APPENDIX 2
INDEMNITY FOR DIRECTORS OF NMEC (PAC/1999-2000/279)
Copy of a letter to the Chairman of Committee
for the Speaker's Counsel
1. You have asked for my advice on whether
the indemnity given by the Department for Culture, Media and Sport
to the Directors of the New Millennium Experience Company on 21
June 2000 ought to have been reported to Parliament.
2. To justify their decision not to do so,
the department must essentially satisfy two tests, demonstrating:
(a) that the giving of the indemnity was
in the normal course of the department's business; and
(b) that the indemnity is of a standard type
which is given in the course of normal, commercial business dealings.
3. On the first test, I am not in a position
to question the department's assertion that such an indemnity
is routinely offered to Board Members of non-department public
bodies.
4. The crux of the matter, therefore, is
whether the department has satisfied the second test. What is,
or is not, a normal commercial business dealing is a matter of
fact not of law. Nonetheless, I would be very surprised to discover
that the giving of an indemnity to directors of a company to protect
them against the personal consequences of their breach of statutory
duties were regarded as a normal business practice.
5. It is noteworthy and that the department's
letter of 10 November 2000 entirely fails to address this issue
and concentrates instead on the first test. I therefore have nothing
before me which attempts, on the department's behalf, to demonstrate
satisfaction of the second test.
John Vaux
15 November 2000
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