Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 100 - 119)



  100. Precisely the sort of thing that might have occurred in the personnel file if there had been previous warnings.
  (Mr Clark) The natural thing to do in that situation is to go to the most senior officer in the department within which that person worked and talk to them about that individual. At that time I had no reason to distrust the person I was speaking to, who was the longest serving person within the organisation.

  101. Who was not the person most closely concerned with this person's work and not the person most expected to know about how he was working on a day to day basis?
  (Mr Clark) The way that department worked was in a very close manner, there was a lot of contact between the officers, and he was in a good position to be aware of it and, of course, he could have gone and spoken to the immediate line manager.

  102. Did the employees have annual reviews?
  (Mr Clark) Yes, they did.

  103. So that would have been in the personnel file as well?
  (Mr Clark) Yes, it would,

  104. Did you check that?
  (Mr Clark) No, I did not because I was speaking to the head of department, of his department, who was privy to those reports.

  105. On the valuations, my understanding, and correct me if I am wrong, is when one of your development directors, deputy director or whatever, decides that they might want to purchase a house, they try to fix a price with the person concerned and then, having fixed the price, bring in the valuer to see if that price is roughly in line with what you would expect, is that right?
  (Mr Clark) Now or then?

  106. At that time.
  (Mr Clark) There would be an informal discussion between the vendor and the Association and then a valuer would be asked to look at it, yes.

  107. Of the 47, was it, houses bought from Mr Ram, do we know how many of those are thought to have been over-valued?
  (Mr Clark) The total over-valuation at Mr Ram's properties was about £317,000, which is about £8,000 a property over-valuation. That is skewed by four particular purchases which were wildly over-valued and, therefore, those four particular properties were the ones that raised most suspicion.

  108. Is there any indication that the valuer, in fact, valued those four and all the others at very much the price that was expected or was there some indication that in those four cases the valuer was still just a little bit over the top as he was in all the other cases?
  (Mr Clark) I think the situation was that the valuer was franking a value which had already been informally agreed. This was seven years ago, going back a long way, but I think it was a price that had been agreed.

  109. So the valuer was told the valuation which had been agreed between the Housing Association and the seller before he did the valuation?
  (Mr Clark) I am almost certain that would have been the case.

  110. Is that still the practice?
  (Mr Clark) That is not the case now.

  111. Never?
  (Mr Clark) Never is a big word. It is not normal.

  112. That seems to make an absolute nonsense of the valuation, it is not independent in any sense.
  (Mr Clark) The valuer is there to serve the Association and get the best price obtainable, that is how we operate now. At that time I am almost certain it worked the other way around.

  113. Do you now, and did you then, check valuations with more than one valuer valuing the same property?
  (Mr Clark) Now if we were unhappy about one we would go to a second opinion.

  114. How do you know if you are unhappy about it?
  (Mr Clark) If our professional judgment is that a value is too high that has been put on it we would go for a second opinion.

  115. If the valuation is much higher than the price you have agreed the fact that it is much too high is irrelevant, it is obviously better than you have agreed, if you like.
  (Mr Clark) No. I am saying that if we are trying to create a development scheme and we wish to purchase a piece of land for a particular price, if a valuer is telling us that it is worth more than we think it is worth, we would go for a second opinion.

  116. Why bother if you have already agreed a price with the seller?
  (Mr Clark) I am saying if the valuer is acting to advise us on the offer of a price on the land—

  117. You do not make an offer until you have had a valuation?
  (Mr Clark) In some cases we do not, we do an outline of the deal. I am sorry, can I make a distinction. I am running together the purchase of land and the purchase of property. We do not purchase many individual properties now. In the case of individual properties we would ask a valuer to check that what we had agreed was not too high and that would be more straight forward. On a piece of land we would get the valuer to value the land and then we would negotiate on the back of that valuation, so there would not even be an informal price on the land.

  118. Final question: why was Hinson given more than Hartshorn by Mr Ram?
  (Mr Clark) It is very difficult for me to answer that question. All one can say is that was the amount that was found and that was the basis of the criminal prosecution. Mr Hartshorn was the more senior of the two and, therefore, carried more responsibility than Mr Hinson for the actual—

  119. Why did he get less? It seems odd that Mr Ram paid the more senior man less than the more junior man?
  (Mr Clark) Those were the amounts that were found by the police in pursuing the prosecution.

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