Trust must hatch plan for reform

By NEIL RIDDELL

CHARITIES regulator OSCR is calling on Shetland Charitable Trust to devise a plan to reform the way it operates by next summer amid further controversy over whether councillors should continue to exercise complete control over a substantial chunk of the isles’ oil reserves.

Independent trustee John Scott this week branded its constitution “insupportable” after trustees decided to defer a decision on whether to approve £2.25 million towards the contentious Viking Energy windfarm project because of concerns over a possible conflict of interest.

The charitable trust, which currently has funds of around £150 million invested in the stock market, has come under increasing scrutiny following recent changes in legislation and the creation of a charity regulator for the first time.

It is also likely to have to overhaul the way the Christmas bonus scheme – paid annually to pensioner and disabled person households – is operated after concerns from the taxman that payments to rich pensioners could not be viewed as charitable.

An OSCR spokesman confirmed yesterday that it has had a “constructive” meeting with the trust’s chairman Bill Manson and acting general manager Jeff Goddard at which “a number of issues” were discussed. He said: “These included the overall governance of the charity as well as its constitution. The charity has agreed to provide a plan by July 2009 to address specific points and this may include changes to its constitution.”

Mr Manson said the constitution of the trust had been raised during the short meeting, and he informed trustees in private following Monday’s meeting at the Town Hall of OSCR’s request. He said yesterday that the trust would start formulating proposals in the new year but that he did not feel the trust was under “any undue time pressure” from the regulator.

But he said that contrary to rumours, no letter or other communication had been received from OSCR telling them that the trust’s constitution had to be changed to incorporate a majority of independent trustees, as had been suggested by one or two trustees following his briefing.

“That is categorically wrong,” said Mr Manson. “We have not had any letter from OSCR within the last several weeks about anything, and specifically not about that. Also, I do not believe that OSCR has the power to do that.”

The Viking Energy decision would essentially have reimbursed the SIC for its expenditure on the project – an investigation into the building of 150 wind turbines in the north central mainland – to date. But after being told that they faced a possible conflict of interest over the proposed transfer, councillor-trustees voted by 8-7 to defer the decision in order that clear written advice from the charities regulator OSCR could be given. They had received only verbal assurances from Mr Manson and Mr Goddard.

Ahead of the submission of a planning application for Viking Energy early next year, the council agreed in 2007 to make provision for a spend of £3 million, of which it has dispersed around £1.5 million so far. An additional £750,000 is estimated to be needed for ongoing work prior to the planning application going in early next year, while a further draw down may or may not be required as the planning process proceeds.

Meanwhile, a number of trustees have demanded a detailed break­down of what the proposed £3 million outlay was actually for. Mr Scott asked simply: “What are we buying?” An itemisation of where exactly the money is being spent will now be brought before a future meeting.

Trustees narrowly voted to take on the council’s 90 per cent stake in Viking Energy last autumn after it became clear that local authorities were not allowed to make money from power generation, though that would not prevent the SIC from taking the project as far as the planning stage – meaning there should be no delay to the submission of a planning application as a consequence of this week’s deferral.

Mr Scott, who sits on the trust as Shetland’s lord lieutenant and strongly opposed taking the windfarm onto the trust’s books last year, said it was now “inevitable” that the constitution of the trust would have to be changed to ensure there is sufficient separation between it and the SIC. The only other independent trustee, by virtue of her position as AHS head teacher, is Valerie Nicolson, who often does not attend its meetings and rarely participates in debates.

Mr Scott, who was part of the group of so-called “trust rebels” set up to campaign for reform last winter, said: “OSCR will insist that there’s a minority of councillors, if there’s going to be any, and you’ve got various formulations. Initially my reaction was to say it should be all elected, but I think on reflection that you probably have to accommodate some councillors because of the necessary link-up between the council and the charitable trust.”

He said he now believed the council would have to continue paying for the windfarm up to the planning stage until the trust had been modified. “It’s basically a council scheme and they tried to land it on the trust,” he said.

Mr Manson told trustees at the meeting that the advice from OSCR was that members of the SIC could take part in the vote on Viking Energy “provided their interest is clearly minuted and they are satisfied they are acting in the interests of the charitable trust”.

But Mr Scott said he saw no way that councillor-trustees could avoid the conflict of interest, particularly as the decision would involve taking a £3 million commitment off the council’s books.

He suggested that ignoring the conflict of interest risked breaking the law and the possibility of a complaint being submitted to the police, particularly given the strength of feeling from opponents of the windfarm. Addressing Mr Manson, he asked: “Why, as chairman, have you put the trustees in this position?”

Mr Manson, who is also chairman of Viking Energy, responded that while the involve­ment of the police was “entirely possible”, it was unlikely. “I believe it is a justifiable risk,” he said.

SIC convener and councillor-trustee Sandy Cluness, who strongly favours maintaining the status quo with regard to how the charitable trust is run, said it was “specifically designed to provide services and capital projects we are unable to achieve through normal local government finance”. He pointed out that the police have had 30 years to investigate its activities but that has never happened as yet.

He said he was comfortable with members declaring an interest, but said it was “nonsense and perverse” if trustees who were also directors of Viking Energy felt they could not even provide fellow trustees with information on the activities of their company.

But councillor-trustee Jonathan Wills said he wasn’t comfortable about voting without having the written advice of OSCR and the council’s lawyers to hand. He said: “The fact is, there are people very much opposed to this project and they would take any action they can – I’m not willing to take that risk.”

His motion was approved by a single vote and the decision will come before trustees at a future meeting once the written advice from OSCR is forthcoming. Dr Wills is also of the opinion that the situation served to highlight the need for a majority of independent trustees to be installed to make a clearer distinction between the trust and the council.

Billy Fox, of anti-Viking Energy protesters Sustainable Shetland, said the group had been surprised with the trust’s decision to come to the meeting with only a verbal assurance. “That was actually a point we had made to our own councillors prior to the meeting,” he said. “It seemed to show a certain lack of attention to detail, to bring it to the meeting and expect them to sanction such a draw down.”

At a meeting in May trustees agreed by a margin of 18-2, with Mr Scott and Dr Wills the exceptions, to reject any reform until OSCR completed a rolling review of all Scottish charities, which is not expected to happen until around 2015. The mood among councillor-trustees was very much one of maintaining the status quo and not wanting to “jump the gun”, in the words of Betty Fullerton, though many did accept that some form of change in the composition of trustees would be necessary sooner rather than later.

Following on from that decision the Shetland Trusts Reform Group – which was set up to advocate radical change in control over both the charitable trust and Shetland Development Trust, which has now essentially been brought back under the auspices of the SIC – accused councillor-trustees of putting their heads in the sand and submitted a complaint to the charities regulator.

The group has been noticeably quiet since but spokesman Gordon Dargie said this week that they were “keeping a watching brief” and the wall of silence was simply because they were awaiting news of a ruling after complaints about the trust’s make-up were submitted.

The protests were led by Peter Hamilton, who has since moved to China, but although Mr Dargie admitted the group had not convened a meeting for some time, he said: “We’re still watching with interest and we haven’t gone away.”

OSCR’s spokesman said he could neither confirm nor deny whether the charitable trust was the subject of an ongoing inquiry.