Examination of Witnesses (Questions 260-279)|
MOTTRAM KCB AND
MONDAY 4 MARCH 2002
260. I see. Paragraph 4.16 mentions how the
bonus to the Chief Executive was to be paid and in particular
it could be up to 10 per cent, and the Corporation had to consult
the Department before awarding a bonus. Can you tell us, Sir Richard,
whether the Department was always consulted? I understand the
bonus of 10 per cent was paid every single year until the last
(Sir Richard Mottram) I would have to check but as
far as I know it was. Can I check?
261. I would be delighted if you did.
(Sir Richard Mottram) I was only querying "every
year". I will check. There were processes. Normally for a
nondepartmental public body the Chairman of the Board, or someone
on behalf of the non-departmental public body, would report to
the Department how they proposed to proceed. Technically speaking,
it does not require the Department's approval but I have certainly
intervened myself on occasions.
262. Paragraph 4.16 says, "On the Chairman's
recommendation, the Corporation's Board approved and paid the
Chief Executive the full bonus each year . . .", it does
not there mention anything about the Department having been involved
and asked for its approval.
(Sir Richard Mottram) I do not think the Department
has to approve it. Sorry, perhaps I am not being sufficiently
263. The Department had to be consulted?
(Sir Richard Mottram) The reason I hesitated over
my earlier answer is because I happen to have seen at least one
letter which was informing the Department of the Chief Executive's
bonus. What I do not know is whether this happened every year.
264. It should not just have informed, it should
(Sir Richard Mottram) Yes, consulted. You are right
to correct me. Can I go away and check this for you?
265. Does the C&AG know from his own investigations
whether some consultation took place every year?
(Mr Cavanagh) We would have to check.
(Sir Richard Mottram) Can I make one more point? I
will go away and check whether we were consulted every year. The
one year where we were not consulted was the final year, and the
Report brings out what subsequently happened then.
266. Do you not think it is rather odd, given
that you as a Department apparently had to tell the Corporation
time and again that they were doing things they should not have
been doing, if you were consulted every year you nevertheless
accepted a 10 per cent bonus should be payable which was the maximum
(Sir Richard Mottram) Yes. The decision which was
being taken was that these wereand I have certainly seen
documentation which supports thisdecisions based upon the
excellent regeneration performance of the Chief Executive. That
therefore leads back into a point which comes out of one of the
recommendations about the importance of all non-departmental public
body chief executives having an objective or target which relates
to financial performance and propriety. I am pretty sure, again
I will check, this was not the case here. Does that make sense?
267. Some. Sir Richard, you said earlier on
if you came across things which had been done outside the guidelines
you would say, "please do not this again", you then
said you might not say "please" but, "do not do
(Sir Richard Mottram) Yes.
268. Paragraph 5.8 shows that that did not happen
in the case of the continuing negotiating sales by the Chief Executive,
you did not even say, "please do not do this again",
never mind, "do not do this again".
(Sir Richard Mottram) No.
269. Why not?
(Sir Richard Mottram) We had confidence in the Chief
Executive's way of doing deals.
270. You are saying he was doing something which
you accept was outside guidelines and you decided to ignore that.
(Sir Richard Mottram) The guidelines give a strong
presumption towards avoiding negotiated sales, they do not rule
them out in every case. The balance between negotiated sales and
other forms of sales in relation to this Corporation was clearly
unusual and as paragraph 5.8 shows the Department did go along
with that, yes.
271. In paragraph 5.9 you said, "Please
do not do that again" once.
(Sir Richard Mottram) Certainly in relation to deferred
272. In the middle of paragraph 5.9 in one case
the Department reminded the Chief Executive deferred payments
(Sir Richard Mottram) In one case in relation to deferred
273. Management Letters went in seven years
in succession, 1991 to 1997-1998, drawing attention to the Corporation's
use of deferred payment. In seven years running the Department
were told that they had gone outside guidelines in using deferred
payments. Out of those seven years running when the Department
was told that on one occasion the Department said "you should
not have done this". Why on only one occasion?
(Sir Richard Mottram) I am afraid I will have to double
check on how many occasions deferred payments were raised. Can
I double check that for you?
274. I am sure you can. It says here in the
Report, "In each of their Management Letters on those seven
years Price Waterhouse drew attention to the Corporation's use
of deferred payments". It appears to be in everyone of those
seven letters it was referred to. Your Department was told, not
(Sir Richard Mottram) I am not trying to avoid that.
275.your Department was told on seven
occasions in a row, seven years in a row, that the Chief Executive
was going outside of the guidelines and on only one occasion did
you raise this with him?
(Sir Richard Mottram) I need to go away and look at
that again and give you some further advice.
Mr Rendel: I am not sure what further advice
is possible, except you made a bloody awful mistake.
276. What would you say in future?
(Sir Richard Mottram) The point I will check is why
we felt it was appropriate to do this.
277. Why you felt it was appropriate not to
do this on the other six occasions?
(Sir Richard Mottram) Indeed, quite so. I am trying
to be helpful to the Committee, if it is not helpful
278. I would certainly like a note on that,
if I may. Mr Hall, you said in response to Mr Steinberg that all
major financial decisions were taken not by you on your own but
by the Board on your recommendation. Did you have a financial
limit agreed by you and the Board under which you were able to
take decisions on your own?
(Mr Hall) Not that I am aware. We were taking decisions
as a Corporation and all of the matters would go to the Board
of the Corporation.
279. The decision to offer a £500,000 mortgage
did not go to the Board?
(Mr Hall) No, apparently it did not. Can I possibly
7 Ev 33, Appendix 1. Back
Ev 33, Appendix 1. Back