Charities in Scotland have been given new governance guidelines after a probe found “misconduct” by Aberdeen University chiefs.
A regulator highlighted “wider lessons” for the sector after concluding that members of the university’s remuneration committee breached their duty to act in the best interests of the institution when they negotiated a pay-off to former principal Sir Ian Diamond.
The Office of the Scottish Charity Regulator (OSCR) issued five recommendations to Scotland’s charities as a result of the case, which was first revealed by The P&J last year.
It decided, however, that it was “not necessary or proportionate” to take further action against Aberdeen University or its governors, due to the measures already under way to tighten its procedures, and because most of the committee members had left.
Esther Roberton, the university’s senior governor, said its court will meet shortly to “consider the implications of the OSCR report together with the wider review of governance already under way”.
North-east Labour MSP Lewis Macdonald said: “These are very serious findings. There was clearly misconduct in the management of the university and the use of public funds.
“There was a failure to give proper notice of meetings. There was a failure to record minutes and report to the university court. And there was a failure to record at all the outplacement support of over £50,000.
“Some of those who are identified as responsible for those failings will be very relieved today that there is no further action to be taken.”
Two investigations were launched last year into a six-figure payment to Sir Ian, who is now the national statistician, as head of the UK Statistics Authority.
A separate probe by the Scottish Funding Council (SFC) concluded in February that Aberdeen University effectively “incurred the cost of two principals” over a financial year as a result of an arrangement with Sir Ian, and that there had been “no documented assessment of value for money”.
The university was ordered to repay £119,000 of its grant, and it recently revealed it had asked Sir Ian to reimburse the ancient institution.
The probes were launched after the university’s accounts for 2017-18 showed that Sir Ian was being paid £601,000 – including a salary of £282,000, pension contributions to the value of £30,000, and contractual notice period payment and related expenses of £289,000.
It later emerged that a payment of £50,000 plus VAT was also made on his behalf by the university for “outplacement support”, which was not disclosed in the accounts.
Under an agreement struck between the remuneration committee and Sir Ian, the former principal only triggered his year-long notice period and payment at the moment he was succeeded by George Boyne in the summer of 2018, despite announcing his retirement plans a year earlier.
OSCR said: “Our inquiry found evidence that the charity trustees were faced with an urgent need to address a potentially difficult situation in the academic leadership of the university in the summer of 2017.
“Nevertheless, the level of care and diligence that was exercised by the charity trustees who were members of the remuneration committee in reaching a settlement with the principal fell below the required standard in a number of respects detailed in our report.
“We consider this amounted to a breach by the charity trustees who were members of the remuneration committee of their trustee duty to act in the interests of the charity.
“In terms of the 2005 Act, a breach of this duty is to be treated as misconduct in the administration of the university.”
Members of the committee were found to have breached the terms under which the university received funding from the SFC, breached the university’s financial regulations in failing to obtain guidance from the SFC before making a severance payment, failed to give proper consideration to a range of options to ensure the agreement represented best value, and were unable to provide evidence that the decision was fully reported to the university court.
OSCR said the terms of the negotiations were set by Sir Ian, that the negotiators were aware that “they exceeded his contractual entitlements”, and they did not seek SFC approval.
The wider lessons for the charity sector included ensuring that minutes of trustee meetings should reflect all the relevant discussions and considerations that led to decisions being made, that trustees should ensure that sub-committees are clear about the extent and limits to their authority, and that charity trustees should have access to an individual’s employment contract when considering severance agreements.
Ms Roberton said the university had already instigated a review of governance and set up a working group to consider the findings of the SFC report in February.
“The OSCR report acknowledges that the university has already taken these proactive measures to enhance governance,” she said.
“The university acknowledges the findings of both the SFC and OSCR reports and the importance of responding to them, however these relate to decisions made three years ago, and since then the university has new leadership and a new direction.
“The university court will meet shortly to consider the implications of the OSCR report together with the wider review of governance already under way.”
