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Note Of Decision Web Version

Complaint no. LA/Fa/835 concerning an alleged contravention of the Councillors’ Code of Conduct by Councillor Stephen Fry of Falkirk Council

1. Complaint number LA/Fa/835 alleged a contravention of the Councillors’ Code of Conduct (“the Code”) by Councillor Stephen Fry (“the respondent”).

2. It was alleged that the respondent had contravened the Code, in particular the provisions set out in section 5 of the Code on Declaration of Interests.

3. The person complaining (“the complainant”) alleged that in his entry in Falkirk Council’s Register of Interests, the respondent had registered his financial interest as a “Strategic Planner” with the Royal Bank of Scotland and therefore, the complainant suggested, it could be concluded that the respondent was a senior figure within the Royal Bank of Scotland. The complainant further alleged that at the meeting of Falkirk Council’s Policy and Resources Committee, which was held on 18 November 2008, the Committee divided over the Council’s “Investment Strategy” and that, according to the report published on the Council’s website, the Royal Bank of Scotland was one of the banks the Council’s officers recommended the Council invest with. It was the complainant’s view that Councillor Fry should have declared his interest and not participated in the debate and vote when, according to the complainant, the company he worked for had a financial interest in the outcome.

4. The respondent agreed that he worked for the Royal Bank of Scotland, but denied that he was a senior figure in the bank, suggesting that his position as a Strategy and Planning Manager was equivalent to that of an Area Manager.  He also pointed out that during the meeting on 18 November 2008, he had stated that he was employed by the Royal Bank of Scotland, but that he had not considered that that gave rise to any conflict of interest under the Councillors’ Code of Conduct.  He had also pointed out during the debate that the institutions thought acceptable for investment were laid down outwith Council control and therefore deemed financially sound for this type of investment.  The Royal Bank was one of many institutions on the list prepared by the Director of Finance. The respondent concluded that he had made a full and proper declaration regarding any business interests he may have had.

5. In the Minute of the meeting of the Policy and Resources Committee held on 18 November 2008, under the heading “Declaration of Interest” it was recorded that the respondent had said that he was employed by the Royal Bank of Scotland but had not considered that that gave rise to any conflict of interest under the Councillors’ Code of Conduct.  Prior to the meeting, he had discussed his position with the Acting Director of Law and Administration Services (The Monitoring Officer) who had established from him that he had not had a direct financial interest in the matter before the Committee.  They had then touched on the test for dealing with non-financial interests with the respondent concluding he had not been required to exclude himself from consideration of the matter. 

6. The report before the Committee had not focused on the Royal Bank of Scotland; the matter to be considered, and in respect of which the respondent had required to decide whether he had a declarable interest, was a review of the Council’s treasury management strategy.  It may have been the case that the application of the strategy and decisions taken by officers under it, having had regard to externally determined credit ratings, could have resulted in short term funds being invested at some stage in the Royal Bank of Scotland (albeit none had been), but that outcome would not usually have been a decision of members of the Committee.  Rather, members had been expected to decide on the strategy and criteria for deciding on the approved counterparties and the counterparty limits with the Director of Finance then determining the list of approved bodies by applying the requisite criteria.

7. Given the whole circumstances of this case, including the facts that the respondent had sought legal advice from the Monitoring Officer, that he had considered his position under the Code, and that the subject matter of the report had been in relation to treasury management policy, I did not consider it could reasonably have been concluded that the circumstances had required the respondent to declare an indirect financial interest in the matter of the report before the meeting. It followed that it would not have been reasonable to have concluded that the respondent had been in breach of the Code.

8. I did, however, have concerns about the declaration of interests in relation to treasury management reports submitted to the Council generally and I made the following points:

(i) reports by the Director of Finance about treasury management may, at the end of the day, touch on the selection of specific institutions to be or become listed as approved counterparties.  Institutions may have a financial interest in being included in that list and also in the policy criteria to determine who should be included on the list.

(ii) members are entitled to know which institutions are on the list, to propose different criteria, and to propose that specific institutions be added to or removed from the list.

(iii) members who are employees of institutions on the approved list (or of those wishing to be included) have potentially an indirect financial interest in any matter before the Council relating to the determination, approval or monitoring of that list.

(iv) members – including specifically the respondent – who come within the terms of (iii) above (no matter the nature or status of their employment) should review their position in respect of any future reports to the Committee on treasury management.  The Monitoring Officer should also give further consideration to this matter in light of this advice.

9. Having considered the information that arose from my investigation, I concluded that, Councillor Stephen Fry had not contravened the Councillors’ Code of Conduct.

D Stuart Allan

Chief Investigating Officer

44 Drumsheugh Gardens

Edinburgh

EH3 7SW

01 December 2009