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Stornoway, Lewis

 

 

Scrutiny panel mooted after accountancy contract scandal      1/11/10

 

 

 

 

 

Western Isles Council is poised to set up a special scrutiny panel to review the roles of councillors on a £120 million PPP schools body after a controversial long running legal dispute.

 

The Scottish Government is said to be keeping an eye on the hugely embarrassing scandal which is believed to be the first claim of unfair dealing since it revamped the PPP schools construction scheme.

 

The latest twist follows a lengthy legal dispute on top of a high level internal probe into claims that Sgoiltean Ùra - an entity owned and established by Western Isles Council to build and operate six new schools - deliberately skewed a tender for accountancy and financial services to prevent a Stornoway firm from getting the job.

 

Stornoway firm Nicolson Accountancy owned by Sue Nicolson and her husband Angus - a former islands' councillor - sued the council in the Court of Session.

 

The Nicolsons dropped the court action after the council eventually agreed an out-of-out settlement - believed to be between the initial claim of £76,600 but greater than an earlier rejected £10,000 offer from the council-owned schools’ body. In addition, the council will pay their legal fees.

 

The council’s own audit panel urges the local authority to set up the scrutiny measures after debating an investigation report into the accountancy contract scandal.

 

Council Chief Executive Malcolm Burr highlighted “issues relating councillors serving on arms length companies and outside bodies - together with the governance arrangements for wholly owned entities.“

 

This is thought to refer to tightening up or clarifying senior management protocols, business ethics and promoting good practice.

 

He recommends the scrutiny panel be established to examine these issues further and to also look at the “role and responsibilities” of councillors on  bodies such as Sgoiltean Ùra.

 

This would include giving “support and guidance” to councillors before they take up such appointments.

 

In the original court summons, the Nicolsons claimed two senior councillors intervened when they “ought to have no part in the decision making process.”

 

They maintained they submitted the best bid for a three and a half year accountancy consultancy contract.

 

The summons claimed that Sgoiltean Ùra bosses - with the involvement of certain senior councillors - changed the contract requirements after opening the bids but Nicolson Accountancy lost out a second time despite still offering the best tender which was 38% cheaper.

 

Instead, it was offered to rival accountancy firm CIB Services of Stornoway at a higher fee.

 

Sgoiltean Ùra took legal advice on how it handled the contentious tender.

 

At the same time, Malcolm Burr, council Chief Executive, headed a probe into all aspects relating to the administration and evaluation of the tender.

 

The investigation fallout resulted in a senior finance officer undergoing disciplinary action.

 

She was said to be involved in the contract process despite her husband being a senior partner in CIB which won the bid.

 

However, following an internal probe, the Comhairle confirmed that she had no role or involvement in the contract process including the design, evaluation or award of the contract for accountancy services to Sgoiltean Ura LLP.

 

 

David Rattray, depute director of finance at Western Isles Council, was suspended over a related matter. He left the authority soon afterwards.

 

The contentious contract was frozen and later aborted preventing CIB Services from taking it up. The finance work was split into two fresh separate tenders and Nicolson Accountancy won one contract.