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Auditors say Clark affair poisoned SIC

SHETLAND Islands Council has come in for some heavy criticism from local government watchdog Audit Scotland who warn that the authority is ill equipped to tackle the huge problems it faces.

The auditors were called in to investigate the authority last December by the Accounts Commission after relationships broke down between councillors and chief executive David Clark, who has since departed with a £250,000 tax free pay off.

The two person investigation team which interviewed councillors, staff and members of the public during March discovered an organisation that had been poisoned by the affair.

In their draft report to be published next Wednesday, the auditors criticise the way Mr Clark was recruited and his performance monitored once he was in post, and describe the use of public money to pay him off as “particularly unwelcome”.

They also say lessons should have been learned after the council was criticised by the Accounts Commission when it parted with a previous chief executive, Nick Reiter, under similar circumstances in 1999, especially as several councillors and senior staff who were around at the time are still in post.

Councillors are accused of a lack of “strategic leadership” and failing to act in the interests of Shetland Islands Council as a whole.

And while convener Sandy Cluness had sought to resolve the council’s problems in a constructive way, “more inclusive decision making and decisive action might have led to a better outcome for the council”.

Most worryingly, the draft report talks of a break down of trust between both members and officers that is hindering the SIC’s ability to perform.

The Clark affair has “damaged working relationships in the council, as well as the council’s reputation, and presents a continuing risk to the organisation’s ability to work effectively.

“This is particularly serious at a time when the council needs to take difficult decisions to sustain its current level of services whilst maintaining its target reserves balance and delivering its capital plans.”

The report adds: “There is now a level of mistrust between a significant proportion of the key stakeholders in the council and this is a barrier to conducting business in an efficient and effective way.”

In one positive note, the auditors comment on the way members and officers did work together in March to negotiate a settlement with the oil and gas giant Total to build a new gas plant at Sullom Voe.

“The council should consider what lessons it can learn from the experience and how this approach might be used to tackle the other challenges it faces,” they say.

One of the issues that triggered the breakdown in trust at the SIC was the allegation that Mr Clark threatened councillor Jonathan Wills with violence over the phone.

The reports says several councillors were unhappy with the way the disciplinary process was handled, some feel the council was not adequately represented in legal terms and “no detailed minutes or transcript were taken at the hearing”.

The report mentions the fact that the allegations were reported to the police, but reveals that the procurator fiscal does not intend to pursue a case against Mr Clark.

Commenting on a series of formal complaints laid against Mr Clark by six councillors in December last year which were not followed up, the report states that if more decisive action had been taken “it may have affected the outcome of the situation”.

Legal correspondence between some members and the council over this matter is ongoing, the report says.

When it came to the financial settlement with Mr Clark, the report says that the council acted “reasonably” in employing local government umbrella group COSLA as advisers.

The amount of the settlement is not mentioned, but it included compensation for injury caused and loss of office, and three months salary, with the SIC paying the income tax on the amount and legal costs, which amounted to almost £34,000.

The report states: “The advisers’ view was that there was significant financial risks to the council should it pursue disciplinary action.

“That public money was used in this way is particularly unwelcome in a time of tightening public finances but, in the circumstances, the settlement was negotiated on a reasonable basis and in compliance with relevant legislation. The amount of the settlement was judged by the council’s advisers to be an appropriate sum based on the circumstances of the case.”

The deletion of the post of assistant chief executive Willie Shannon also contributed to the deterioration of working relationships at the council, the report says. The way he was handled was in breach of the council’s redundancy policy, and the situation remains unresolved with Mr Shannon still having no clear remit or objectives.

One issue with which Mr Shannon has been tasked is the problem Audit Scotland sees with the council’s relationship with Shetland Charitable Trust.

The auditors want the council and the trust to group their accounts because of what is seen as their close working relationship and will, they say, result in the SIC’s accounts being qualified for the fifth consecutive year.

The draft report has been distributed to senior staff and councillors for comment, before its publication on Wednesday.

The Accounts Commission will discuss its findings on 13 May, when it will make recommendations or ask for further investigations to be carried out. The ultimate step would be to hold a public inquiry, though this is considered unlikely.

Ironically the final comments in the report mention the damage to the council’s reputation of having confidential reports consistently leaked to the local media, fuelling distrust in the organisation.

“This use of the media to further particular viewpoints is not unique to the Shetland Islands, but its extent has had a negative impact on the council’s ability to conduct business effectively, on the reputation of the council and on working relationships,” they say.

The draft report is a highly confidential document, but within days of its release, copies have found their way into the hands of local reporters.