Examination of Witnesses (Questions 80-99)|
MOTTRAM KCB AND
MONDAY 4 MARCH 2002
80. Since you said earlier that Mr Hall did
bend and break the rules, have you considered legal action against
him? I am not sure what action is available to the Department.
(Sir Richard Mottram) No, we have not. The only action
which was taken in relation to Mr Hall was that it was suggested,
because of what happened in relation to the wind-up, that his
bonus for that year should be reduced, and I think he actually
agreed to refund some of it.
81. So people who ultimately report to you are
allowed to get away with bending or breaking the rules and you
just throw up your hands and say, "We are sorry that happened"
but ultimately you do not do anything about it. Is that correct?
(Sir Richard Mottram) I did not actually say that,
82. You said he had his bonus reduced in one
(Sir Richard Mottram) What happened here was that
there was a dialogue which went on throughout the period of the
life of this Corporation about some of the issues identified in
this Report. The position was reviewed, quite clearly, in 1996
as the Report brings out, and it was decided to continue on the
basis of an ever more active dialogue between us and the Corporation.
At the end of the process there was a particular concernon
the part of my predecessor, as it happens, but I am here to account
obviously for all of the Department's activities during this periodabout
the way the wind-up had been conducted. At that point there was
particular focus on the way in which the Corporation was being
83. I am not surprised you do not want to put
your predecessors in trouble, since one of them is the current
(Sir Richard Mottram) I think they are both more distinguished
than I am.
84. So far. You said you were in active dialogue,
I think it was, with the Corporation.
(Sir Richard Mottram) Yes.
85. In fact there was a systematic failure by
your Department to account for public money, to perform the basic
job of oversight. If you read Part 5 of this Report is it not
clearand we will go to it in detailthat basically
you knew about the major problems throughout and you did not actually
do anything about it. In fact when you did consider action, there
was a bit of sabre-rattling by the Corporation and you backed
(Sir Richard Mottram) No. I think what was happening
was we had a process whereby each year we were auditing the accounts
of the Corporation, we were also generating a management letter
about the way in which the Corporation was being run, and we were
looking at the regulatory framework in which it was operating.
That process was throwing up issues which were being discussed
between us and the Corporation. They were discussed on a number
of occasions. I think it is clear from the Report they were not
necessarily resolved that well and when we drew them to the attention
of the Corporation they gave the Department answers. The priority
of the Department was the regeneration activity of the Corporation.
86. Rather than the proper conduct of Government
(Sir Richard Mottram) No, because the way in which
the business was being conducted was effectively audited, and
we were discussing with the Corporation the lessons to be learned.
As the Report brings out on a number of occasions, the Corporation
did things quite clearly behind the back of the Department. You
may say that calls into question the way we were auditing them
or that calls into question that we were not necessarily reading
the Board minutes correctly and drawing the right inferences from
them, but I think the Department could reasonably have expected
the Corporation to have behaved properly within the framework
of governance which had been laid upon it.
87. You say that things were happening behind
your back, in paragraph 5.8 of this Report it says that the Government
Office knew from 1991 onwards that land disposal was taking place
in contravention of the basic principles of your own guidance.
(Sir Richard Mottram) Yes, we did, yes.
88. So that was not happening behind your back.
(Sir Richard Mottram) Mainly through negotiated sales.
That was happening in front of our back, yes.
89. That is contrary to the
(Sir Richard Mottram) That was contrary to our guidance,
90. So that was not behind your back. You knew
(Sir Richard Mottram) Yes.
91. In paragraph 5.9 it says, "The Department
also became aware that the Corporation had entered into agreements
without the necessary Departmental and Treasury approval . . .",
so you knew about the problems of deferred payments?
(Sir Richard Mottram) Yes, we drew them to the attention
of the Corporation and said, "What you are doing using deferred
92. That is not really taking action, is it?
(Sir Richard Mottram) The idea of that is, "Could
you kindly not use deferred payments again."
93. I am sorry, "Could you kindly not use
deferred payments again"?
(Sir Richard Mottram) That is just a word.
94. You are the accounting officer.
(Sir Richard Mottram) I know. The point I am making
is, if you come across something that has already happened, what
you normally do is you say to peopleand I apologise for
my phrase, it certainly was not meant to be flippant"This
is outwith the rules, please do not do it", and that is what
we were doing.
95. The words "please" and "kindly"
(Sir Richard Mottram) All right, I take away the word
"please" as well.
96. Why not, "Just do it or else you are
(Sir Richard Mottram) Okay, but "Do it or you're
fired" was a choice which the Department did not wish to
(Sir Richard Mottram) Because actually it thought
the Board of the Corporation and its Chief Executive were doing
a good job in relation to regeneration.
98. There is another example in paragraphs 5.5
and 5.6. Price Waterhouse had come to you in June 1996 and said,
"There are problems with the cash flow."
(Sir Richard Mottram) Yes.
99. At the beginning of the next paragraph it
says, "Initially, the Department assumed that these forecasts
were incorrect, believing the Corporation's finances to be sound."
(Sir Richard Mottram) Shall I tell you why?