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Complaint no. LA/SI/684 concerning an alleged contravention of the Councillors’ Code of Conduct by Councillors Adam Doull, Leslie Angus, Alexander Cluness, Joseph Simpson and Iris Hawkins of Shetland Islands Council

1. Complaint number LA/SI/684 alleged a contravention of the Councillors’ Code of Conduct (“the Code”) by the above-named respondents.

2. It was alleged that Councillor Doull had contravened the provisions in section 4 of the Code on Registration of Interests, and that all of the respondents had contravened section 5 on Declaration of Interests.

3. The person complaining (“the complainant”) alleged:

First Allegation: that on being elected to Shetland Islands Council on 3 May 2007, Councillor Adam Doull (the first respondent), failed to register his interest as a director of SSG Seafoods Ltd;

Second Allegation: that at the meeting of the Council held on 4 July 2007, at which members were asked to consider a report by the Monitoring Officer on the findings of an investigation by the Scottish Public Services Ombudsman (the Ombudsman) into the involvement of the Council’s Chief Executive in investment decisions relating to SSG Seafoods Ltd, Councillor Adam Doull (the first respondent) and Councillor Leslie Angus (the second respondent) failed to declare their interests as directors of SSG Seafoods Ltd, when that company sought investment funding from Shetland Development Trust and SLAP Trading Ltd; and in the case of the second respondent his continuing interest as a director of SSG Seafoods Ltd (in receivership);

Third Allegation: that at the Council meeting on 4 July 2007 Councillor Alexander Cluness (the third respondent), Councillor Joseph Simpson (the fourth respondent), and Councillor Iris Hawkins (the fifth respondent) failed to declare their interests as trustees of Shetland Development Trust, or directors of SLAP (Trading) Ltd, when investments were made in SSG Seafoods Ltd.

4. In October 2005 a complaint was made with to the Scottish Public Services Ombudsman in relation to the Chief Executive’s alleged involvement in decisions to provide public investment or funding to SSG Seafoods Ltd, a company of which his brother was a director.

5. SSG Seafoods Ltd was incorporated on 24 January 2000 with the aim of safeguarding the viability of Shetland fish farming by establishing what was in effect a co-operative of locally owned enterprises. The company was placed in receivership on 22 December 2003 and no longer trades although it remains on the register as a company in receivership.

6. In June 2007 the Ombudsman issued a report which concluded with a recommendation that the Council emphasise to staff the importance of public perception in relation to their actions.

7. For the Council meeting on 4 July 2007 the Monitoring Officer prepared a report setting out the background to the complaint and the Ombudsman’s finding. The conclusion of the Monitoring Officer in his report for the meeting was that the Council should proceed to accept the recommendation of the Ombudsman.

8. Copies of the Monitoring Officer’s paper and the Ombudsman’s report were distributed to the councillors immediately prior to the agenda item. After the period allowed to read the documents had elapsed the third respondent, as convener, asked if the members had had sufficient time. There was general agreement and the Monitoring Officer, after explaining the reason for the delayed submission, proceeded to summarise his paper.

9. After a short debate (the entire agenda item taking approximately 20-30 minutes) Councillor Wishart, seconded by Councillor Robinson, moved that the recommendations in the paper be approved and the Monitoring Officer on the basis of bringing closure to the matter be given delegated responsibility to respond to any further communications from the complainant. There was no dissent and the members approved the matters without a vote. Councillor Robinson then proposed that members should go further by making a public statement of support and confidence in the Chief Executive. There was again no dissent and this decision was also agreed and included in the minute. The Council also agreed that the Monitoring Officer’s report and the minute should be made public after the meeting.

10. In examining this complaint I took cognisance of the fact that the underlying circumstances of the propriety of the Chief Executive’s involvement in the decision to invest in SSG Seafoods Ltd, and the commercial judgement applied by the funding bodies fall outwith the scope of the Councillors’ Code of Conduct. It is not my role further to investigate matters which have properly been examined by the appropriate agencies. My findings therefore relate solely to the conduct of the respondents as applied to the Code.

11. The First Allegation: Section 4 of the Code requires councillors to register certain interests on being elected and whenever their circumstances change thereafter. It is self-evident that to require registration the interest must exist during the currency of the member’s tenure of office as a councillor. Interests are grouped under seven categories of which those relevant to the present case are Category One: Remunerated Interests, and Category Seven: Non-Financial Interests.

12. In regard to remuneration a registerable interest exists where a Councillor receives remuneration by virtue of being employed, self-employed, the holder of an office, a director of an undertaking, a partner in a firm, or undertaking a trade, profession or vocation, or any other work. The first respondent (Councillor Doull) was appointed as a director of SSG Seafoods Ltd on 9 May 2000. This active role lapsed when the company was placed in receivership on 22 December 2003, giving rise finally to his resignation as a director on 31 March 2004. The first respondent had received no remuneration in connection with SSG Seafoods Ltd since his election to the Council and accordingly no requirement for registration arose under Category One.

13. Non-financial interests are defined in paragraph 4.21 of the Code as those which members of the public might reasonably think could influence the actions, speeches or votes of a member in the Council. While it might be argued that the directorship of a company which becomes the subject of retrospective consideration by the Council could constitute an interest under Category Seven, I did not consider that an elected member could reasonably be expected, or required, to include within his registered interests a directorship or employment which existed prior to his election. I did not consider there was any obligation to do so, and accordingly I found that the first respondent had not breached section 4 of the Code.

14. The Second Allegation: In matters relating to the declaration of interest there are three essential questions which require to be addressed: firstly, did a relevant interest exist; secondly, if such an interest has been established, was it one that required to be declared; and thirdly, did the councillors concerned apply their minds to the relevant test in the Code and properly make a decision as to whether they should or should not make such a declaration and, if so, whether to withdraw from the meeting.

15. The main facts of this case are matters of public record. The first respondent (Councillor Doull) had no interest as a director of SSG Seafoods Ltd at the date of the meeting and as such no presumption arose under the Code that he should declare the fact that he had previously been a director during the period covered by the Ombudsman’s report. The second respondent (Councillor Angus) on the other hand had registered his interest as a director of SSG Seafoods Ltd (in receivership) and had in fact been a director of the company since 29 July 2002, albeit this date fell marginally outwith the period considered within the Ombudsman’s report. The registration of a non-financial interest raises a strong presumption that it should be declared when matters relating to it come before the Council.

16. Both respondents could of course have elected to declare their directorships of SSG Seafoods Ltd and no exception could have been taken to such a course of action. However the subject under consideration was not the performance of the company, but the response of the Council to the Ombudsman’s report and the recommendations made by the Monitoring Officer. Members were not being asked to review the conduct of the company. Neither were they required to debate the decisions taken by the Council, the trustees of Shetland Development Trust, or the directors of SLAP (Trading) Ltd which had led to the investment of public funds in SSG Seafoods Ltd – such matters having already been scrutinised by the Council’s external auditors and Audit Scotland.

17. In the event the first respondent (Councillor Doull) did not declare an interest as a former director of SSG Seafoods Ltd. I consider that he was entitled so to do as the agenda item and the recommendations to be decided upon raised no issue which could reasonably have been regarded as being influenced by such an interest. I found therefore that the first respondent had not breached the terms of section 5 of the Code.

18. The second respondent (Councillor Angus) only became aware of the contents of the Ombudsman’s report and the Monitoring Officer’s paper on their distribution at the commencement of the agenda item. On realising that they related to SSG Seafoods Ltd and Shetland Development Trust, he informed the meeting that he was respectively a director and trustee of these bodies although this statement was not taken to be a formal declaration of interests. Essentially, however, he did apprise the meeting of his past interest in the company (which was, at the time, no more than a non-financial interest). The second respondent, having alerted his colleagues to his involvement in the company and Trust continued to remain within the Chamber and, although he did not actively take part in debate, was part of the meeting when the decision was taken. Had the agenda item been concerned directly with the propriety of the Chief Executive’s involvement in the provision of funds to SSG Seafoods Ltd, and the channelling of such funds through Shetland Development Trust, I considered it much more arguable that the proper course of action would have been for the second respondent to have formally declared an interest and then exercised his judgement as to whether the link between the agenda item and the declared interest required his withdrawal from the Chamber. In this case the item of business under consideration related wholly or mainly to the Ombudsman’s report, including its recommendation to the effect that the Council emphasise to staff the importance of public perception in relation to their actions. In all the circumstances, I considered that the second respondent (Councillor Angus) could not reasonably have been taken to be under any obligation under the Code to declare an interest (which in any event he probably did) and to withdraw from the meeting. I concluded, therefore, that he had not breached section 5 of the Code.

19. The Third Allegation: The reasoning applied to my findings in regard to the second allegation was also relevant to the final part of the complaint. Once again the complainant raised the question as to whether councillors who were trustees of Shetland Development Trust or SLAP (Trading) Ltd, two of the bodies concerned in funding SSG Seafoods Ltd, had an obligation in terms of section 5 of the Code to declare these as interests and withdraw from consideration of the agenda item.

20. In the case of the third and fourth respondents (Councillors Cluness and Simpson) I noted that they were trustees of Shetland Development Trust at the date of the meeting, and during the period considered by the Ombudsman. The fifth respondent (Councillor Hawkins) only became a trustee from her election as a councillor in May 2007. All had registered their trusteeships of Shetland Development Trust, and the third and fifth respondents had registered their directorships of SLAP (Trading) Ltd.

21. The complainant did not adduce any evidence to show that the funding decisions in which the third and fourth respondents participated were improperly influenced by the relationship between the Chief Executive and the Chairman of SSG Seafoods Ltd. The fifth respondent was neither a member of the Trust nor of SLAP (Trading) Ltd at the relevant period and thus had no such involvement. The matters they were being asked to consider and decide upon at the meeting on 4 July 2007 related solely to the actions to be taken in response to the Ombudsman’s report and its recommendations. For the reasons already detailed I did not consider that the third, fourth or fifth respondents had breached the terms of section 5 of the Code and I found accordingly.

22. The complainant invited me to consider whether the remaining members of the Council, who by virtue of their role as councillors were also trustees of Shetland Development Trust, should have declared an interest in the agenda item to which this decision refers. While I would not as a matter of practice and jurisdiction widen an investigation beyond those named councillors against whom specific allegations have been made, I was satisfied that in the particular circumstances of this case the reasoning in paragraph 5.14 would apply to all members of the Council who were at the relevant time, or continued to be trustees of Shetland Development Trust or directors of SLAP (Trading) Ltd.

23. This case again raises important issues turning on the registration and declaration of interests relating to companies which Shetland Islands Council (directly or indirectly) have supported financially. In an earlier case (LA/SI/490), I had occasion to recommend that the Council give consideration to reviewing their arrangements for recording members’ interests to ensure they fully comply with all the relevant provisions under the Code and statutory regulations. I understand that the Council have such a review in hand and would hope that they complete the review as soon as practicable.

24. Having considered the information that arose from my investigation, I concluded that Councillors Adam Doull, Leslie Angus, Alexander Cluness, Joseph Simpson and Iris Hawkins had not contravened the Councillors’ Code of Conduct.

D Stuart Allan

Chief Investigating Officer

Forsyth House

Innova Campus

Rosyth Europarc

Rosyth

KY11 2UU

17 June 2008