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Trust’s ‘undemocratic’ reform: row rumbles on

SHETLAND Charitable Trust (SCT) has moved to offer assurances that its trustees are free to accept or reject proposed new governance arrangements amid fresh calls for the trust to become a democratically elected body.

The charity, which controls funds worth around £230 million on behalf of the community, meets on Thursday to discuss recommendations for its 15-strong trustee body to be tweaked to consist of four SIC councillors and 11 appointed trustees.

Few appear to be quibbling with the move to further dilute the council’s presence on the board, but there is considerable opposition to plans to increase the proportion of appointed trustees.

Vice chairman Jonathan Wills is tabling a compromise amendment that would see eight directly elected sit alongside seven appointed trustees. He went public with his proposal having found himself “blocked at every turn” when promoting the issue using normal SCT procedures.

Meanwhile, campaigner Peter Hamilton has formed a new pressure group, Democracy for Shetland’s Charitable Trust, and is calling on people to take lawful direct action to prevent the “politically-motivated theft of control” of SCT.

All four parliamentary candidates in last week’s Scottish election have expressed misgivings about selecting rather than electing trustees, as have council leader Gary Robinson, several other SIC councillors and community council members.

The Institute of Directors (IoD) was contracted, at a cost of £14,824, to carry out the latest governance review and its report has now been published.

Conflicts of interest ‘frustratingly difficult’

Peter Hamilton.

It was tasked with finding a model ensuring SCT is “flexible, responsive and effective” amid continued concerns over conflicts of interest – despite the number of councillor-trustees being reduced from 22 out of 24 to only seven out of 15 back in 2012.

Conflicts have arisen three times since: funding of the SIC’s rural care home model, in particular, was “a challenging area in terms of decision-making and did attract significant local media attention”, the IoD notes.

It has made contributing to trust business “frustratingly difficult” for councillor trustees.

The report identifies “significant improvements” to governance and management and claims there is “a general view that the finances are being addressed and that decision-making is robust and objective”.

That assertion is disputed: the public portion of trust meetings in recent years have frequently lasted only a few minutes, sparking concern about transparency and the manner in which key trust decisions are being taken under chairman Bobby Hunter and general manager Ann Black.

The IoD interviewed numerous trustees and others involved in public life within Shetland and nationally prior to concluding that a model of four councillor-trustees and 11 trustees appointed by a panel is the best way forward.

Some respondents favoured reducing the board’s size to 10 or 12 trustees, but the IoD said 15 was a better number to ensure trust sub committees can be easily filled.

SCT trustee Keith Massey.

It also recommends altering the trust deed to enable trustees to be recruited from outwith Shetland. Again many respondents were opposed, but the IoD suggests that option would only be used in “exceptional circumstances” after “all avenues for local recruitment had been exhausted”.

Trust is ‘unique’ – but not legally accountable to public

Addressing clamour for directly elected trustees, the report acknowledges the trust’s “unique” nature but points out it is legally accountable to charities regulator OSCR rather than the SIC or the community.

SCT was set up in the 1970s to shelter the isles’ proceeds from the oil industry from taxation and to prevent the UK government cutting its grant to the SIC.

Its deed says it was formed to “benefit the inhabitants of Shetland”, and those concerned by the undemocratic nature of the proposals point out that – by funding leisure centres, the arts, care homes and Shetland Amenity Trust – the trust is responsible for services that are ordinarily provided by local authorities.

The IoD report states: “The SIC is unique in the UK. To this end there are no direct comparisons that can be made with other trusts… That said, it must be borne in mind that SCT is not a public body, and in law it is not accountable to the SIC or directly to the public.”

It emphasises that SCT does not see itself as an arm’s length adjunct to the council, while acknowledging the importance of the two organisations maintaining a “close engagement and working relationship”.

The report’s recommendations are the culmination of what SCT audit and governance advisory committee chairman Keith Massey describes as an “extensive period of interviews, discussion and reporting that began in August last year”.

The IoD says a “significant majority” of those interviewed favoured selecting, not electing, trustees – though there was a “small minority who were strongly against” using a selection process.

The IoD was contracted, at a cost of £14,824, to conduct the latest governance review.

It argues against electing trustees because that would be “open to election fraud in a number of guises”; being elected after standing on particular issues that people vote for “may impede making decisions in the interest of the trust”, and “puts representation of the people ahead of ensuring the best possible board skills set for delivering on the trust deed”.

Selection of trustees is “commonplace” for NHS trusts, colleges and government agencies, with only one major trust in Scotland currently running elections, the IoD states.

‘Small, unrepresentative and politically motivated group’

But Hamilton, who was involved in a previous trust reform group, said his new pressure group was clear there must be no decision on governance until SCT has carried out a “full and open consultation”.

“We want what Shetland’s community councillors want,” he said. “It is what Shetland’s political parties want and this is what the leadership of the SIC also want – no decision without public involvement.

“A small, unrepresentative and politically motivated group want to keep control and prevent direct elections to the trust. They want to steal control for themselves and keep it there permanently. This act of daylight robbery has to be prevented.”

Hamilton suggested Thursday’s meeting should focus on “how they will improve their consultation process” and called for “responsible citizens” to gather and “be prepared to disrupt the meeting” if necessary.

“The issue at stake here is the control of [a] rich organisation which, in the people’s hands, could secure a better future for everybody in Shetland, and particularly those at the margins, living in poverty and without a voice, who have been neglected by this politically manipulated underperforming charity for so long.”

However Massey said it was “time to counter the misunderstanding that trustees are somehow being railroaded into pushing through a particular set of recommendations”.

“The trust’s structure was substantially reformed in 2012,” he said. “It was agreed at that time that an independent assessment of how these governance arrangements were working in practice would be carried out within three years.”

Trustees, officers and representatives of other relevant organisations have been “closely involved” in the development of the proposals in meetings and a workshop, continued Massey.

He added: “And of course the option is still open to trustees to reject the recommendations and instruct officers to bring alternative recommendations to a future meeting.

“The majority of trustees have been engaged and constructive in this process but if they still feel their views are not represented within the report, they reserve the right to argue their own case at the trust meeting.”