Public Audit Committee, 07 Oct 2009

Meeting date: Wednesday, October 7, 2009

Official Report 282KB pdf

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Public Audit Committee Report

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“The First ScotRail passenger rail franchise”

We move to item 3. Members have received from the clerks an overview and timeline of what has happened with regard to the First ScotRail franchise. I do not know whether it satisfies the questions that members raised at the previous meeting.

One issue is worthy of note. Members will have seen the e-mail exchange between Guy Houston and other officials, which indicated that he had disposed of the shares at the end of October. It has now transpired that the legal transfer did not take place until 28 November. Indeed, it also appears that Mr Houston did not put in place that transfer until mid-November, so there was an inaccuracy in the information that he gave to other officials. We can speculate about whether it was just a coincidence that the attempt to transfer the shares coincided with Audit Scotland's reported interest in the matter.

I invite members' comments on the information that we have received. Nicol Stephen was the one who asked the questions.

As the convener said, there is some inconsistency in the responses that have been given. I am still left wondering whether we have been told the truth and whether we have a full, accurate picture of what occurred. I am still optimistic that we will get further information from the Scottish Information Commissioner.

For completeness, I ask that we follow up some of the obvious questions with FirstGroup or the company registrar who is responsible for these matters. I refer members to the second page of paper PA/S3/09/15/5(P). The third paragraph under the heading "Week beginning 17 November 2008" states:

"There is a delay between sending an instruction and a name being removed from the share register which makes it impossible to ascertain precisely when Guy Houston acted to dispose of his shares."

I would like to ask how long that delay was and what was the legal or factual transfer date. We cannot sensibly do anything more at this stage until we find out what further information the Information Commissioner may release to us in due course.

We can certainly try to find out a bit more about the process and dates.

Would it be useful for us to send the report to both Dr Reed and Sir John Elvidge and to ask each of them whether they wish to correct their evidence in light of it?

Guy Houston was the person who gave incorrect information. Before doing what you suggest, I would need to be sure that there was an inconsistency in the evidence of either Malcolm Reed or John Elvidge.

Would it take some time to check that?

I can check and report back to you on the matter. However, I am not sure that there are any inconsistencies in their evidence. The issue is the inaccuracy of the information that Guy Houston gave to others, when taken at face value.

I may be wrong in my recollection—sometimes I am—but I recall Dr Reed saying that he was not present at meetings that discussed the extension of the franchise at a time when he had shares in the company.

Off the top of my head, I cannot remember whether he said that. We can check.

I am a little uneasy about pursuing the matter further. The committee spent a lot of time preparing a thorough report, which was a fair summary of all of the concerns that we uncovered. We have received a good response to the report from the Scottish Government. I am concerned that further pursuit of the matter at this level of detail would appear vindictive. If, as we may have discovered, some of the information that Mr Houston provided to Transport Scotland was not strictly accurate, it is for Transport Scotland, not the committee, to pursue the matter with him.

I think that we have done what we set out to do. We await a response from the Scottish Information Commissioner; once we have received it, we can reflect on the matter. I will look into the questions that have been raised about accuracy of evidence. Until the position has been ascertained, I suggest that we do no more than note the information that we have received.

I agree.

We all know that, from 14 November 2008, when Malcolm Reed received a communication from Audit Scotland, action was taken to cover Guy Houston's back. We have not been told the whole truth about that by Guy Houston and, I suspect, Malcolm Reed. However, there is nothing to be gained now from our trying to get at that.

Will we follow up the matter with FirstGroup, as I suggested?

We will try to clarify the factual position.

That is all that I want to do. I am conscious of the point that Murdo Fraser makes and have deliberately not suggested going back to Guy Houston or any of the other officers involved. I would like simply to obtain factual information about the process, which would be helpful.

We will try to do that. Other than that, we will simply note the information that we have received.

Meeting continued in private until 12:49.