Examination of Witnesses (Questions 200-219)
SIR RICHARD
MOTTRAM KCB AND
MR DUNCAN
HALL
MONDAY 4 MARCH 2002
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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