Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 40-59)



  40. Why did you flout them?
  (Mr Hall) I do not believe that I flouted them.

  41. You do not think that you did. Let us turn to page 25, Mr Hall. I am not making these accusations, picking them off apple trees, without consulting evidence, I am reading the Report. I am getting all of this information from the Report that I am reading. You say that you did not flout the guidelines. The guidelines say, "Do not bend or break the rules, be even handed, record decisions. If approval is needed get it first". Tell me, then, if you read those publications, and you say that you did not flout the guidelines, if you turn to page 25, Case C, you lost the taxpayer £650,000 on virtually the day it was winding up. You had no right whatsoever to be going into new deals, as it was, virtually the week that the Corporation was actually packing in, yet you went ahead and at the end of the day you lost the taxpayer £650,000. That is outrageous, is it not?
  (Mr Hall) I think there are two situations which arise from that, the first one is whilst we were expecting to wind up by 31 December 1997 in securing a home for our assets the Department was well aware, together with ourselves, that we complete it, and we did. Again, I have to say to you that if we look at a situation some years—

  42. Did you bend or break the rules?
  (Mr Hall) I am not aware that I deliberately bent or broke the rules.

  43. It is quite clear to me that the guidelines on the terms of the winding up of the Corporation clearly said no new schemes had to be gone into yet, virtually the week that it was winding up you went into a new scheme. If that is not bending or breaking the rules I do not know what is.
  (Mr Hall) I think that the way that Corporation was considering these matters was to say, we have made it very clear that we were trying to complete all of the business of the Corporation.

  44. This was new business.
  (Mr Hall) Yes. The business that it was involved in involved a very major site of the Corporation which we wished to see disposed of to the private sector, hopefully on a successful basis. The difficulty I have, if I may say, is that I am now looking at a situation four years on, I am looking at a situation that was concluded two years after the end of the life of the Corporation, but at that time I believe this to be a right and proper decision for the Corporation.

  45. Can you turn paragraph 4.5, that is on page 33 again. You seem to indicate in the Report, you appear to be saying this afternoon, that your actions were justifiable because your primary role was to foster regeneration by entrepreneurial means with the private sector. I put it to you, Mr Hall, you went far beyond anything that could be expected and regarded as acceptable. In my view you abused your position knowing full well at the end of day if anything went wrong you were going to be bailed out by the Department. You spent money that Parliament had not even granted you two years ahead and you lost the taxpayers millions of pounds of money. That would not be accepted in the private sector, you would be sacked.
  (Mr Hall) Can I take those points on an individual basis?

  46. Of course.
  (Mr Hall) The situation was that I accept the commercial nature of the role that I took in the Development Corporation but equally we acknowledged the rules and regulations that would involve the Corporation. The situation which arose out of that was that from our point of view, the Corporation's point of view, we received 11 clean audits for the whole of the life of the Corporation. Upon the wind up of the Corporation we, as this Report says, balanced the books, and it is absolutely fair, in relation to what the Chairman asked earlier regarding Teesside, that in overall terms the Corporation actually brought in more money than it spent.

  47. I was going to come on to that. I am not going to have time by the looks of things. If you want to go down that line, the deficit is now thought to be £23 million, and still going up. I was going to ask Sir Richard Mottram if he can tell us how the much the deficit is going to be at the end of day?
  (Sir Richard Mottram) I do not quite know but I expect it might be in the region of £40 million.

  48. The last question. Sir Richard has got off the hook here because I had a lot of questions for him.
  (Sir Richard Mottram) I deserve a bit of consideration, I think!

  49. We all feel that sometimes. The final question to Mr Hall, on Appendix 2, page 45, the National Audit Office were unable to find, "Key information such as marketing and disposal files and contract files with the developers", they are just not there. They have been destroyed. Now I am not a suspicious man at all but I wonder why these were destroyed. It makes me think, Mr Hall, that this is just the tip of the iceberg, that there are many, many more things that should come out, and will come out and, hopefully, the Department will not let it run?
  (Mr Hall) The situation referred to, I repeat my previous answer, there is no question whatsoever of the Corporation deliberately shredding files. There is a very clear system put forward by the Corporation in relation to the documentation, both in terms of the legal audit it undertook and in relation to the general files which it had. Frankly, I cannot explain why those files cannot be found or some of those files cannot be found. There is absolutely no question whatsoever of anybody deliberately dealing with those files on a deliberate basis.

  Mr Steinberg: Thank you.

Mr Williams

  50. Sir Richard, that was a staggering figure you just gave my colleague when you said that the possible deficit would be £40 million?
  (Sir Richard Mottram) Yes

  51. At the time of the close down they were actually prophesying a surplus of £14.5 million, so we have seen a turnaround of £54 million. That really is an incredible figure failure, not on your part but on the Corporation's part?
  (Sir Richard Mottram) As the Report brings out I do not think that the resource position statement that was submitted by the Corporation in April 1998 could be defended. What has happened is that progressively as English Partnerships have sought to unwind the various positions, so to speak, the costs have been rising.

  52. I must say that I think Sir Richard certain remarks attributed to you last week seem highly relevant in the context of receiving this staggering figure.
  (Sir Richard Mottram) I wondered how long I would get before that was referred to.

  53. Mr Hall, when you were appointed did anyone tell you not to worry about the rules?
  (Mr Hall) Not to worry about them. It was perfectly clear that we received the UDC Guidebook and guidance in relation to—

  54. Did anyone tell you that you did not need to worry about the rules?
  (Mr Hall) No.

  55. It was all your own idea?
  (Mr Hall) What was?

  56. You may laugh like that. For example, the Department got in touch with you about deferred payments to contractors, which is strictly outside the rules, when they asked you, you, according to the Report in 2.18 said, "I am aware of the rules".
  (Mr Hall) Yes.

  57. You were aware of the rules, you were just not working according to the rules, were you?
  (Mr Hall) What we were endeavouring to do, and again I had not appreciated that was, indeed, a breaking of the rules, that with the negotiations, with the contractors we were in a position to sustain the regeneration which was taking place.

  58. You see if that were an isolated example, one could say, let us look at your record, let us wipe this one off against the others. There are rules on government accounting, you ignored those; there are Treasury rules, you ignored those; there are departmental rules, you ignored those; there is a book of guidance, you ignored that; there was a letter to you from the Secretary of State emphasising the importance of restitute and you ignored that. This sounds like a calculated attitude on your part.
  (Mr Hall) It was most certainly not a calculated attitude on my part. It may sound extremely surprising to you that we did not consider in the Corporation that we were bending or breaking those rules.

  59. You spent £34 million outside your delegated authority and did you not think that was breaking the rules.
  (Mr Hall) In relation to?

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