SIC - Orkney & Shetland valuation joint board

Letters / Opinion: “Appointocracy” poised to take control of Shetland Charitable Trust

SCT vice chair Jonathan Wills

As members of Shetland Charitable Trust are to meet next week to decide on the future of the £200 million trust, its vice chairman Dr Jonathan Wills warns that the four year long reform process has led to a reversion that would sweep away democratic powers. Here he proposes to reject the deal that has already been approved by the charity regulator OSCR.

“Control over the biggest chunk of Shetland’s public wealth may pass to a group of unelected appointees, forever, if trustees of the Shetland Charitable Trust agree to do the Scottish Charity Regulator’s bidding next Thursday (13 September). Once lost, we may never be able to restore democratic, elected stewardship of the trust’s £200m assets, and the hundreds of millions more that we’re likely to earn from Viking Energy.

The Office of the Scottish Regulator (OSCR) insists it has no preference between selected or elected trustees. All it’s concerned about is how long we’re taking to implement a decision taken by the trust last December, when nine of the then 22 trustees voted to “reform” the trust by creating a majority of unelected trustees who would, in effect, select their successors in perpetuity.

OSCR won’t listen to the argument that only three of the present trustees actually voted to end democratic control. The other six were either defeated at this year’s council elections, or did not stand again. We’re bound by our predecessors’ decisions, whether we like it or not, the regulator says.

Those of us who gained the largest votes in the May election all supported an elected majority on the trust. OSCR regards this as irrelevant. Nor is it interested in the fact that Shetland Islands Council (which donated the public funds to start the trust, back in the 1970s) has formally objected to the end of democratic control, or that the Association of Shetland Community Councils unanimously opposes it, or that the 68 written submissions OSCR received (an unprecedentedly large number for such a technical consultation) almost all wanted a majority of elected trustees, rather than selected ones.

None of this matters to OSCR, which demands that we stick to the timetable agreed by a rump of our predecessors.

No amendment to their defective scheme to reorganise the trust can be considered. It’s all or nothing, or else. We must either implement it or start the process all over again, in which case OSCR will be extremely displeased and may discipline us for “misconduct”. If we don’t do what the regulator now demands, we could be taken to court. OSCR has even hinted that trustees could end up paying OSCR’s legal costs from their own bank accounts. This is not, perhaps, intended as a threat, but it’s a weighty consideration for trustees when they vote next Thursday. None of us is wealthy. None of us earns a penny from being a trustee. The lawyers’ bills could prove personally ruinous. So it is actually a threat.

What would we tell the judge?

If we vote not to go ahead with the Undemocrats’ so-called reform and decide instead to submit a new scheme of reorganisation that retains democratic control – and also solves the “grouping of accounts” problem for the trust and the council – what could we miscreants say to the judge if OSCR asked the Court of Session for powers to dismiss us, on the grounds of our “misconduct”, and to authorise it to take over the trust and enforce this repellent “privatisation”?

What we could say to the court is this: Nobody now argues that we should keep a majority of councillors on the trust. We all accept that the new Scottish charity law makes that undesirable, and possibly improper. There’s no argument with OSCR on that point, so no-one need pretend there is.

As the trust fund is the public’s (not the state’s) money, held in trust for ‘the inhabitants of the Shetland Islands’ (as the trust deed says), then it’s entirely reasonable for the voters of Shetland to have a say, through elected trustees, in how these very large funds are managed and spent. If elected councillors aren’t allowed to be the majority any more, then obviously these new independent trustees would need to be directly elected.

To agree to the removal of democratic control would be to betray the trust of the inhabitants of the Shetland Islands and to flout the intentions of the founders of the trust. It’s clearly not “in the best interests of the trust and its beneficiaries”, to use one of OSCR’s favourite phrases. It would, in fact, amount to “misconduct” of the most serious kind because it would infringe the principle of popular consent for the use of the public’s money.

Undemocrats v. Randoms

The Undemocrats who want to do away with an elected majority keep saying elections produce “random” results, with trustees who’re not up to the job. But they give no examples of this alleged problem. They name no names. Who, exactly, among the many trustees who’ve served Shetland Charitable Trust since its inception 36 years ago, has been a liability to the trust or its beneficiaries? They do not say.

When has the trust ever had to use its considerable powers to chastise or remove a trustee found to be negligent or delinquent? Never.

Has there been any instance of corruption? Not one. This seems a pretty good record for us “Randoms”.

It’s true that some opponents of the Viking wind farm investment have made allegations against the trust and individual trustees. Has a single one of their complaints stood up? No. But OSCR appears to take them seriously, as evidence of an alleged public “perception” that there’s something wrong.

So what’s the real problem here? Is it the rumoured failings of the “random” councillor-trustees or is it, perhaps, the prejudice of bureaucratic minds who dislike and distrust the democratic process and would prefer to have much more influence over who becomes a trustee, without the annoying inconvenience of elections? The Undemocrats argue that the “governance” of the trust will become more “stable” if a majority of appointed trustees in turn appoints unelected appointees to succeed them ad infinitum, which we might call an “appointocracy”. Well, there’s stability in any self-perpetuating, closed organisation, of course. What’s missing is popular consent.

Their other argument is that we need trustees with special skills and experience. But the trust already hires the best legal and investment advisers available. It always has. People with this level of expertise won’t volunteer to sit on a trust for nothing when they can sell us their services for large sums of money (which I don’t grudge them, if they help us to act “in the best interests of the trust and its beneficiaries”). I have no objection to the charitable trust co-opting a few carefully selected local residents with special knowledge and skills, but it already has the power to do this and has never used it.

An insult to the inhabitants of Shetland

The main qualities needed in trustees are common sense, an ability to understand (and question) the advice they get from the experts, a detailed knowledge of their community, and that rather old-fashioned virtue – public spiritedness. We have hundreds of such citizens who devote their time and skills to the very large number of voluntary organisations in Shetland. To suggest that we couldn’t find eight people willing and able to be elected trustees is, to put it mildly, a collective insult to “the inhabitants of the Shetland Islands”.

Trust alleged to be council “subsidiary”

The other main reason for not implementing the OSCR-approved “reform” is that it doesn’t solve the problem of the grouping, or consolidation, of accounts. In an attempt to appease the Accounts Commission and remove the “qualification”, or black mark, from the council’s annual accounts, council officials have included a summary of the charitable trust’s financial affairs in the draft SIC accounts submitted in June. In that document they describe the trust as an SIC “subsidiary” and say it’s “controlled” by the council.

This statement is inaccurate. It’s also potentially damaging to both organisations, which is why the trust (and OSCR) have consistently opposed lumping together the accounts of these two legally separate organisations. We have the (very expensive) opinion of Scotland’s foremost expert on accountancy law to back us up. If the trust and the council are to be treated as a single financial unit, it could mean problems with tax, with charitable status and with government grants. That’s why it was set up in the first place, to keep the Government’s claws off our cash. But it now seems that, as long as more than 20 per cent of the trustees are also councillors (even if they’re in a minority), the Government’s accountants can and will continue to make their annual false allegation that the trust is a councillor-controlled subsidiary. That means my compromise proposal, to have eight directly elected trustees and seven councillor trustees, rejected last December, wouldn’t solve the problem with consolidating the accounts, any more than having a majority of eight unelected trustees would solve it.

The answer is to reduce the number of councillor trustees further, probably to three (20 per cent of a new 15-member trust), to have a majority of eight directly elected trustees, and to co-opt another four, on the basis of their special skills and experience.

Lasting and effective solution

This, or something very like it, would retain democratic control and remove the accounting problem. It would ensure popular consent for the stewardship of the trust funds, which are already worth more than the council’s dwindling reserves and are likely to dwarf them by the end of this decade.

Would the Court of Session agree that we’re obstinate and corrupt backwoodsmen who, for unexplained reasons, are determined to delay and obstruct a long-overdue reform that some of us have advocated, in one form or another, for years?

Or would the court find that we’re honestly trying, despite OSCR’s rigid interpretation of the rules, to create a new trust deed that, unlike the Undemocrats’ botched “reform”, really does achieve the lasting and effective reorganisation of the Shetland Charitable Trust that all of us, including OSCR, want?

Would the court perhaps agree that this is not a reform but a reversion – to the early 19th century, when Shetland’s self-appointed Great and Good decided amongst themselves how to distribute the contents of The Poor’s Box, not trusting ignorant and feckless peasants to elect their own representatives?

So I hope my fellow trustees will not be intimidated by veiled threats of personal bankruptcy at the hands of OSCR, but will vote next Thursday for what is truly “in the best interests of the trust and its beneficiaries”.

Jonathan Wills
Vice-chair of Shetland Charitable Trust