Examination of Witnesses (Questions 20-39)|
MOTTRAM KCB AND
MONDAY 4 MARCH 2002
20. The Department did not turnaround and say
you had broken the rules?
(Mr Hall) Not as far as I am aware.
21. As far as you were concerned these deferred
payments, the late payments to creditors as far as you were concerned
the Department were not giving you any advice during all of this,
they were not saying, "Hang on a moment, something is going
wrong here, you are getting things built and things done but there
are some rules, you are a public body and it would help to stay
within the rules".
(Mr Hall) What the Department did was to question
and query the action that we had taken on occasions. Quite frankly
the Department expressed its concerns. From the Corporation's
point of view we were satisfied that satisfactory explanations
had been given to those questions and matters were resolved. That
is why we continued in the way that we continued as part of our
22. Mistakes were made. Can I refer you to page
25 of the Comptroller and Auditor General's Report, you will see
in Case D, the case of the Ukrainian Training Ship, a tall ship
kept in a port, the crew were paid for 27 months. Is this what
public money should be spent on?
(Mr Hall) In this particular instance it was the Corporation's
view, which I obviously share, that this money should have been
spent. The reason is, if you take a parallel, the bringing into
Hartlepool of the Trincomalee, that was a major restoration of
a vessel, costing some £10 million, that became a fundamental
part of the regeneration of the area. We were consistently looking
to build a tall ship centre. In fact we were undertaking repairs
of tall ships to prove we had the labour in the area. The Tovarisch
became available and became a great focal point, not only for
the potential of Middlesbrough Dock but also a focal point for
Lottery funding, which unfortunately failed. In hindsight the
situation is, would you have done it because you failed in the
end. I have to put it to you, Chairman, that the view would be
that we had to try, and try properly. I think the view of the
Corporation is that we tried properly and reasonably.
23. Do you think a lot of the problems that
you are now meeting, for instance in the hearing today, are due
to your attitude, which some consider to be high-handed and arrogant,
particularly with local councillors, and local people generally,
that you felt you were doing a good job and you were entitled
to cut a few corners to get that job done?
(Mr Hall) I think so far as peoples' views of myself
on a personal level are concerned I think they are matters for
themselves, people can make their own judgment, some people like
you and some people do not like you. I do not think it was a situation
of cutting corners as far as we were concerned, it was a situation
of stimulating and continuing to stimulate the regeneration of
Teesside in what everyone is collectively admitting was a very,
very difficult area, suffering some 25 per cent unemployment.
24. Can you tell us a bit about other Corporations,
were they capable of achieving an orderly wind up?
(Sir Richard Mottram) They were generally. The Public
Accounts Committee published a Report and we incorporated the
lessons of that Report in our guidance and other Corporations
were successfully wound up.
25. Mr Hall you said just a moment ago, "the
view of the Corporation". If you turn to page 22, paragraph
28, it does not seem to me that the Corporation have much of a
view, to be quite honest, because you managed the TDC as a one-man-band,
you were a law onto yourself. They did not have a view. Occasion
after occasion you were involved personally in handling controversial
property deals, were you not? Why have you put yourself into this
(Mr Hall) There are a number of points that you made
there. I frankly do not see it as a compromising situation. I
did not envisage it at the time as being controversial. The whole
of my background was in property negotiations, having been the
Chief Executive for 10 years before in Corby.
26. Did you run Corby like the Teesside Development
(Mr Hall) I did not run Corby and I did not run the
Teesside Development Corporation. I was the Accounting Officer
and the Chief Executive of those organisations.
27. Were the Board so useless that you could
not put the information to them? It clearly states on page 22,
"All but one of the 24 disposals completed by the Corporation
were by negotiated sale. The Corporation's Chief Executive conducted
sales negotiations personally, considered and accepted all deals
on behalf of the Corporation and, where appropriate, reported,"
that was good of you, "and recommend their acceptance to
the Board". The Board themselves were not doing much, were
they? Were they that useless that you could not give them the
(Mr Hall) I do not think it is appropriate for me
to say any more than I think the Board of the Corporation was
of the highest quality.
28. Then why did you not consult them?
(Mr Hall) I find it difficult to interpret the statement
there as being I was not consulting them.
29. Did they make decisions?
(Mr Hall) Of course they made decisions.
30. It does not say that here. It says here,
"All but one of the 24 disposals completed by the Corporation
were by negotiated sale. The Corporation Chief Executive conducted
sales negotiations personally, considered and accepted all the
deals on behalf of the Corporation".
(Mr Hall) The prerequisite of that statement is I
would be referring to the Board of the Corporation. In relation
to negotiations for the sale or purchase of a piece of land that
decision does not rest with me, it quite properly rests with the
Board of the Corporation.
31. When you took it to the Board for their
decision presumably you would take your Finance Director along
with you, did you?
(Mr Hall) No, I did not. It is well stated in this
Report that the Board of the Corporation.
32. You did not think it was necessary to take
along the expert in finance to a Board meeting to give them the
briefings that you presumably had, you did not think that it was
necessary for the Board to have that information?
(Mr Hall) At the outset the Board decided that the
33. There is an expression about mushroom, Mr
Hall, I expect you have heard it!
(Mr Hall) I think the situation to respond to is that
the Board decided, and the Department was well aware of it from
inception, that the Corporation ran with the Chief Executive only
with the Board members. The reports which were necessary to go
to the Board were written by a variety of staff, not only myself,
and they went to the Board with best advice. If I can just come
back to the sale of properties, if I may, it should be, I believe,
taken for granted from this meeting that the Corporation had a
duty and responsibility to obtain valuation certificates in terms
of all of the negotiations that took place. To suggest, if I may
say, from this Report that I simply negotiated and accepted the
deals on behalf of the Corporation without the following situation,
which is that, yes, I negotiated, yes, I took the lead and, yes,
I saw it as a fundamental part of my job in the Corporation.
34. If that is the case then the Board must
have been pretty pathetic. If you look at Cases A and B on page
16, for example, that clearly shows to me if you had given information
to the Board and they agreed to these particular cases they were,
as I suspected, not very able. How can you justify paying £1.6
million additional costs to two developers even though no development
had taken place? On another case, why do you think it is okay
to sell the same site twice, which then cost the taxpayer nearly
£1 million in compensation. If are you saying the Board agreed
that after being given the relevant advice by your Finance Director,
who was not at the meeting in the first place to give that advice,
it does not give great confidence in the Board, does it?
(Mr Hall) I can only repeat the confidence that I
believe the Board should enjoy and the Corporation should enjoy.
If I can take and recall the various points which you have raised.
I think the question of these two cases, perhaps, should be also
put in the context of the £116 million
35. It should not be put in any context, Mr
Hall, the fact of the matter is you paid out £1.6 million
in an additional costs to the developers out of public money and
regardless of how successful they were that is irrelevant, the
fact of the matter was that you squandered £1.6 million of
taxpayers' money and that is just not acceptable.
(Mr Hall) My response to you, again, in those circumstances
is that in any business, and I consider in part the Corporation
to be a business, the situation arises that on occasion some of
the negotiations you can prove work, and some of them do not.
I think that the important thing is that in the vast majority
of cases the Corporation succeeded in its negotiations and, indeed,
the capital receipts received by the Corporation were fundamental
to the regeneration of the area. I do not see the situation as
wantonly squandering of the position. It is unfortunate, I accept
that in hindsight, I obviously accept that in hindsight, that
the obstacles in the way of these
36. It is more than unfortunate, Mr Hall, why
did you ignore warnings and the cautions given to you by the DETR?
(Mr Hall) I am not sure that
37. The Report makes it quite clear to us that
the Department were warning you, they were cautioning you, they
were saying that you better look at what you were doing and you
totally ignored it, you just went on your own way.
(Mr Hall) I have to say so far as the Corporation
is concerned when the Department expressed its concerns on any
matters which the Corporation was involved with it responded to
those concerns. I do not believe that the Corporation simply ignored
either the rules or the advice that it was receiving.
38. If do you not think that turn to page 33,
if you would, please, paragraph 4.2, 4.3 and Figure 11, were you
aware of the Development Corporation Guide rules and your responsibility
as the Accounting Officer?
(Mr Hall) Yes.
39. Did you also read the July 1997 Treasury
Guidance to Accounting Officers, which lists seven of the keys
rules to govern your actions, which is on Figure 11?
(Mr Hall) I am aware of the actions outlined in the