The decision by the Scottish Government to double a payment to the departing chief executive of Transport Scotland was criticised today by a Holyrood committee.
The Public Audit Committee questioned the reasoning behind a decision to pay former chief executive Dr Malcolm Reed six months’ salary in lieu of notice when his normal contractual notice period was only three months.
Reporting on the 2008-09 audit of Transport Scotland, the committee raised concerns about a lack of evidence to justify the exceptional payment, and about the information provided to both it and the Scottish Government’s auditors.
Committee Convener Hugh Henry MSP said: “When the former chief executive of Transport Scotland left his post by mutual agreement he was paid six months’ salary in lieu of notice. His normal contractual entitlement was to three months' notice.
"In justification of the decision to effectively double his payout to £61,000, the Scottish Government told its auditors that this was an exceptional payment made on the basis that his departure from post would provide an organisational advantage.
"But, when later questioned on this by the committee, the Permanent Secretary said that Dr Reed’s contract entitled him to six months' notice if structural grounds were involved in the decisions for his departure.
"The Committee does not accept that any structural change related to the post of chief executive occurred between the time of Dr Reed’s departure in February 2009 and a year later when it inquired into the matter. On that basis, it does not consider that the structural change argument was relevant.
"The committee has not received any good or robust reason to justify why the extra payment was made. At a time when financial rigour is required, the committee questioned the need to make this payment, especially when one year later no structural change involving the chief executive had been made.”
"Moreover, it is concerned that the Scottish Government did not provide relevant information to the auditor on which it later sought to rely, casting doubt on the decision-making process”.
The committee recommended that the Permanent Secretary takes early action to ensure the Scottish Government’s arrangements for supplying information to its auditors are more robust in future.
The report also commented on current arrangements for disclosing the pay of senior public servants, given that the 2008-09 accounts of Transport Scotland do not provide details of the remuneration arrangements for the former Director of Finance and Corporate Services, who also left the organisation in that year.
Mr Henry said: “The committee, the parliament and the public have a right to know the amounts spent on senior officials. Without that information those responsible for the use of public money can not be properly held to account.
"The committee is calling for action at UK and Scottish level to ensure that such information is in the public domain.”
The report from the Public Audit Committee followed the publication of a report by the Auditor General for Scotland (AGS), under section 22(3) of the Public Finance and Accountability (Scotland) Act 2000, on the 2008-09 Audit of Transport Scotland.
While the auditor gave an unqualified opinion on Transport Scotland’s audited accounts for the year ended 31 March 2009, the AGS decided to report to the Scottish Parliament on remuneration arrangements relating to the departures of Transport Scotland’s former Chief Executive and Director of Finance and Corporate Services, both of whom left the organisation during that year.