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On 11-15 January 2010 the Disciplinary Committee of the Chartered Institute of Public Finance and Accountancy (“CIPFA”) heard allegations against Mr John Lindsay (formerly of East Lothian Council).
Mr Lindsay did not attend the Disciplinary Committee hearing and was not represented in his absence. He had made written submissions which were considered by the Disciplinary Committee.
The facts in this case concern two different reports which were presented to different meetings of East Lothian Council (“the Council”) in 2005 and 2007.
Chief Officers Conditions of Service Report: Facts
In April 2005 Mr Lindsay, then Chief Executive of the Council, instructed the Council’s Head of Personnel to draft a report “Workforce Equality- New Chief Official Conditions of Service”. He later instructed the Head of Personnel to remove from this report all references to advice received from COSLA (Convention of Scottish Local Authorities). This advice did not support the proposals – COSLA considering that they were a departure from the national agreement. Mr Lindsay later re-wrote the report on Chief Officers Conditions of Service, again omitting the COSLA advice. After some further re-drafting this report was presented to Cabinet in December 2005 (hereinafter referred to as the “December 2005 Report”).
The Disciplinary Committee found no evidence that Mr Lindsay had taken all reasonable steps to ensure the completeness of the information in the December 2005 Report in that he had failed to take advice (other than limited internal advice) from COSLA or anyone else as to the propriety or legality of the proposals. In the event, part of the proposals had the effect of converting a travel allowance to pensionable pay which was contrary to applicable Local Government Pension Regulations.
In addition, the December 2005 Report did not provide appropriate financial advice and guidance to the Council. In particular, by instructing that the reference to COSLA’s advice be removed Mr Lindsay deliberately withheld information from members that he knew, or ought to have known, was materially relevant to the matters under consideration.
At no stage did Mr Lindsay acknowledge his personal and pecuniary interest in the setting of the Chief Official Allowances that were discussed in the December 2005 Report and, in particular, made no declaration of his interests at the Cabinet meeting.
Council Re-organisation Report: Facts
In November 2006 Mr Lindsay, then Chief Executive, reached an agreement with the then Leader of the Council that he might retire early and that such a proposal should be brought forward as part of the Leader’s budget proposals.
At a Special Meeting of the Council in February 2007, the Council considered a report concerning the proposal (hereinafter referred to as the February 2007 Report) which was ostensibly about the achievement of efficiencies for the Council by merging two departments. In fact the February 2007 Report contained precise and detailed arrangements for Mr Lindsay’s early retirement on the grounds of redundancy and the appointment of a new Chief Executive – an appointment to be made from a restricted pool of internal candidates. The February 2007 Report contained little or no other detail.
The February 2007 Report did not contain appropriate financial advice and guidance to the Council for its decision on restructuring and Mr Lindsay’s redundancy. It was in any event inappropriate in the context of the Special Council meeting called for the setting of the Annual Budget to table a report that had detailed consideration of Mr Lindsay’s proposed early retirement and redundancy.
Mr Lindsay at no stage properly considered the nature and extent of the conflict of interest that existed between himself as the potential recipient of a large severance payment and the Council.
BREACH OF PROFESSIONAL STANDARDS
Mr Lindsay had acted in breach of CIPFA’s Standard of Professional Practice on Ethics which requires Members to maintain objectivity and professional independence, to act with integrity, to observe the principles of Proper Conduct and to demonstrate appropriate professional behaviour.
In relation to the December 2005 Report, Mr Lindsay’s judgement and actions lacked professional independence and showed a lack of professional objectivity in relation to his failure to consider or declare his conflict of interest, his suppression of the COSLA advice and in bringing forward proposals without the benefit of appropriate external or legal advice.
His actions in directing the preparation of the December 2005 Report in such a way that relevant information and advice was either suppressed or not properly and diligently researched also amounted to a breach of the requirement to act with integrity.
He had also failed to promote and support the fundamental principles of the Standard of Professional Practice on Ethics by leadership and example – a key requirement of his role as Chief Executive.
Mr Lindsay had also acted in breach of CIPFA’s Standard of Professional Practice which requires members to conduct business lawfully, fairly and to provide timely advice with due care and diligence.
In relation to the February 2007 Report, Mr Lindsay’s actions lacked integrity in that his conduct did not reach the required standard of fair dealing in relation to both the proposal to award him a £149,000 severance payment and his promotion of a report which was ostensibly about departmental restructuring but was actually concerned with the terms of his own severance payment and the consequences for the post of Chief Executive.
Mr Lindsay’s conduct lacked objectivity in that he had compromised his professional judgement because of his conflict of interest.
Mr Lindsay’s conduct (which received much local press coverage) also represented a failure by Mr Lindsay to avoid any action which may bring discredit on the profession.
By his actions Mr Lindsay was found to be in breach of CIPFA Bye-law 23(b) - in that he had breached one or more of CIPFA’s guides to conduct, principles or rules, 23(c) - in that he had conducted himself in such a way as to prejudicially affect the status, reputation or welfare of the Institute, and 23(d)(i) – in that his actions had brought discredit upon himself, his employer, the Institute and the profession.
SANCTION AND RELEVANT CONSIDERATIONS
The Committee determined to expel Mr Lindsay from the Institute and impose a fine of £7,000. It took into account that there were multiple breaches of the Standards of Professional Practice, which included breaches of the fundamental principles underpinning the Institute’s Disciplinary Scheme – those of Selflessness, Objectivity and Integrity. Mr Lindsay had demonstrated no insight or real remorse in his written representations to the Committee. His actions were a breach of trust with the residents of East Lothian Council and were fundamentally incompatible with membership of the Institute. A fine of £7,000 was imposed. This as well as having practical effect, reflects the seriousness of the breach of CIPFA’s standards and that his conduct was motivated by personal gain.
As Mr Lindsay was at the time of the hearing a former member of the Institute, the effect of the sanction is that any application for re-admittance would only be considered in accordance with procedures laid down under CIPFA’s Disciplinary Regulations.
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