Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 260-279)



  260. I see. Paragraph 4.16 mentions how the bonus to the Chief Executive was to be paid and in particular it could be up to 10 per cent, and the Corporation had to consult the Department before awarding a bonus. Can you tell us, Sir Richard, whether the Department was always consulted? I understand the bonus of 10 per cent was paid every single year until the last year.
  (Sir Richard Mottram) I would have to check but as far as I know it was. Can I check?

  261. I would be delighted if you did.
  (Sir Richard Mottram) I was only querying "every year". I will check. There were processes. Normally for a nondepartmental public body the Chairman of the Board, or someone on behalf of the non-departmental public body, would report to the Department how they proposed to proceed. Technically speaking, it does not require the Department's approval but I have certainly intervened myself on occasions.

  262. Paragraph 4.16 says, "On the Chairman's recommendation, the Corporation's Board approved and paid the Chief Executive the full bonus each year . . .", it does not there mention anything about the Department having been involved and asked for its approval.
  (Sir Richard Mottram) I do not think the Department has to approve it. Sorry, perhaps I am not being sufficiently precise.

  263. The Department had to be consulted?
  (Sir Richard Mottram) The reason I hesitated over my earlier answer is because I happen to have seen at least one letter which was informing the Department of the Chief Executive's bonus. What I do not know is whether this happened every year.

  264. It should not just have informed, it should have consulted?
  (Sir Richard Mottram) Yes, consulted. You are right to correct me. Can I go away and check this for you?

  265. Does the C&AG know from his own investigations whether some consultation took place every year?
  (Mr Cavanagh) We would have to check.[7]
  (Sir Richard Mottram) Can I make one more point? I will go away and check whether we were consulted every year. The one year where we were not consulted was the final year, and the Report brings out what subsequently happened then.

  266. Do you not think it is rather odd, given that you as a Department apparently had to tell the Corporation time and again that they were doing things they should not have been doing, if you were consulted every year you nevertheless accepted a 10 per cent bonus should be payable which was the maximum bonus?
  (Sir Richard Mottram) Yes. The decision which was being taken was that these were—and I have certainly seen documentation which supports this—decisions based upon the excellent regeneration performance of the Chief Executive. That therefore leads back into a point which comes out of one of the recommendations about the importance of all non-departmental public body chief executives having an objective or target which relates to financial performance and propriety. I am pretty sure, again I will check, this was not the case here. Does that make sense?

  267. Some. Sir Richard, you said earlier on if you came across things which had been done outside the guidelines you would say, "please do not this again", you then said you might not say "please" but, "do not do this again".
  (Sir Richard Mottram) Yes.

  268. Paragraph 5.8 shows that that did not happen in the case of the continuing negotiating sales by the Chief Executive, you did not even say, "please do not do this again", never mind, "do not do this again".
  (Sir Richard Mottram) No.

  269. Why not?
  (Sir Richard Mottram) We had confidence in the Chief Executive's way of doing deals.

  270. You are saying he was doing something which you accept was outside guidelines and you decided to ignore that.
  (Sir Richard Mottram) The guidelines give a strong presumption towards avoiding negotiated sales, they do not rule them out in every case. The balance between negotiated sales and other forms of sales in relation to this Corporation was clearly unusual and as paragraph 5.8 shows the Department did go along with that, yes.

  271. In paragraph 5.9 you said, "Please do not do that again" once.
  (Sir Richard Mottram) Certainly in relation to deferred payments.

  272. In the middle of paragraph 5.9 in one case the Department reminded the Chief Executive deferred payments were forbidden.
  (Sir Richard Mottram) In one case in relation to deferred payments.

  273. Management Letters went in seven years in succession, 1991 to 1997-1998, drawing attention to the Corporation's use of deferred payment. In seven years running the Department were told that they had gone outside guidelines in using deferred payments. Out of those seven years running when the Department was told that on one occasion the Department said "you should not have done this". Why on only one occasion?
  (Sir Richard Mottram) I am afraid I will have to double check on how many occasions deferred payments were raised. Can I double check that for you?

  274. I am sure you can. It says here in the Report, "In each of their Management Letters on those seven years Price Waterhouse drew attention to the Corporation's use of deferred payments". It appears to be in everyone of those seven letters it was referred to. Your Department was told, not you personally—
  (Sir Richard Mottram) I am not trying to avoid that.

  275.—your Department was told on seven occasions in a row, seven years in a row, that the Chief Executive was going outside of the guidelines and on only one occasion did you raise this with him?
  (Sir Richard Mottram) I need to go away and look at that again and give you some further advice.

  Mr Rendel: I am not sure what further advice is possible, except you made a bloody awful mistake.


  276. What would you say in future?
  (Sir Richard Mottram) The point I will check is why we felt it was appropriate to do this.[8]

Mr Rendel

  277. Why you felt it was appropriate not to do this on the other six occasions?
  (Sir Richard Mottram) Indeed, quite so. I am trying to be helpful to the Committee, if it is not helpful—

  278. I would certainly like a note on that, if I may. Mr Hall, you said in response to Mr Steinberg that all major financial decisions were taken not by you on your own but by the Board on your recommendation. Did you have a financial limit agreed by you and the Board under which you were able to take decisions on your own?
  (Mr Hall) Not that I am aware. We were taking decisions as a Corporation and all of the matters would go to the Board of the Corporation.

  279. The decision to offer a £500,000 mortgage did not go to the Board?
  (Mr Hall) No, apparently it did not. Can I possibly explain that?

7   Ev 33, Appendix 1. Back

8   Ev 33, Appendix 1. Back

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