Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 80-99)



  80. Since you said earlier that Mr Hall did bend and break the rules, have you considered legal action against him? I am not sure what action is available to the Department.
  (Sir Richard Mottram) No, we have not. The only action which was taken in relation to Mr Hall was that it was suggested, because of what happened in relation to the wind-up, that his bonus for that year should be reduced, and I think he actually agreed to refund some of it.

  81. So people who ultimately report to you are allowed to get away with bending or breaking the rules and you just throw up your hands and say, "We are sorry that happened" but ultimately you do not do anything about it. Is that correct?
  (Sir Richard Mottram) I did not actually say that, did I?

  82. You said he had his bonus reduced in one year.
  (Sir Richard Mottram) What happened here was that there was a dialogue which went on throughout the period of the life of this Corporation about some of the issues identified in this Report. The position was reviewed, quite clearly, in 1996 as the Report brings out, and it was decided to continue on the basis of an ever more active dialogue between us and the Corporation. At the end of the process there was a particular concern—on the part of my predecessor, as it happens, but I am here to account obviously for all of the Department's activities during this period—about the way the wind-up had been conducted. At that point there was particular focus on the way in which the Corporation was being run.

  83. I am not surprised you do not want to put your predecessors in trouble, since one of them is the current Cabinet Secretary—
  (Sir Richard Mottram) I think they are both more distinguished than I am.

  84. So far. You said you were in active dialogue, I think it was, with the Corporation.
  (Sir Richard Mottram) Yes.

  85. In fact there was a systematic failure by your Department to account for public money, to perform the basic job of oversight. If you read Part 5 of this Report is it not clear—and we will go to it in detail—that basically you knew about the major problems throughout and you did not actually do anything about it. In fact when you did consider action, there was a bit of sabre-rattling by the Corporation and you backed down.
  (Sir Richard Mottram) No. I think what was happening was we had a process whereby each year we were auditing the accounts of the Corporation, we were also generating a management letter about the way in which the Corporation was being run, and we were looking at the regulatory framework in which it was operating. That process was throwing up issues which were being discussed between us and the Corporation. They were discussed on a number of occasions. I think it is clear from the Report they were not necessarily resolved that well and when we drew them to the attention of the Corporation they gave the Department answers. The priority of the Department was the regeneration activity of the Corporation.

  86. Rather than the proper conduct of Government business?
  (Sir Richard Mottram) No, because the way in which the business was being conducted was effectively audited, and we were discussing with the Corporation the lessons to be learned. As the Report brings out on a number of occasions, the Corporation did things quite clearly behind the back of the Department. You may say that calls into question the way we were auditing them or that calls into question that we were not necessarily reading the Board minutes correctly and drawing the right inferences from them, but I think the Department could reasonably have expected the Corporation to have behaved properly within the framework of governance which had been laid upon it.

  87. You say that things were happening behind your back, in paragraph 5.8 of this Report it says that the Government Office knew from 1991 onwards that land disposal was taking place in contravention of the basic principles of your own guidance.
  (Sir Richard Mottram) Yes, we did, yes.

  88. So that was not happening behind your back.
  (Sir Richard Mottram) Mainly through negotiated sales. That was happening in front of our back, yes.

  89. That is contrary to the—
  (Sir Richard Mottram) That was contrary to our guidance, yes.

  90. So that was not behind your back. You knew about that.
  (Sir Richard Mottram) Yes.

  91. In paragraph 5.9 it says, "The Department also became aware that the Corporation had entered into agreements without the necessary Departmental and Treasury approval . . .", so you knew about the problems of deferred payments?
  (Sir Richard Mottram) Yes, we drew them to the attention of the Corporation and said, "What you are doing using deferred payments?"

  92. That is not really taking action, is it?
  (Sir Richard Mottram) The idea of that is, "Could you kindly not use deferred payments again."

  93. I am sorry, "Could you kindly not use deferred payments again"?
  (Sir Richard Mottram) That is just a word.

  94. You are the accounting officer.
  (Sir Richard Mottram) I know. The point I am making is, if you come across something that has already happened, what you normally do is you say to people—and I apologise for my phrase, it certainly was not meant to be flippant—"This is outwith the rules, please do not do it", and that is what we were doing.

  95. The words "please" and "kindly"—
  (Sir Richard Mottram) All right, I take away the word "please" as well.

  96. Why not, "Just do it or else you are fired"?
  (Sir Richard Mottram) Okay, but "Do it or you're fired" was a choice which the Department did not wish to confront.

  97. Why?
  (Sir Richard Mottram) Because actually it thought the Board of the Corporation and its Chief Executive were doing a good job in relation to regeneration.

  98. There is another example in paragraphs 5.5 and 5.6. Price Waterhouse had come to you in June 1996 and said, "There are problems with the cash flow."
  (Sir Richard Mottram) Yes.

  99. At the beginning of the next paragraph it says, "Initially, the Department assumed that these forecasts were incorrect, believing the Corporation's finances to be sound."
  (Sir Richard Mottram) Shall I tell you why?

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