Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 200-219)



  200. The Corporation's Chairman told us the Department did not concern itself about financial management with the Board. The Department had information which the Board, in order to do their job, should have had, and according to this paragraph did not have. Is that correct?
  (Sir Richard Mottram) I think it is very probably focussing on the word "the Board". Each year Price Waterhouse were producing Management Letters, also a regulatory compliance in the Report. It was out of those document that a number of the issues described in this Report were arising, that is how the National Audit Office know how they were being handled. We were discussing those with the Corporation. I would have thought, but I have to check, that the Chairman of the Audit Committee of the Corporation would know about it, but whether the Board knew about it—

  201. It says that the Board did not. Can you let us know who on the Board was told and when, assuming the documents have not been shredded?
  (Sir Richard Mottram) I will try from the Department's records.[3]

  202. Am I right in thinking that the Board had primary financial responsibility for the conduct of the Corporation?
  (Sir Richard Mottram) It did.

  203. If there was information the Department had that the Board did not have it would make it rather difficult for the Board of the Corporation to do its the job in that respect?
  (Sir Richard Mottram) It would. That is why we had the management letter system alongside the audited accounts.

  204. Mr Hall, can I ask you about destroying documents. It says on page 40 of the Report, paragraph 5.19, "The Development Corporation Guidebook stated that Corporations should be very cautious about destroying files unless they were sure that they would not be of use to the Commission or another body. It particularly highlighted files and other records relating to Board meetings, projects, grant cases and acquisitions, and disposals of land and property should be retained and provide a clear audit trail to show when and by whom decisions were taken and payments were certified and authorised". You got this shredder installed in an open plan part of the office, were files relating to Board meetings destroyed?
  (Mr Hall) I do not know the answer to that.

  205. Were files relating to projects destroyed?
  (Mr Hall) Would it be helpful if I—?

  206. I would like to know if files relating to projects were destroyed?
  (Mr Hall) Logically the files relating to projects, I stand corrected on this point, would not be destroyed.

  207. Were files relating to grant cases destroyed?
  (Mr Hall) I cannot answer that question.

  208. Were files relating to acquisitions and the disposal of land and property destroyed?
  (Mr Hall) I cannot give you a deliberate answer. Could I have the opportunity to explain why I cannot give you the answer. Essentially what happened with the Corporation's files—and they were, indeed, very cautious about their disposal—is that we had a fully computerised database of the general files of the Corporation. The project leader who was responsible for our strategy went through all of those with the various staff and the internal auditor and then they decided what could be disposed of and what could not be. In addition to that we had the legal files of the Corporation and they were audited by our solicitors with recommendations of what was live and what was not live. I cannot go into individual details.

  209. I only have two minutes, could you say if you, yourself, personally destroyed any files?
  (Mr Hall) No, I did not.

  210. How was it done? Did you give other people files and say, "destroy that"?
  (Mr Hall) We had a specific team set up two years before the end of the life of the Corporation which was responsible for the wind up strategy of the Corporation, included in that was the disposal of files and documents that were not required or were agreed to be not required. I was not involved in that process.

  211. At all?
  (Mr Hall) No.

  Chairman: Thank you, Mr Bacon.

Jon Trickett

  212. I want to follow on those questions. I regard the shredding of documents as sinister, whatever other members might say, in particular the statement which appears to have been agreed that key information in relation to the marketing and disposal files was not available to the auditors. That is what this sentence says in 5.19. I take that to mean files relating to the disposal of assets which belong to the public and which were sold to the private sector, very often at knockdown prices, it is certainly a loss to the public purse. Are you telling me every single file that was shredded you received legal advice that it should be shredded prior to it being shredded?
  (Mr Hall) I am not saying that. I made the distinction between two sets of files, one was the legal files of the Corporation, one was the general files of the Corporation. Prior to the legal files of the Corporation being disposed of or shredded the situation was they were audited by our firm of solicitors saying, this is appropriate to . . .[4]

  213. I have understood. I want to focus on the issue of the sale of land and also the taking out of leases, many of which was done at ludicrous prices, knockdown prices, assets which belong to the taxpayer were almost given away in some cases, they were shredded.
  (Mr Hall) I am not aware of that.

  214. That is a fact, is it not? It says here those files are now missing and it relates that to the process of shredding, that is what this paragraph says?
  (Mr Hall) I think the situation is they cannot be found or they were disposed of. I cannot give you a definitive answer because I was not involved in that process.

  215. Do you not think that it is sinister, that files relating to property disposal and the sale of assets which belong to the taxpayer are now missing?
  (Mr Hall) I simply would not use the word "sinister".

  216. I would, and I am using it. I just want to ask about your personal role in the shredding of documents. You said that you shredded none, did your personal staff shred any or anybody else shred any at your recommendation?
  (Mr Hall) No.

  217. Your personal recommendation?
  (Mr Hall) Not as far as I am aware.

  218. How many shredders were hired?
  (Mr Hall) One.

  Jon Trickett: I should have begun by say saying I was a member of the Leeds Development Corporation for the last two years. I do not believe I have an interest in these matters at all, but for the benefit of everyone here I should just simply say that.

  The Committee suspended from 18.23 to 18.31 for a division in the House

Jon Trickett

  219. I think I made a point about the shredding of documents and how it appears to me. I want to try to copper-bottom it really. Can I ask the auditors, what conclusion they have come to about the missing files, the two sentences follow each other, one about shredding and the one about key files missing?
  (Sir John Bourn) We thought it was extraordinary that the files on such significant business transactions did not exist. You could not help but notice, without averring definite cause and effect, that these files did not exist and a shredding machine had been hired.

3   Ev 32, Appendix 1. Back

4   Note by witness: I believe it may be helpful to explain what I mean when I refer to the general files and legal files of the Corporation. General files refer to the operational, transactional and management files of the Corporation. These were assessed by the project leader prior to their archiving or destruction as part of the Corporation's exit strategy arrangements. The legal files refer to the legal title, parliamentary proceedings (the Private Bill for the Tees Barrage) and construction contract files of the Corporation which had been maintained by the Corporation's in-house legal team prior to their departure from the Corporation. Richardson, Boyle & Blackmore conducted an audit of these files in conjunction with that of the deeds and contracts as part of the Corporation's exit strategy arrangements and advised on which files would be required by the Corporation's successor body. The purpose of this audit was to see that there was a complete and accurate reflection of the Corporation's land holding and its contractual rights and obligations. Back

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