I today received the written judgement from last week’s hearing. This can be found at the link below. I have sent it out to all councillors this afternoon.
I have also sent councillors the email in question which found its way to For Argyll. This is what I said to them today (in blue) with the email of 29 December 2014 below this in red. I need say no more.
Afternoon all. Further to the written judgement sent earlier, below and attached is the email sent to Charles on 29 December 2014.
The mistake I made, which I acknowledged very quickly, was attributing the decision on competence to Charles. The decision was made by the Provost but on the advice of Charles. I cannot recall any chair ever ignoring the advice of a law officer and suspect you won’t recall such either.
The email in question was forwarded to a number of councillors and 2 non councillors for information. The commissioner knew who these people were but did not bother to ask any of them if they had sent it to For Argyll or if they had sent it to someone else who might have. You will note in the decision that they accepted that I didn’t send it to For Argyll.
The advice given by Charles was of significant public interest hence me saying that his response should be made public. I do not consider that my email to Charles was critical but the hearing panel disagreed.
You now have the full story. It is correct that I expressed regret at the hearing about some of the unfair flak Charles got in For Argyll and that remains the case. The fact is, though, that the flak only came about due to the actions of others, not me, so it’s hard to see how I am blamed for this.
That is why I will be considering an appeal in the coming week.
The email sent to Charles Reppke on 29 December 2014 was as follows, with the attachment below that again.
From: Breslin, Michael
Sent: 29 December 2014 18:04
To: Reppke, Charles
Subject: P&R: Castle Toward
I assume it will be the 5th before you read this Charles so Happy New Year to you.
I have a couple of questions in relation to the above please:
- The motion which was agreed and put forward by Cllr E Morton was altered from the original paper version given to members on the day. I was working on my amendment and didn’t hear what was, apparently, said. I have checked with others present and only one recalls that Ellen said the wording was a mistake and that instead of it saying interest would be deferred, she changed it to repayments would be deferred. You will know that there is a material difference between what was written and what I am told was said. Can you confirm please if she did say that the word repayments should replace the word interest?
- If you do confirm that this was the case, can you explain why my proposed amendment on the same subject in June 14, Castle Toward, was deemed incompetent by you on the grounds that it didn’t mention the potential problem of a state aid challenge? You will recall that I immediately offered to add wording to the effect that state aid rules could not be breached but you ruled that my amendment had to be considered using the words offered, ie it could not be altered. If that was the case in June, why was the changed wording allowed to be competent in December?
- Given the fact that it was crystal clear to anyone who had read the papers that a loan of £1m would not be acceptable, why was the motion deemed competent? You will again recall that I personally made the affordability issue clear on at least 2 occasions. I attach an email to all councillors that explains why this was not a feasible option under any circumstances. Your reply is awaited with interest Charles.
I should perhaps make clear now that your response will be made public and I hope to receive this no later than Wednesday 7 January. I might add that I am willing to take independent external legal advice, if necessary, and to challenge any decision if I feel I have grounds to do so.
The attachment was an email sent to all councillors on 24 December 2014:
Morning everyone, I want to leave you all before your Christmas break with some information on the effect of the vote last Thursday.
The figures I have prepared are my own, not SCCDC’s nor their advisers, and are illustrative only. In particular no consequential changes to interest payments or the balance sheet have been factored in. Lastly, the assumptions made on the way any loan might be structured are just that, assumptions, but I think they are reasonable ones.
What was agreed was a loan of £1m with payments deferred for 3 years. My assumptions on the loan are as follows and are somewhat better than the indicative loan terms outlined on page 407 of the papers:
- The interest that would accrue in years 1 to 3 is added to the initial loan and compounded, ie interest is added each year and then interest on that new total is applied. The amount of capital to be repaid at the start of year 4 becomes £1,157,625 on this basis.
- The loan is at a fixed rate of 5%.
- The term is 25 years.
On page 391 of the papers for the P&R committee was a 10 year cash flow forecast for the proposed business. For ease of comparison, I have simply added the loan repayments using the above assumptions to the cash flow for that 10 year period. The information pasted below summarises the effect on the net cash position over those 10 years but bear in mind what I have said in my second paragraph above. The bright yellow highlighting shows the loan repayments and the darker highlighting the net cash position.
You will see that the forecast is now radically and terminally altered and it would only get worse for the 18 years remaining on the 25 year loan, if that was what was agreed. In my view, as I said several times on Thursday last week, it kills the project stone dead.
However, that was what was agreed and the consequences will have to be lived with. But I have some questions for the leader and depute leader:
- What advice from officers was sought prior to the meeting on the advisability of proposing a motion with a £1m loan on offer, specifically:
- What were the risks to the council in offering such a loan, especially when the paper already said that “the business case contains serious risk and uncertainty”.
- Was any work done on the consequences of loan repayments on the cash flow forecast submitted by SCCDC and were any figures shown to you?
- Why did the motion propose a £1m loan when, on page 407 of the papers, SCCDC had already made clear that “the repayments would be unaffordable”?
- If no advice was asked of officers on the above, why not?
- Was any of the advice that may have been provided to you discussed with all members of the administration?
- Were they all fully aware of the likely effect on the community buyout?
I am sure we would all appreciate detailed replies to each of these questions as soon as possible please.