Council chief might have remained in post while suing for £2m, says SIC solicitor

Shetland Islands Council might have had to stump up £2 million in compensation to former chief executive David Clark because of the way he was publicly criticised by some councillors, the Accounts Commission inquiry heard this afternoon.

Elected members were first warned last year by their external solicitors Anderson Strathern that discussion in public or briefings to the media about Mr Clark’s employment could have serious financial consequences.

It was the fear of an exorbitant claim through the civil courts or an employment tribunal that persuaded councillors a settlement of £285,000 was in fact a snip, despite their reluctance to sanction any payout, knowing it would be met by public outrage.

Solicitor Murray McCall of Anderson Strathern told the inquiry that, rather than confining himself to that settlement, Mr Clark might instead have resigned and claimed unfair constructive dismissal while continuing to draw his full £97,000-a-year salary as interim relief payment until his case was heard by an employment tribunal.

Unfair dismissal rules include special provisions for whistleblowers which enables claims to be made by workers who have served less than the usual minimum of one year in post. The level of damages in such cases is “open-ended”, Mr McCall said.

Other avenues that were considered by Mr Clark’s legal team included suing for compensation for personal injury, stigma damage, race discrimination, defamation of character, bullying and harrassment and discrimination on the grounds of religion or belief.

The council also had to consider the cost of more damage to its own reputation and the amount of time and money involved in defending itself in the courts or at a tribunal.

Mr McCall said the overall penalty could have been in the region of £2 million due to Mr Clark’s loss of salary and pension and the “pretty bleak” prospects of finding any kind of work due to the damage to his reputation.

He said he had advised the councillors three months previously, in November last year, that they should cease talking about their chief employee in public. Mr McCall said: “In blunt terms there needed to be a cessation to the public discussion of the chief executive’s employment situation. This was an internal staffing issue even though it was the highest officer in the council and it ought not to have been played out through the media.”

Asked whether councillors were breaching their code of conduct by commenting on the matter in public, he said they should have raised their concerns internally, particularly in the wake of the first complaint to the Standards Commission about Gary Robinson’s behaviour.

It also emerged that Mr Clark might have stayed on in his job had the confidential complaint to convener Sandy Cluness from six councillors about the chief executive’s performance not been leaked immediately to the media. The hunt for the mole continues although no accusing fingers have been wagged during the inquiry so far.

Mr McCall said “media briefings” about Mr Clark from unknown sources had continued even while the council was negotiating a compensation package in February for him to go.

The Accounts Commission was intrigued to learn why leaking to the media seemed much more prevalent in Shetland than in other  local authorities and what effect such behaviour had on council operations.

Acting chief executive Hazel Sutherland admitted it had become an everyday concern. “We are in the circumstances now where we have to approach our business knowing that issues are likely to be leaked,” she said.

Executive director of infrastructure Gordon Greenhill, who has spent his career in councils elsewhere in Scotland, said it was possibly unique to Shetland that exempt information relating to people’s personal details would be leaked to the media. “Why it happens I don’t know,” he said. “It’s certainly something that has to stop.”

Meanwhile, the Accounts Commission was surprised to discover that after 35 years the council is still trying to put in place a proper personnel policy for managing and recruiting staff instead of the lax procedures which saw Mr Clark being interviewed by all the councillors and then put in post without any plan for assessing his performance – a repeat of the process which led to the council getting rid of a previous chief executive, Nick Reiter, just months after his arrival in 1998. Douglas Sinclair from the Accounts Commission said such a process was surely “bread and butter work” for human resources departments.

In her other evidence, Ms Sutherland admitted the troubles of the past year had been “disruptive” for officials trying to concentrate on the day job of running Shetland’s services. She said the political difficulties, which she hoped were now behind them, had also spilled over into how some councillors related to her and other senior officials, although she did not name names or offer up examples.

Mr Greenhill rejected the Commission’s earlier assertion that the council was isolated and unwilling to  learn examples of good practice from other local authorities. He said it was a misconception because councillors and officials were keen to get out and see examples of best practice.

Much of the rest of the first day was taken up with dry discussion of the division between Shetland Charitable Trust and the council and the trust’s refusal to allow its annual accounts to be grouped with the local authority’s.

The Town Hall will hear more evidence on the final day of the inquiry tomorrow from 10am.