1 Tuesday, 5 September 2017 3 MR LAKE: The next witness is Lesley Hinds. 4 MS LESLEY HINDS (affirmed) 5 Examination by MR LAKE 6 MR LAKE: Could you state your full name, please. 7 A. Lesley Adelaide Hinds. 8 Q. We have your address as a matter of the Inquiry records. 9 What is your occupation? 10 A. Semi-retired at the moment. 11 Q. And the bit that's not retired? 12 A. Sorry, I was a councillor for 33 years. 13 Q. Other than being retired at the moment, you give the 14 impression you actually do something else? 15 A. I'm on a number of boards. I have only just given up 16 the Council in May of this year. So just enjoying the 17 freedom. 18 Q. I would like you to look at a production that will be 19 shown on the screen, and you should also have a hard 20 copy of it in front of you. It's reference 21 TRI00000099_C. 22 A. Okay, yes. 23 Q. Now, both -- I think we can see it all on the screen, 24 but you should have a paper copy? 25 A. Yes. 207 1 Q. Is that a copy of a statement that was prepared by you 2 for the purposes of the Inquiry and signed by you on the 3 last page? 4 A. Yes, it is. 5 Q. Are you content that that be accepted as your evidence 6 to this Inquiry? 7 A. Yes. 8 Q. I want to ask you a few questions on particular aspects 9 of it, things that are of particular interest. The 10 first is I want to ask you about the whole question of 11 an arm's length company. You have heard TIE being 12 described as an arm's length company. I think there 13 were other arm's length companies within the Council? 14 A. Yes, there are a number. 15 Q. Were you involved in any of them? 16 A. On a number of them, I have been involved over the 17 years, for example in Edinburgh International Conference 18 Centre. And also EDI, arm's length property company, 19 and other ones that -- those are the main ones that are 20 I have been involved with other the years. 21 Q. EDI is a property development company? 22 A. Yes, arm's length. 23 Q. What does it mean, arm's length in this context? 24 A. Well, it's a company that's a private company but it's 25 wholly owned by the Council. That's my understanding. 208 1 Q. What's the purpose of keeping it at arm's length? 2 A. Well, I suppose each one might be different. Perhaps 3 you might want to give me -- I'll give you the example 4 of Edinburgh conference centre, if you want to do that. 5 Would that be okay? 6 Q. Yes? 7 A. So it was set up originally for a conference centre 8 which had been promised in Edinburgh for a number of 9 years, and the idea of setting up as an arm's length was 10 to set up a board that could bring in non-executive 11 members on to the board and executive members on to the 12 board who had expertise, in particular the International 13 conference business, and also involved at that time 14 enterprise company who had members on it as well. 15 So it was to give that expertise and to give 16 a delivery for a new Edinburgh International Conference 17 Centre at that time. So I would say as a Council over 18 the years, there have been arm's length companies being 19 set up for different reasons, and particular reasons for 20 either efficiency, for example Edinburgh Leisure, you 21 could call that an arm's length company. Originally 22 that was set up because of the issue to do with rates 23 and savings that could be made there, but also ways that 24 we could engage as well in terms of leisure. 25 So each one has been quite different over the years. 209 1 Q. The purpose of setting up the company has been 2 different? 3 A. I would say so, yes. 4 Q. With the conference centre it was expertise and 5 experience. With leisure it might be different? 6 A. Yes. 7 Q. When it's referred to as an arm's length, is that 8 intended to indicate a degree of lack of control by the 9 Council over what it does, it lets go? 10 A. No. The Council sets out the strategic direction and 11 the policy direction, and there would be obviously 12 a scrutiny process in terms of the company's reporting 13 to the Council in terms of their work and their plans, 14 and we scrutinised for that. So the Council would set 15 out its policies, its strategies, for that company, and 16 would expect that company to deliver it in terms of 17 being arm's length. 18 Q. What about the day-to-day management and control of the 19 company? Is that something the Council get involved 20 with, with an arm's length company? 21 A. There would be -- normally on an arm's length company 22 would be Directors who were perhaps councillors and 23 Directors who were officers of the Council as well. And 24 they would have a role. But obviously the role would be 25 if they sat on the board of that arm's length company, 210 1 their responsibility would be to the board of that 2 company, but there would be an expectation of reporting 3 back to the Council on a regular basis in terms of not 4 the day to day, but in terms of the strategy and policy 5 being delivered. 6 Q. The company, like any company, presumably, would report 7 to the Council as its shareholder on what it is doing 8 and how it's achieving matters. 9 A. Yes. 10 Q. That would be perhaps every six months, every 12 months, 11 whatever is agreed? 12 A. Yes. 13 Q. But does the Council have more day-to-day control, 14 day-to-day dictating how the company will do things? 15 A. As I say, they would have -- on some companies they 16 would have perhaps a Director who sat on the board of 17 that, and they would also have advisers as well who may 18 well be officers of the Council who would give guidance 19 and support to that company from the Council. 20 Q. I'll come back to ask about those Directors in a little 21 while. 22 Just returning to arm's length companies and TIE, 23 what was the reason TIE was set up as an arm's length 24 company? Are you aware? What was it supposed to 25 achieve? 211 1 A. It was set up -- I don't know if you can remember. This 2 is many, many years ago, but it was set up as -- my 3 understanding is that there had not been, for example, 4 a tram project in the city and therefore the setting up 5 of that company was to bring in non-executive Directors 6 with experience in terms of engineering and experience 7 in terms of tram projects elsewhere, perhaps not so much 8 in Great Britain but in Europe as well. So to bring in 9 people who would be able to give that expertise, advice 10 and support and be able to deliver that project. 11 Q. Bringing in people with experience of trams or these 12 matters, transport, was there any reason why that can't 13 be done by means of either finding consultants or even 14 employing people? 15 A. That has -- that could be the case, that it could be -- 16 as it was at the end of the project, that the tram 17 project was then brought in-house, if you wanted to call 18 it that, brought back to the Council. But at the 19 time -- and this is me reflecting many, many years ago 20 of the reasons why the TIE and TEL were set up at the 21 time, and my understanding from many years ago was 22 particularly because of the expertise it could bring in 23 in terms of delivering that project. 24 Q. But is there any advantage to bringing in that expertise 25 through an arm's length company, rather than just buying 212 1 it in direct to the Council? 2 A. I think it was to be able to deliver it quickly and 3 efficiently as well as possible within the strategic 4 direction and the policies of the Council. 5 Q. Could that be done by the Council in-house? 6 A. Well, as has been proved, it was brought back in-house. 7 So it can be. Obviously, the reasons we'd go back, and 8 there would be reports which, you know, went back to 9 that time. The report would come to the Council so the 10 councillors can be briefed on the reasons that 11 particularly officers may well think would be an 12 advantage to setting up a TIE and a TEL at that time or 13 a company, an arm's length company, and the report would 14 give the reasons why and the elected members, the 15 councillors would scrutinise why was the reasons for 16 that and to set up that arm's length company. 17 Q. You say in your statement -- it's at paragraph 114 if 18 you are interested -- that you think in principle that 19 arm's length companies are a good idea, subject to 20 obviously who they recruit. 21 What I'm interested in is why is it better to use an 22 arm's length company to do this than to do it in-house, 23 or is it really not necessarily better, it's just one 24 way of doing it? 25 A. I'm repeating myself, but each individual setting up of 213 1 the company would then -- for example, if it's EICC, 2 Edinburgh International Conference Centre, a report 3 would have come to the Council and the reasons why the 4 officers felt that this would be a better way of 5 delivering that project and give the reasons why, and 6 then elected members, the councillors, would make 7 a decision whether they believed that was the best way 8 of delivering it. 9 I'm just giving my experience in some -- in the 10 arm's length companies that I've been involved with have 11 been successful in terms of -- EICC, I know it was 12 a long time ago, but it delivered it on time and on 13 budget. So you can only go with your own experience. 14 Do you mind if I just take my jacket off? It's very 15 warm in here. 16 Q. You mentioned there that councillors might be appointed 17 as Directors on an arm's length company. I think you 18 said Council officers also. What is their function? 19 Why put them on to the Board of the arm's length 20 company? 21 A. It would be because normally if it would be a convener 22 or a vice convener, someone that had particular 23 expertise or a particular interest in that and would be 24 responsible on the Council for that -- that project, 25 would be responsible basically back at the Council, and 214 1 therefore to give an indication of the strategy and the 2 policy and give support and help to the project as well 3 and to the arm's length company. 4 Q. That's talking about a flow of information from the 5 Council to the company. 6 A. Yes, but they're always -- as I in my statement say, 7 there is obviously that balance that you're very clear 8 on any training that I've done, and I'm sure other 9 councillors have done, that your responsibility in terms 10 of governance is your responsibility to that board that 11 you sit on, and that's your responsibility. 12 That obviously has been -- it's like a conflict of 13 sitting on that board and take the best interests of the 14 Council, but also you're there on behalf of the Council 15 as well, and those kind of two can be quite difficult to 16 be able to balance in terms of doing your best, as you 17 believe, on behalf -- as a councillor on behalf of the 18 Council, but also sitting on the board, and that is made 19 very clear in terms of governance. 20 Q. So what happens when a conflict arises between you 21 sitting as a Director and there is a conflict of 22 interest between the company and the Council? 23 A. It's difficult without giving an example, but obviously, 24 if you were unhappy with a direction that the board was 25 going, sitting as a board Director, you would address it 215 1 there at the board and record that, and perhaps ask for 2 more information, et cetera. And then if you were 3 unhappy, then I would expect, if you didn't believe that 4 you as a board member were happy with the way the board 5 was functioning and the company was functioning, then 6 you would go back. 7 My advice -- and would be to other people -- I've 8 given in the past would go back to either the leader of 9 the Council or the Chief Executive of the Council to say 10 their unhappiness because they were appointed by the 11 Council to go on that board and would be to say their 12 unhappiness with the direction that company was going. 13 Q. That involves really -- it would be necessary to reveal 14 the affairs of the company to the Chief Executive of the 15 Council to express that unhappiness? 16 A. Well, whether they had to give absolute detail, but to 17 say that they were unhappy. They had been appointed by 18 the Council to sit on the board, and obviously, as 19 I explained before, the governance says very clearly 20 that you are sitting on a board to make your judgment 21 for the best interests of that company. But also if you 22 were unhappy, then I would expect you then to either 23 say, "I don't want to be part of this anymore because 24 I don't feel it's going in the right direction", or 25 I would report back to say I was unhappy with the way 216 1 the direction the board would be. 2 I would then expect either the leader of the Council 3 or the Chief Executive to then have some discussion with 4 the company in terms of unhappiness of that individual 5 board member. 6 MR LAKE: Now, we talked about -- 7 CHAIR OF THE INQUIRY: Mr Lake, is this -- 8 MR LAKE: Yes, this would be -- 9 CHAIR OF THE INQUIRY: I'm sorry, the previous witness took 10 a lot longer than we thought and we intend to rise about 11 4.30 each day. So we'll adjourn. Could you come back 12 tomorrow in time to start afresh at 9.30. 13 A. Okay. I just thought that was me finished now, that was 14 me gone. Okay, yes, that would be okay. 15 (4.30 pm) 16 (The hearing adjourned until Wednesday, 6 September 2017 at 17 9.30 am) 18 19 20 21 22 23 24 25 217 1 INDEX 2 PAGE 3 MS JENNIFER DAWE (affirmed) ..........................5 4 5 Examination by MR LAKE ........................5 6 7 MS LESLEY HINDS (affirmed) .........................207 8 9 Examination by MR LAKE ......................207 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 218