with the way he did the job were “groundless”. He pointed to what he sees as key achievements, including restructuring the council and creating a new head of capital programme post.

Mr Clark also claimed credit for last week’s welcome announcement by Alchemy Plus that it is to invest £12 million in a data farm in Lerwick. Mr Clark was behind moves last year which saw the SIC spend £1.1 million on hooking up a fibre optic cable to improve the broadband network and attempt to attract such business. “This investment results directly from an initiative created and driven forward by myself.”

For comprehensive coverage, see this week’s Shetland Times.