A SHETLAND councillor is calling on local government watchdog The Accounts Commission to investigate his local authority’s failure to claim insurance for a multi million pound out of court settlement that cost £4.8 million.
In February Shetland Islands Council agreed to hand over £4.8 million to Lerwick Port Authority for delays it caused to a £6 million dredging contract in August 2005.
The SIC took legal action to block the dredging, arguing it would be fatal to its own plans to build a bridge from Lerwick to the isle of Bressay.
Councillors were told in February that they could not claim insurance on the settlement as their had been no staff error involved.
However Lerwick South member Jonathan Wills, one of four who has called for an independent investigation into the matter, said he has found evidence of such an error.
He quotes from Lord Reed’s 2007 judgment in the Court of Session, which said staff had told councillors in January 2005 that there was “a formal agreement” between the council and the port, over the size and shape of a dredged channel in the area where the proposed bridge would have been built.
Lord Reed, whose judgment has not been appealed, said: “There was in fact no formal agreement, and the [council] had decided to disregard the [port authority’s] minimum requirements.”
Dr Wills said: “I fail to see what possible explanation there can be for this, other than that at least one council official had made an error and that the council was deliberately or inadvertently misinformed, in either case an error/failure under the terms of the insurance policy.
“In order to justify not claiming a very large sum of insurance for the benefit of public funds, the council administration has represented that its officials committed no errors when in fact at least one of them clearly did so.”
Calling for a full, independent investigation by the external auditors, Dr Wills said on Sunday the council could ill afford not to make the claim, at a time when pensioners’ lunch clubs and other public services were facing cuts.
“An insurance payment would come in very handy,” he said. “For example, I have just heard that the Anderson High School’s operating budget has been slashed by 21 per cent. I think we have a public duty to lodge an insurance claim.”
Dr Wills has now written to the Accounts Commission chairman, Professor John Baillie, saying it appears from a court judgment five years ago that SIC staff did in fact make errors, perhaps inadvertently, that led to the fiasco.
Financial watchdog Audit Scotland has already said it will be looking into the out of court settlement as part of its annual review of the SIC’s accounts.
It has emerged the total cost of the aborted bridge plans has cost the council more than £7 million.
Lord Reed’s judgment is available online at: http://www.scotcourts.gov.uk/opinions/2007CSOH05.html
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