Better to be elected (Jonathan Wills)
One of the correspondents in the current debate about the future of the Shetland Charitable Trust said people who stood for election were “politicians” and therefore somehow unsuited to run a trust.
This strange and disturbing remark has puzzled me throughout the festive season, when I ought to have been thinking of other things.
One of the main tasks of politicians, be they MPs, MSPs or councillors, is surely to decide how to spend public money. That is why the public elect us, after all, and if we make a mess of it they can chuck us out.
Controlling how public money is spent is also the main task of the trustees of the Shetland Charitable Trust. They have to decide, for example, how much of the trust’s income to give to elderly people so they can afford to use a care centre near their home; how much to spend on holidays for disadvantaged children; what annual subsidies to award to the Shetland Recreation Trust, the Shetland Amenity Trust and Shetland Arts.
In doing so they must examine the arguments and make judgments based on facts and logic. Mostly, over the last three decades, the trustees have got it right. Sometimes they have made mistakes.
Everyone agrees that the only acceptable way to choose our parliamentarians and councillors is to elect them. There are absurd anachronisms, to be sure, such as the House of Lords and the three religious representatives on our local education committee. But since about 1928 the idea of universal suffrage has been accepted, well, universally.
So why, exactly, is it okay to elect councillors to oversee spending of more than £100 million a year but not okay to elect trustees to spend £11 million? Could the nine trustees who voted to end democratic control please explain, before 2012 is much older?
Jonathan Wills
Sundside,
Bressay.
Drew Ratter
Trustees are not elected nor appointed to spend money. They are elected or appointed to look after the interests of the trust, and must cleave to their duty so to do. So it is important, in terms of those duties, not to be tempted by plucking at the sleeve, to overspend. There have been problems with this throughout the life of the Charitable Trust, and that is why the fund is not much bigger, and hence able to devote more resources to good causes.
Alan Skinner
I don’t believe that the lack of confidence in the trustees has been to do with how they have spent the income of the trust. The lack of confidence is entirely down to how they have invested some of the capital of the trust. That is why understanding of investment and understanding of fiduciary responsibility are essential in the appointment of trustees. Sadly, democratic elections do not guarantee these qualities.
Jonathan Wills
Oh dear, Drew! Such sophistry! Deciding how the trust spends its money is of course part of the process of looking after the trust’s interests. These are set out in the trust deed, which tells trustees to use the income for the benefit of the people of Shetland. It does not tell them to pile up huge funds just for the sake of it. One of the mistakes the trustees made when Drew was last a trustee was to start spending slightly more each year than the trust could afford. In recent years this has been brought under control, thanks to the intervention of trustees, more than 90% of whom are currently elected representatives of the people. If you compare the investment performance of the trust with that of the council you will see immediately that the council has beeen burning its capital, whereas the trust is now living within its means.
I really am very sorry to see Drew Ratter joining the ranks of the Undemocrats and supporting the unelected bureaucrats who started this scare story about the unsuitability of elected persons to be trustees. Perhaps he will relent by May?
Jonathan Wills
Sundside
Bressay
ian tinkler
To put it plainly and simply, I and many others find it quite wrong for Trustees Councillors to completely ignore personal conflicts of interest and vote monies to projects which considerably increase their own personnel, family and cronies’ wealth and interest’s. How can a councillor founder of the VE project promote such an undertaking when he and his family will gain massive income from rent as they hold grazing writes where the turbines are to be built? I for one smelt a rat and find such duality wholly inappropriate and a purely personal opinion, verging on corrupt. I am sure many feel the same. If Shetlanders lose control of Trust funds the only have to look at the idiots they have elected and allowed managing these funds. Those Trustees, Director, councillors who say they have no conflicts of interest are either utterly stupid, ignorant of normal equitable and moral practise or plainly corrupt, just my personal view.
Sandy McMillan
Jonathan, how many of the 22 elected members of the council, have any knowledge or Diplomacy in domestic politics.
Alan Skinner
I have been thinking a little bit more about Councillor Wills’s point and perhaps there is a workable compromise. How would he feel about appointing a smallish group of trustees (in the manner proposed by the SCT working group), with appropriate investment and fiduciary experience, whose responsibility would be the investment of the capital, whilst electing, by democratic elections, a larger group of trustees, whose responsibility would be the allocation of income to appropriate causes?
Michael Garriock
Mr Wills, the so-called elected SCT trustees are most certainly elected by the people….but as SIC councillors, NOT as SCT trustees. They only become trustees of the SCT by default of having been self-appointed to those roles by their predecessors. Therein for some lies the greatest problem with the status quo of the SCT. NO SCT trustee is, or ever has been directly elected to that role by the people, where is the control by the “people” or the democracy in that situation??
There is, as seen by the the lay eye of at least some of the people, a significant and hugely important difference in the role of being a SIC Councillor and of being a SCT trustee. A SIC Councillor is charged first and foremost with looking after the interests of Shetland and Shetlanders, and secondly with delivering public services best suited to the demands for said services, in an efficient and value for money manner. From a pot, the contents of which are annually decreed by statute (aka. whatever whim Edinburgh/Westminster have at any one given tiem that will be the minimum they can get away with giving to us without risking inciting a riot).
A SCT trustee is first and foremost an investment manager, charged with growing a variable sum as much as possible, while minimising the risks of losses, and secondly with disbursing earnings equally and fairly among beneficiaries.
I am not saying the roles of SIC councillor and SCT trustee are mutually exclusive, as undoubtely people have, and do exist who can and do excel in the required disciplines, however I am saying that people of such calibre are IMHO exceptional, and most certainly are not willing and/or available to comprise all of the 0.1% of the population that constitutes the holders of the posts aforementioned at any one given moment in time.
As things stand, the people are being asked (if they even are, given candidate’s bumpf at election time rarely even so much as mentions what that particular individual’s take on the SCT is) to elect one person for the dual role as SIC Councillor and SCT Trustee. Consequently, I would argue, as a result we are getting, depending on the importance each ballot paper puts of getting a “good” councillor or a “good” trustee, a collection of largely mediocre councillors and trustees. Rather than (hopefully) a majority of excellent councillors and excellent trustees if the roles were filled by wholly seperate ballots, and people with the best talents for the single roles were more likely to be elected in to them.
What is this apparent obsession that exists with the SIC to retain the SCT under their wing anyway? The funds therein are the property of Shetland/Shetlanders are they not, why does the SIC seem to feel it has an absolute right to do what they like with them, when clearly there is disquiet among a proportion of the people for the current arrangements?
The SIC become involved in negotiations with the oil companies, and as a result of those negotiations the SCT was formed by the SIC in time. The SIC was the only body which existed at that time who could have fulfilled those roles, and that was fine, but times and circumstances move on, and things evolve, and so has the SIC, the SCT and the world. The SCT has evolved very little during its lifetime, not, I would argue because as a sometime trustee was/is wont to put it, that “it works”, but because “it was the devil we know”, ie. it worked well enough not to want to risk fiddling with it too much just in case…. That situation seemed to stand, until, for reasons best known to the trustees they appeared to veer away from the long standing tried and tested investment policy they had lived by, and began seriously talking about investing a worrying sum in an arguably speculative green field industrial development, better known as VE.
For some at least, such a departure from long standing investment policy was concerning, and in attempting to either secure greater detail of information, or influence how “their” money was proposed to be spent/risked by the trustees of it, it has become quite worryingly apparent just how tied the people’s hands are when electing said trustees, and how little say and influence they can have concerning fund management. In such circumstances.Is it any wonder that a significant number of the people aren’t prepared to believe that “it works” any longer, and are actively seeking changes to something that hopefully should “work a bit better”.
Yes, I agree that the undemocratic “appointing” of unelected trustees to the SCT is very wrong, but I would tend to see that as the fault of the current and previous trustees who have one way or another either failed or refused to reform the trust’s composition, and this is what we have to put up with foisted upon us as a result. The charities commission has been bleating away in the background for years saying it wasn’t going to tolerate the status quo, so it hardly came as a surpise to many (unless perhaps SCT trustees??) when after all their huffing and puffing and (as they probably saw it) being ignored, they waded in with their size 12 steel toecaps and forced a change. How bad for the SCT that change is or may become, is on the shoulders of the trustees, present and past, who either refused to read and/or heed the writing that has been on the wall for quite some time.
While I could live with a situation where all trustees were elected directly by the people by democratic ballot to their posts, I would much prefer a split trusteeship, along the lines Mr Tinkler already mentions. Whereby X number of trustees are elected for their skills as competent and astute investors and for their business acumen, which comprised the investment portion of the Trust, and Y number of trustees were elected for their ability to prioritise and assess needs, and divide up available funds accordingly, and comprise the disbursement portion of the trust. That way, I believe, the liklihood of secureing the most able and competent people for the individual roles would be maximised. After all, does Shetland not deserve to have her nest egg looked after as best as it possibly can be??
Sitting SIC councillors need not be barred for also being SCT Trustees under such an arrangement, they could easily stand for SCT election too in the seperate ballot. If councillors have done so well in running the SCT so far, they have nothing to worry about, as their track record to date should ensure more councillors are elcted as SCT Trustees than the Charities Commission will now permit to sit on the Trust, should it not??
Tom Robertson
It is almost as if some of the contributors are too polite to point out to Mr Wills the predominant reason for the general dislike of the councillors also running the SCT – that being that no previous elected members in living memory have wasted so much money than the current group.
There is no trust in their ability to run the SCT because they have destroyed any trust they may at one time have had to run the council.
Jonathan Wills
MessageSubject: The donkey’s tail
Comment on Alan Skinner’s letter
Pinning the tail on the donkey?
Alan Skinner’s thoughtful suggestion is interesting but I think it’s already covered by my compromise proposal that, in addition to seven councillor trustees and eight directly elected trustees, there should also be up to five trustees co-opted for their specialist expertise and experience. To create two classes of trustee, one investing and one spending, would add unnecessary complication and might cause problems with charity law, which regards all trustees as being equally responsible for the trust’s wellbeing.
Not everyone may be aware that trustees already have the most expert (and expensive) investment advice available. The Shetland Charitable Trust hires professional investment managers to handle its funds and then pays an independent firm to keep a close eye on them. Trustees receive regular reports on how the fund managers are doing and, at public meetings, can and do question the people entrusted with the public’s money. It’s actually an advantage to have trustees who’re not expert stock pickers or hedge fund analysts, because they force the investment managers to explain themselves in plain English. On occasions trustees have sacked firms who didn’t perform as promised.
So, when they set policies and approve decisions about where and when to buy and sell shares and bonds, trustees are not exactly throwing dice or pinning a tail on a donkey, blindfolded. Although I’d personally prefer the trust to invest more in ethical funds, the fact is that the investment record of elected councillor trustees, advised by hired experts, isn’t at all bad, overall, particularly when you consider the recent state of the markets.
It’s also important to remember that some £30m of the Shetland Charitable Trust’s £200m assets are invested in local property and enterprises. These provide stable, long-term returns and I hope the trust will make more such investments in the future, perhaps in the new Anderson High School building and, hopefully, in a scaled-down windfarm if there are proper asssurances of finance and of government guarantees. It might well be handy to have a few retired bankers or stockbrokers on the board to advise the elected trustees, but that’s hardly an argument for dismantling a system of majority democratic conbtrol that’s served us all so well for so long.
Jonathan Wills
Sundside
Bressay
Alan Skinner
It is not the donkey’s tail that concerns me, but rather the elephant in the room – Viking Energy, plus other local private equity investments. Nobody would ever criticise the trustees for appointing BlackRock, Insight and Schroders, all of whom are first class investment managers.
However, I am very concerned about those investments that appear to have been made without the benefit of professional analysis. A group of professional appointed trustees would ensure that all investments meet agreed criteria – e.g. no more than a certain percentage of the trust’s assets to be committed to a particular project, an agreed benchmark for rate of return from the investments. For example, I am unaware of what the rate of return would be from investing in Anderson High School and I am still in shock from realising the percentage of the trust’s assets that have been committed to Viking Energy.
Any investment has to make sense for the long term future of all Shetland residents, and should not be the favourite hobby horses of individuals, whether councillors or otherwise.
Alan Skinner
I happened to be lighting the fire this evening with an old copy of The Shetland Times, dated 21st December 2001. My eye was caught by the headline ” ‘ Damnable’ situation as trust burns more money.” The story was about the trust’s investment in SHEAP. Mr Angus was quoted as saying “It was a huge investment which had never had a return on it. Now it was going to be magically transferred to a disbursement”.
It appears that the trustees’ local private equity investments have been experiencing problems for at least a decade.
Jonathan Wills
Alan Skinner would be more persuasive if he checked his facts. No trust investment has been made without professional advice, or “due diligence” as the lawyers call it.
The trust has committed no more of its funds to the wind farm project that what was necessary to carry out detailed investigations of the proposal and apply for planning consent. It cannot and will not commit any more funds to it until there has been another detailed investigation by professional advisers and a further vote by trustees. Presumably Alan would prefer these trustees to be unelected.
The return from any investment in the new school would have to be a commercial return, as anyone with the slightest knowledge of trust law could tell him.
ian tinkler
The trust has committed no more of its funds to the wind farm project that what was necessary to carry out detailed investigations of the proposal and apply for planning consent.
£4 million? Plus. You jest.
phili smith
What’s £4 million between friends hey Ian ??
Four million would of gone a long way towards insulating properly, those council houses and Haljtland propertys that need it, mine included!
Energy conservation is the answer, not public subsidised wind factorys that benefit the bank balances of a few, and the “pie in the sky” renewables policy of the SNP.
Alan Skinner
As a qualified solicitor and former CEO/COO of three major trust companies, I would be fascinated to learn from Councilllor Wills which trust law says that “any investment in the school would require a commercial return”. However, that is not important.
What is important is that the trustees of SCT have total integrity, the trust of the people of Shetland, and the skills to do the job that is required of them. I have expressed the view previously that there should be a much higher proportion of elected trustees (non-councillors) and believe the proposed eight/seven split will be a nightmare to control for the new Chairman.
If we can find electable trustees with suitable investment expertise and understanding of fiduciary responsibility, I will be surprised but delighted. It is very important to get this right or mistrust of SCT will continue for many years, which would be a great shame because SCT should be the trusted fairy godmother that is looking after all of us.
Dave Heaney
Gentlemen
The way forward for this Trust is to be governed by the Scottish Enterprise and Business
department in Hollyrood under the eye of the Scottish Energy Sec.