Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 280-299)



  280. What I really want to ask you to explain is why you said in response to Mr Steinberg that all major financial decisions had gone to the Board when they had not. This one at least had not?
  (Mr Hall) I thought we had—I stand corrected—a separate discussion about this particular item, if the record is different I withdraw what I have said. What I was trying to do is explain a particular set of circumstances where the Board through the sale of the shipyard—do you want me to explain it further?

  281. I would rather go on. In answer to Mr Steinberg you also said you had never broken or even bent the guidelines for Urban Development Corporations, is that right?
  (Mr Hall) Knowingly.

  282. You did, however, dispose of an asset by mortgage—this is Case C on page 25?
  (Mr Hall) Yes.

  283.—which was explicitly prohibited in the Urban Development Corporation Guidebook, are you saying you did not know that it was in the Guidebook or you did not understand you were getting rid or disposing of this particular asset by mortgage?
  (Mr Hall) I did not appreciate at that time, which is clearly the case, this was a breach of that guideline. There is a very particular reason for that, for my statement, which I can repeat, very briefly, when you refer to a mortgage, as I said earlier, I think there is a presumption that you are giving the company money. In a normal situation like a house sale, buying a house, you borrow some money by mortgage and you purchase the property. This was not about the monetary transaction of £500,000 by way of mortgage.

  284. Yes.
  (Mr Hall) I have taken mortgage to be the giving of the £500,000, whereas in fact no money was involved. It technically became a mortgage by virtue of the deferred payment arrangement.

  285. You did not think at the time it was a mortgage and, therefore, did not contradict the guideline. That is what you are now claiming?
  (Mr Hall) I find this very difficult because the documents in relation to this transaction refer to a mortgage. It is very difficult for me to see it not as a mortgage. I know I am being convoluted in my answer.

  286. The documents that you signed at the time refer to it as a mortgage?
  (Mr Hall) I think so.

  287. Yet you did not think that was against the guidelines, that mortgages were explicitly prohibited.
  (Mr Hall) The distinction I am trying to make, the problem that I have is that a mortgage was, in my judgment, the granting of money to a firm.

  288. I understand what you thought a mortgage was. What you appear to be telling us is the document you signed said that this was a mortgage. You are also telling us that you knew at the time that mortgages—even though you did not think this was a mortgage—were against the guidelines, you knew that. You went ahead signing a document that said this was a mortgage when the guidelines said that you should not sign mortgages?
  (Mr Hall) I can see the contradiction you are putting me towards in relation to the answer that I have given you.

  289. I think there is a clear contradiction in your suggestion that you never bent or broke the guidelines. This was not just bending the guidelines, you broke the guidelines. You saw on the document in front of you that it was a mortgage and you knew you were not allowed to sign mortgages and you went ahead and signed.
  (Mr Hall) I can understand the point that you are making. My understanding at the time in relation to mortgages was mortgages were by definition the granting of money. There was no money being granted by this mortgage.

  290. In spite of that the document said it was a mortgage. What would have happened if the shipyard had not been allowed to pay over a further four years and could not pay up?
  (Mr Hall) They would not have purchased the site.

  291. We would not have lost the extra £500,000. Can I go back to Sir Richard, if I may, Hammersmith and Fulham Borough Council—of which I was member, but a long time before this happened—lost a lot of money some time ago or were about to lose a lot of money some time ago because they were acting ultra vires in some sort of swap arrangement over debt. It seems to me that the Corporation clearly acted in a way that it was not permitted to under various rules and guidelines under which it was set up. Have you gone into the proposition with your legal advisers that it may be that some of the things they did that cost a lot of money they were never entitled to do and we could recover the money for that reason?
  (Sir Richard Mottram) I think not is the answer.

  292. You could not do it?
  (Sir Richard Mottram) We have not looked at it. I will look at it.[9]


  293. Mr Hall, one of the reasons why we work in the way we do is that it makes it much easier when accounting officers sign up to a document that they accept that as the starting point of debate. We have wasted a lot of time in arguing about whether you agree the Report or not, but you agree that you signed up to this document?
  (Mr Hall) Yes.

  294. We have here Case C, ". . . but was unable to raise the remaining sum due to buy the site outright, so the Corporation's Chief Executive granted it a mortgage of £500,000 to part-fund the acquisition." You signed up to these words. We have wasted now four or five minutes of the Committee's time by you apparently arguing you did not think it was a mortgage.
  (Mr Hall) I am sorry, Chairman, if I have done that. I was simply trying to make the distinction that the issue of a mortgage in normal circumstances means the giving of money. That is what a mortgage is, somebody borrows some money from you and takes a mortgage. That was the only point I was trying to make. I am making it very clear in this case, there was no money passing between the Corporation and the company.

  Chairman: Perhaps you should have made that clear when the Report was first put in front of you.

Mr Gardiner

  295. Chairman, can I start off by saying that I am deeply disappointed that we do not have the previous accounting officer here today. Given that Andrew Turnbull is still a permanent secretary in the Civil Service, given he was presumably able to come here today and given he presided during the period from 1994 onwards, it would have been appropriate that he damn well should have been here. This Committee has a precedent. I do understand that normally we accept the present accounting officer but we have gone against that precedent in the past and I believe this is an instance where it would have been extremely helpful to the Committee to have had that accounting officer here. I am disappointed the C&AG did not insist on that and I, for one, will look very carefully at the Treasury's response on this, given that the previous accounting officer is now the accounting officer at the Treasury. That is the first thing I want to say. Mr Hall, I understand that you were asked for a CV. It is normal for members of the Committee to have a CV before them of the people who are sitting in front of them. We have a very full CV from Sir Richard and we do not have one from you. Why is that?
  (Mr Hall) Simply in view of the change that was taking place to the arrangements and the work I was putting into this Report and I wanted to see the final version, or near enough the final version, to decide who would accompany me. I was invited to bring some advisers with me, so I waited until that time, and that was very close to the end of last week, so I did not produce a CV. Part of the reason for that—

  296. Sorry, that has absolutely nothing to do with the question I have just asked. Whoever you wanted to bring with you, you were still going to be here, why did you not produce a CV when you were asked for it?
  (Mr Hall) I did not produce one.

  297. Could you please tell us what you are doing now.
  (Mr Hall) I run my own company or companies.

  298. What companies are those? Could you name the companies?
  (Mr Hall) I run a company called Method Marketing Ltd and I run a company called Duncan Hall Associates.

  299. Could you please provide this Committee with a full note of your CV, including the present engagements you have.
  (Mr Hall) Yes.[10]

9   Ev 33-34, Appendix 1. Back

10   Note provided, not printed. Ref footnote to Q 335. Back

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