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Complaint nos. LA/SI/932 and LA/SI/933 concerning an alleged contravention of the Councillors’ Code of Conduct by Councillor Gary Robinson of Shetland Islands Council

1. Complaint numbers LA/SI/932 and LA/SI/933 alleged a contravention of the Councillors’ Code of Conduct (“the Code”) by Councillor Gary Robinson (“the respondent”).

2. It was alleged that the respondent had contravened the Code, in particular, the provisions on Confidentiality contained in paragraphs 3.15 and 3.16; and the key principles of Duty, Leadership, and Respect set out in section 2.

3. The persons complaining (“the complainant”) who included Councillor Caroline Miller, alleged that the respondent made untrue and defamatory comments to The Shetland News website which breached the confidentiality of a legal agreement between Judane (Shetland) Ltd, Shetland Islands Council and Shetland Development Trust. The first and second complainants alleged in addition that the respondent sought to stop the implementation of the agreement.

4. The background to this complaint was a complex situation involving the first and second complainants’ company, Judane (Shetland) Ltd, which had received public funding by way of loans to assist its development. Initially the loan repayments were met but when trading conditions deteriorated the company found itself unable to meet its loan repayment commitments. After prolonged attempts by the company to realise funds from the sale or lease of its factory – the principal asset – the Council sought to resolve Judane’s indebtedness in a manner which achieved the optimum return to the public purse. The details of the loans, the repayment terms, and fiscal decisions which led to the eventual settlement lay outwith the scope of the Code and are currently under consideration by Audit Scotland.

5. The question which I was required to consider was whether public comment by the respondent which referred to the agreement reached with Judane (Shetland) Ltd was such as to breach the terms of the Code.

6. The indebtedness of Judane was widely known in the Shetland community through media coverage. It had also been reported to Shetland Development Trust, of which the respondent was a trustee following his election to the Council in May 2007. When the Council became sole trustee in March 2008 oversight of the Trust’s activities was delegated to the Development Committee of which the respondent was a member. He was thus fully aware of the ongoing situation and that the Council had delegated authority to the Chief Executive to seek a negotiated settlement – a decision from which he had not dissented.

7. The issue was complicated by the dual role of the Council as a party to a compensation claim by Judane arising from erroneous planning advice, and as sole trustee of Shetland Development Trust to which the company was indebted. The respondent suggested that this posed a conflict of interest, but in general terms, as a matter of practical utility, I considered that no objection could be taken to the Council acting in either capacity to achieve the best possible return to the public purse. Neither did I consider that the incorporation of the maladministration claim within the negotiations was an unreasonable course of action in the context of what was essentially a pragmatic commercial consideration.

8. The settlement was reported to the Council within meetings which were clearly identified as confidential and to which the public were not admitted. The confidential nature of the negotiations was made evident within the minutes of the relevant meetings, although a confidentiality clause was not included in the Heads of Agreement document.

9. Following the press reporting of claims made by Judane’s former factory tenant that rent due to the company had been paid through the Northern Isles Knitwear account of which Councillor Caroline Miller, in her private capacity, was the sole signatory, the respondent sought to clarify whether this was known to the Council officers responsible for managing the affairs of the Trust. It appeared that this was not the case and the respondent then attempted to raise the matter with the Council. He appeared to have done so in a restrained manner and it was uncertain as to whether he conveyed the information as a question or a statement. In any event he did not pursue, or was not permitted to pursue, the matter at the Council meeting. At that stage I considered it was entirely reasonable for the respondent to have sought an explanation for the use of the Northern Isles Knitwear account.

10. When the respondent was contacted by a reporter from The Shetland News the fact that some moneys due to Judane had been paid into the Northern Isles Knitwear account was already in the public domain. The reporter asked the respondent to comment on the claims made by the former factory tenant about his rental payments. Councillor Robinson responded to the effect that these claims, if true, merited further scrutiny. His subsequent references to fraud and the possible involvement of the police were however premature given that, at that stage, an explanation from the complainants had not been sought.

11. The reference to £400,000 having been written-off was inaccurate but the respondent and the majority of his fellow-councillors were not privy to the basis of the settlement and the exclusion, on legal advice, of the penalty interest. I do not consider that in itself this breached the confidential nature of the agreement and it might indeed be regarded as fair comment on the basis of the respondent’s knowledge at that point.

12. The Shetland News report revealed none of the detail of the agreement, and the independent accounts of the respondent and the reporter were consistent in stating that the agreement itself, and its terms, were not discussed between them. The generality of the agreement had already entered the public domain but in fact the respondent was being asked to comment specifically on an issue which had not featured in the settlement and which now appeared to be a new and salient issue. I did not consider that the reference to the written-off sum or the call for further investigation could be seen as being motivated by a desire to achieve personal or political advantage, or to discredit the Council. I did not consider that the respondent had breached the terms of paragraphs 3.15 or 3.16 of the Code, and I found accordingly.

13. The first and second complainants also stated that the respondent sought to suspend the agreement in an e-mail to the Head of Legal and Administration. This was not disputed by Councillor Robinson who, at that stage, did not know whether the payments to Northern Isles Knitwear were a material factor which could have influenced the settlement negotiations. He did not ask that the settlement be rescinded but simply delayed until that point had been clarified. In that context I considered that he was entitled to raise the question, and indeed, in his role as a member of both the Development Committee and Audit and Scrutiny Committee, which is charged with ensuring good stewardship of Council resources, it was entirely within his remit to do so.

14. I also considered the impact of the presumption in favour of freedom of expression afforded by the Article 10 of the Convention on Human Rights, and its role in enabling democracy and public participation in decision-making. In that context a wide latitude of expression is permitted and only restricted where necessary to protect the rights and reputations of others, or to protect national security, public order, public health or morals. In this case the information imparted by the respondent was posed in the form of a call for an enquiry or investigation of the use of the Northern Isles Knitwear account, albeit an implication might well be drawn that the respondent was if not directly making the allegation, at least not discounting the possibility of some fraudulent practice. Defamation is not an area to which the Code or my jurisdiction extends but it was my view that the quotes attributed to the respondent in The Shetland News report were prompted by legitimate concerns and did not extend to gratuitous criticism of the complainants.

15. The key principle of Duty requires councillors to act in the interests of the Council as a whole, and to represent the interests of the community conscientiously. Councillor Robinson had received information from the former tenant of the factory and others which appeared to him to be relevant to the settlement negotiations, and certainly required an explanation. He attempted to raise the matter in Council and directly with the Head of Legal and Administration. (who is also the Council’s Monitoring Officer). At that stage all that was required was an explanation of the use of the Northern Isles Knitwear account. The complainants later indicated that they would have provided this if asked, and it appeared that they had no reason not to do so as the purpose of using the account was simply to facilitate the payment of liabilities which could not be channelled through the company account after it was placed on a reducing balance basis. The respondent, who it may be noted was responding to rather than initiating press comment, could be criticised for adding to the call for investigation rather than simply seeking that explanation, and using phraseology that showed poor judgement and a lack of courtesy to the complainants. I considered however that his attempts to obtain clarification were prompted by legitimate concerns and in the public interest – and that these concerns could and should have been addressed when they were first raised in the Council. As such I considered that Councillor Robinson was in fact upholding rather than breaching the key principle of Duty and I found accordingly.

16. The principle of Leadership requires councillors to act in a manner that maintains and strengthens public trust and confidence in the integrity of the Council and its councillors in conducting public business. This went to the heart of the case where the Council – either in its own capacity or as sole trustee of Shetland Development Trust was conducting negotiations with the purpose of optimising the return of public funds. Scrutiny of minutes and media reports over a considerable period showed that there was considerable concern, shared in some cases by trustees and elected members, that Judane would be unable to settle its indebtedness to public funds. In saying that, I wished to make it clear that I was not in any way implying that the company had deliberately sought to avoid repayment, or had diverted or concealed funds that might have been devoted to that purpose. There was however a concern that the point had come at which the Council and/or Trust required to bring the matter to a head. The ensuing negotiations resulted in an agreement which relied on a judgement being taken as to the ability of Judane to pay and the risks and costs attaching to receivership or the continued pursuit of the compensation claim by Judane against the Council. It was my view that any suggestion of lack of transparency or incomplete disclosure of salient facts by the company would have inevitably damaged the credibility of the agreed settlement.

17. When the use of the Northern Isles Knitwear account became known – and the explanation appeared on the face of it to be relatively straightforward - it should have been addressed. The failure of either party to respond to the initial public disclosure in The Shetland Times simply contributed to an impression of concealment, and it was principally Councillor Robinson who sought clarification. It would have been preferable if he had done so directly with the directors of Judane, or Councillor Caroline Miller as the account holder, rather than airing his concerns through The Shetland News. He might indeed have phrased his comments in a more measured manner, or referred the reporter to the Convener or senior officers of the Council, but perhaps influenced by the immediacy of the reporter’s request, volunteered his own request for an enquiry. I considered that this did not breach the principle of Leadership and indeed demonstrated a willingness to speak out on a matter, already in the public domain, on which continued silence might well have exacerbated public disquiet. I found, therefore, that Councillor Robinson had not breached the principle of Leadership.

18. The principle of Respect requires that courtesy shall be shown to other councillors and Council employees. While the respondent’s attributed comments in The Shetland News article clearly aligned him with the former factory tenant’s call for a police investigation, which necessarily implied the suspicion of some criminal practice, no specific claim was made against the third complainant, Councillor Miller, or any officer. As a matter of fact Councillor Miller was the sole signatory to the bank account, the wife of the first complainant, and the sister-in-law of the second complainant, who were the directors of Judane (Shetland) Ltd. As her register of interests shows, Councillor Miller was, or had recently acted as, an unpaid consultant to that company. It would simply not have been possible for the respondent to raise concerns with regard to Judane’s use of the Northern Isles Knitwear account without alluding to Councillor Miller. I found that the respondent had not breached the principle of Respect.

19. Having considered the information that arose from my investigation, I concluded that Councillor Gary Robinson had not contravened the Councillors’ Code of Conduct.

D Stuart Allan

Chief Investigating Officer

44 Drumsheugh Gardens

Edinburgh

EH3 7SW

7 May 2010