Let the ‘A team’ millionaires get on with the job – MEA Select Committee hears evidence on DTI Minister’s alleged view

Chief Secretary, and former Chief Financial Officer, Mary Williams was the second person to give evidence at Thursday’s session (29^th May 2008) of the Select Committee of Tynwald investigating the Manx Electricity Authority ‘affair’.

 

Committee Chairman Steve Rodan, at the commencement of the session, had reminded witnesses that the Committee had sub divided their terms of reference and they were currently concentrating on the MEA’s adherence to Financial Regulations and the provision of information.

 

He started by putting to Mrs Williams that as along ago as February 1999 the Secretary to the Council of Ministers had written the Chief Executive of the DTI about the difficulty in getting information from the MEA. So why had it taken until 2002 for a ‘direction’ to be issued.

 

Mrs Williams replied she could only account for the period she was in post, so had to rely on what Ian Thompson had told her, but she was aware that there had been a political will to allow the MEA to get on with the job. However, she made clear that in her opinion the Treasury didn’t allow the MEA to do just what they wanted; and it had been agreed that Internal Audit could check on what procedures the MEA had in place.

 

Mr Rodan referred to a meeting in October 2001, when Ian Thompson had suggested the Treasury redefine its role in respect of capital projects and that the DTI’s role, in relation to the MEA, be redefined, and invited Mrs Williams to comment.

 

She said that it would have required the DTI to promote the idea and, coming around the time of an election, it was decided to allow time to see how the new DTI Minister got on with the MEA.

 

Mr Rodan suggested that the whole issue seemed to be being driven by the MEA’s reluctance to cooperate and wondered if there were any changes in the defined role of the DTI today. Mrs Williams, replied, “No”.

 

Mr Rodan said that at a meeting in June 2002 concern had been expressed about the MEA’s projects and inquired what action had been taken.

 

Mrs Williams said that at the time they were waiting for the report from the Chief Internal Auditor, on compliance issues, so she didn’t think COMIN had been informed at the time of concerns.

 

Mr Rodan pointed out that a week later, Treasury was so concerned, it decided a letter would be sent to the MEA; and he wondered if they were so concerned whether the Attorney General and the Chief Minister were notified.

 

Mrs Williams said not, but the DTI were copied in to the letter. She explained that they were trying not to escalate the situation, although it did; and they were trying to avoid a COMIN ‘direction’, as that would be a very serious issue.

 

Mr Rodan asked Mrs Williams that, having finally issued the long awaited Treasury ‘direction’, did they consult with the A.G. as it appeared the wrong section of the Treasury Act had been referred to in the ‘direction’.

 

Mrs Williams gave a résumé of the different sections of the Act, particularly section 3 which dealt with ‘directions’, and pointed out she had not specified in her correspondence the subsection, although she was aware which one it was. She explained that she had plenty of experience of issuing Treasury ‘directions’ and had obtained advice from the previous A. G.

 

Clare Christian MLC inquired how she had reacted to the letter from the A. G. which resulted in the withdrawal of the ‘direction’.

 

Mrs Williams replied that she had “considered my position”. She told the Committee she had discussed the matter with Stephen Harding, in the A. G’s chambers, and the subsection that it had been felt she should have quoted in the correspondence to the MEA; but, because it was a technicality, it was not considered a big issue.

 

However, the A. G. had held the meeting with Mr Proffitt and within two days there was a total about face from the A. G’s department, she stated.

 

Mr Rodan put it to Mrs Williams that following the intervention by the A. G. she was told to “open dialogue” with the MEA; even though they knew you had problems with getting information from the MEA.

 

Mrs Williams’ almost apologetic response was “can I say I was ignored”. She went on to say that Mr Harding had told her that for commercial reasons the MEA couldn’t comply; and added that she had been under a lot of stress at the time.

 

Mr Butt asked Mrs Williams what her response was to Mr Proffitt’s assertions that her letter and contained inaccurate assumptions.

 

Mrs Williams told the Committee she had planned to refute the allegations but, having discussed the matter with Mr Harding, who said it would only inflame the situation, she had decided not to.

 

Mrs Christian suggested to Mrs Williams that the ‘approach’ of the A. G’s chambers was from looking at the ‘political’ situation.

 

Mrs Williams said this was to speculate, but claimed she was “shocked by the about face” and assumed this was based on the conversation between the A. G. and Mr Proffitt. She appeared put out that the A. G. had not also spoken to her, as she said she expected he would.

 

Mr Rodan inquired if the Treasury ‘direction’ was withdrawn on the A. G’s advice rather on a ‘direction’.

 

Mrs Williams replied there was “a lot of political pressure from the DTI Minister on the Treasury Minister”. The impression she had acquired was that it was a case of “back-off or the Board will walk”. She added that it had come over from the DTI Minister that all the Board members were “millionaires who knew how to make money” and they should be left to get on with the job.

 

Mr Rodan put it to Mrs Williams that the DTI Minister was Mr Downie; and Mrs Williams said “Yes”.

 

Mr Rodan then inquired what documents had been destroyed, were they the letters between the Treasury and Mr McCallion, Chairman of the MEA Board.

 

Mrs Williams said she had received correspondence from the government advocate, which indicated that there could be implications for Treasury, regarding the suggestion that the Financial Regulations were not lawfully made; and so Mr Gelling was acting as go between for the Treasury and the MEA. He had suggested withdrawing the (direction) letter. Mr Proffitt had then called to say that ‘withdraw’ meant destroyed; and so not wishing to inflame the situation she asked the DTI to return or destroy the letters.

 

In response to a question from Mr Rodan if ‘political’ pressure was applied, Mrs Williams said she had written to the previous A. G. in 1997 inquiring whether the Minister had a prerogative in allowing any leeway on financial regulations. It would appear the answer was no but the new position, decided by the current A. G., was different; and, although she was not happy with the situation, she said she felt she had no choice but to accept it.

 

Mrs Christian wanted to know what involvement COMIN had in the matter; but Mrs Williams did not think they had much involvement; although she believed the Chief Minister and the Treasury Minister had held discussions.

 

(Editor’s note: perhaps Mrs Christian would have been better directing the question to the person sitting next to her, Mr Rodan, as he was a member of COMIN at the time).

 

Mrs Christian asked if the Treasury Minister had been put under any pressure; but Mrs Williams just reiterated that the DTI Minister was very supportive of the MEA getting on with the job without unwelcome bureaucracy getting in the way.

 

Mr Butt wanted greater clarification of the ‘directive’ matter and Mrs Williams said she had been advised that they couldn’t issue ‘standing directives’, although she maintained they could have issued a “correct one”, but there was pressure not to issue one.

 

She stated that the MEA was “spoiling for a legal battle”, and because of the conflicting legal opinion, issued two days apart, and taking into account she had written to Mr Harding regarding the 1997 advice, she was left thinking “where does that leave us as we are not getting compliance.”

 

She continued that new financial regulations were under consideration, and the ‘Value for Money’ Committee had been written to regarding statutory enforcement of directives, and the response was that they were enforceable subject to certain conditions. Further correspondence was received on the enforceability issue but, owing to a lack of confidence on the issue, the Minister was not prepared to go to court over it.

 

Mr Butt inquired if there were any other options open to the Treasury, such as “unleashing the Chief Internal Auditor” on the MEA. Mrs Williams said they already had; as well as trying the dialogue route through the ‘Fresh Start’ initiative.

 

Mr Butt said the Committee had heard evidence that she had had an unpleasant conversation with Mr Proffitt.

 

Mrs Williams confirmed that it was an “exceedingly unpleasant” conversation, during which she had been accused of all sorts of things, that it had been “extremely personal” and she could not reconcile the response to what had been written in her letter dated 25^th June.

 

She maintained she had just kept reiterating to Mr Proffitt that all she wanted was compliance with financial regulations.

 

Mr Quirk asked how satisfied she was now with the level of compliance.

 

She replied that she was now satisfied and did not think what had happened with the MEA would happen again.

 Mr Rodan wondered if the ‘new’ regulations would have avoided the 2001/2 battle with the MEA.

Mrs Williams said there had not been much change to the regulations; mostly just a few technicalities of which some were finance issues.

 

Mr Rodan returned to the issue of the response by Mr Proffitt to Mrs William’s June letter. Paraphrasing what she had said, he put it to her she had said that the letter used temperate language, but had resulted in a ‘shockwave’ response, political pressure from the DTI to leave the MEA to get on with it; and the import of this was “back-off”. A letter had also been received from the CEO of the DTI in August, saying they found the situation most unsatisfactory as they had not been kept informed of the withdrawal of the ‘direction’.

 

Mrs Williams confirmed that the Treasury Minister had written the ‘withdrawal’ letter to the MEA and that it had not been copied to the DTI but she was satisfied the information had been relayed to the DTI.

 

Mr Rodan put to Mrs Williams that the DTI had got what they wanted and the threatened “meltdown” had been averted; before returning to the issue of the Treasury’s alleged exposed position if the matter was referred to the PAC.

 

Mrs Williams confirmed they had felt exposed because of the content of the 1997 letter from Mr Kerruish and the 2002 letter from Mr Harding. She claimed that if some one knew of non-compliance, and the more senior that person was, the more serious the matter would be considered if it had not been addressed. The position in which they found themselves was that it was made to appear that they had done nothing in respect of the non-compliance.

 

Although the Treasury were being ‘briefed’ regularly, she said, we were not getting all the documentation.

 

Mr Rodan asked if there had been any thought at the time to put a politician on the Board to ensure the necessary reporting.

 

Mrs Williams said that it was her recollection that the DTI made the recommendations of the appointments; and re-emphasized that the DTI were happy “with the ‘A Team’.

 

Mr Rodan pointed out that a paper to Treasury, in June 2002, raised the lack of political representation on the Board in connection with the non-compliance issue; but Mrs Williams just reiterated her previous response.

 

Mr Rodan moved on and asked that when the additional borrowing was in place in July 2003 what evidence, if any, did the Treasury have of this additional borrowing.

 

Mrs Williams replied, “None”. She added that the very idea that a statutory board would borrow money without Treasury concurrence was “unbelievable” and totally “outside expectation”.

 

Mr Rodan stated that as the MEA didn’t consider themselves a ‘Board’, he wanted to know if really there had been no suspicion, given their history of non-compliance etc, and why it came as such a surprise that they had borrowed money outside of the procedures.

 

Mrs Williams maintained that it was “inconceivable” and added that she could not really say any more.

 

Mr Butt said the internal audit report had pointed to lack of compliance. He reminded Mrs Williams she had said there was a concern whether the MEA’s internal audit was getting all the information it needed from the Board. Apparently, the issue was raised with them, and he inquired what the response had been; but she couldn’t remember.

 

Mr Butt asked Mrs Williams how she responded to the allegation by previous Board members that Treasury either knew or should have known of the additional borrowing.

 

Mrs Williams replied that she did not believe that Treasury had any inkling, or sufficient information to derive the information, of the additional borrowing until they received the draft accounts.

 

Mr Butt continued his questioning along this theme and put to Mrs Williams that when Tynwald approved the borrowing, in July 2001, it was made clear that there would be no more borrowing. So how confident, at the time, were they, given the lack of compliance, the ‘problems’ with the Deloitte report, which was taken on trust, and Mr Wilcox claiming the costs were only ‘indicative’.

 

Mrs Williams said she was not trying to avoid the question but it was before he time so she could not really provide an answer.

 

Questioning finished Mr Rodan inquired if Mrs Williams had anything to add.

 

She said that in August 2001 they had tried to come to an agreement with the MEA but the situation became “intolerable”. If Treasury had not done anything she said they would have been held liable for the inaction. So they tried to address the situation - which did not mean they were trying to “unpick” everything the MEA had done, not that the A. G. had really helped the situation - through dialogue but it continued as a “one way street”. “We couldn’t have done anything more” were her final words.

 Further public sessions are scheduled for the 1^st July 2008.

Add to: del.icio.us | Digg