Examination of Witnesses (Questions 280-299)
SIR RICHARD
MOTTRAM KCB AND
MR DUNCAN
HALL
MONDAY 4 MARCH 2002
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]
Chairman
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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