Select Committee on Public Accounts Minutes of Evidence



Copy of a letter to the Chairman of Committee for the Speaker's Counsel

  1.  You have asked for my advice on whether the indemnity given by the Department for Culture, Media and Sport to the Directors of the New Millennium Experience Company on 21 June 2000 ought to have been reported to Parliament.

  2.  To justify their decision not to do so, the department must essentially satisfy two tests, demonstrating:

    (a)  that the giving of the indemnity was in the normal course of the department's business; and

    (b)  that the indemnity is of a standard type which is given in the course of normal, commercial business dealings.

  3.  On the first test, I am not in a position to question the department's assertion that such an indemnity is routinely offered to Board Members of non-department public bodies.

  4.  The crux of the matter, therefore, is whether the department has satisfied the second test. What is, or is not, a normal commercial business dealing is a matter of fact not of law. Nonetheless, I would be very surprised to discover that the giving of an indemnity to directors of a company to protect them against the personal consequences of their breach of statutory duties were regarded as a normal business practice.

  5.  It is noteworthy and that the department's letter of 10 November 2000 entirely fails to address this issue and concentrates instead on the first test. I therefore have nothing before me which attempts, on the department's behalf, to demonstrate satisfaction of the second test.

John Vaux

15 November 2000

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