1 Wednesday, 6 September 2017 21 MR LAKE: My Lord, the next witness is Donald Anderson. 22 MR DONALD ANDERSON (affirmed) 23 Examination by MR LAKE 24 MR LAKE: Mr Anderson, could you state your full name, 25 please. 193 1 A. Donald Craig Anderson. 2 Q. We have your address in the Inquiry records. What is 3 your occupation? 4 A. I'm a communications director. 5 Q. I would like you to look at a document please. There 6 will be a paper copy in front of you and I'll put it up 7 on screen as well. The reference is TRI00000125_C. 8 A. I have not got anything in front of me yet. 9 Q. It will come. 10 A. Thank you. That's Iain Whyte's statement. 11 Q. I have the wrong reference there. 12 A. That's the one. 13 Q. That's the one we have. 14 Now, do you recognise that on screen in front of 15 you, the statement you gave to the Inquiry? 16 A. Yes. 17 Q. I think if you look on the last page of it, it's signed; 18 is that correct? 19 A. Yes. 20 Q. Do you adopt that as your evidence given to this 21 Inquiry? 22 A. I do. My apologies for not being able to correct all 23 the mistakes, but because I changed occupation in the 24 middle of the period, I didn't have the time to go 25 through it in detail. 194 1 Q. Just by way of summary, I think you were a councillor 2 from 1986 all the way to 2007? 3 A. Yes. 4 Q. And you were a Council Leader in that period from 1999 5 to 2006? 6 A. Yes. 7 Q. You ultimately, after leaving the Council in 2007, went 8 on to a communications consultancy, and eventually were 9 instructed by Bilfinger Berger and Siemens in relation 10 to the tram project with effect from 2010? 11 A. Yes. 12 Q. First I want to ask you some general questions about the 13 way the contract was delivered. 14 A. Okay. 15 Q. And the decision to use an arm's length company. How 16 did it come about that an arm's length company was used? 17 A. I'm not too sure I exactly remember all the details of 18 how we decided to set up an arm's length company. 19 I think from recollection we had advice from Scottish 20 Ministers that that was the best way to set up the new 21 transport initiative that we were pursuing in relation 22 to the congestion charge in Edinburgh. But we didn't 23 have the expertise within the Council to provide the 24 resource to staff up and run a transport initiative of 25 such a scale for so many projects within the Council. 195 1 So we had extensive experience of setting up special 2 purpose vehicles and arm's length companies to deliver 3 various aspects of Council activity. So we were 4 comfortable with that model and it seemed a sensible 5 approach at the time. 6 Q. Could the expertise have been procured in-house, brought 7 into the Council? 8 A. You could have done it in different ways. I think 9 that's a fair comment. But, you know, I do think we 10 were given advice and guidance, both internally from 11 officers of the Council, but also from Scottish 12 Ministers, that the best way to procure it would be to 13 create an arm's length organisation and we felt 14 comfortable about doing that. 15 Q. Can you remember why it was said to be the best way, 16 either by the ministers or officers? 17 A. I think we had a family of companies in Edinburgh 18 Council that were very, very successful, and we 19 obviously had the bus company. We had the Edinburgh 20 International Conference Centre -- 21 Q. Can I ask you to slow down a bit. 22 A. My apologies. 23 Q. If you take it too fast, it becomes too much. 24 A. Of course. We had a family of companies in Edinburgh; 25 and that included organisations such as the Edinburgh 196 1 International Conference Centre; organisations like 2 Edinburgh Park, where we were 50 per cent owners; the 3 bus company where we held a majority shareholding; and 4 other organisations that carried out specific functions; 5 and it was tremendously successful for Edinburgh. 6 So this was seen as a mechanism that we were used to 7 using, and one that could be used well to deliver 8 complicated and large scale projects. 9 Q. In some of those projects you refer to, like 10 Edinburgh Park, that was the one that stuck out in my 11 mind, conference centre, and others are ones that 12 generate money for the Council, whereas TIE was not 13 going to be something that was going to generate money 14 for the Council. It was going to be something that was 15 going to use money? 16 A. Well, initially, in association with the congestion 17 charge, there would have been a revenue stream that 18 would have come in and been administered through TIE as 19 well. So TIE would have been able to operate from the 20 context of having a revenue stream available to deliver 21 capital projects. 22 Q. I understand. Are there disadvantages to having an 23 arm's length company deliver? 24 A. I think there are pluses and minuses in having external 25 arm's length companies. You do get a degree more 197 1 flexibility than you sometimes get within a Council 2 bureaucracy. 3 Where there's a need for very specialist expertise 4 in delivering projects and project management, it can 5 have advantages and you have a more flexible approach in 6 terms of the levels of salaries that you can pay to the 7 senior officers. 8 So there are advantages and disadvantages. 9 Q. You give me the advantages. What are the disadvantages? 10 A. The disadvantages are sometimes they can take on a life 11 of their own. Sometimes they don't necessarily follow 12 the guidelines or the aspirations that the Council has 13 for them. There can be tensions in regard to that, and 14 action sometimes needs to be taken to pull organisations 15 back to their central and core functions. 16 We have had experience of that in terms of 17 organisation -- other organisations that we were 18 involved with in a similar fashion. 19 Q. Presumably if the Council is setting up an arm's length 20 company, it will also establish what it wants the 21 company to achieve and to some extent how it wants to go 22 about it? 23 A. Yes. 24 Q. To what extent would the Council expect to get involved 25 in the more operational day-to-day matters of the arm's 198 1 length companies? 2 A. I think it varies. I think you would want a very close 3 working relationship between the professional officers 4 of the Council who were supporting and giving guidance 5 to any arm's length company. Elected members would 6 probably have a more overseeing role in relation to 7 that, but that can change in relation to any issues that 8 come up in terms of the company. You can get involved 9 either at a strategic level in giving advice and 10 guidance, or at times where there are conflicts, where 11 there are complicated issues or problems, then sometimes 12 you would need to get involved in some of the intimate 13 detail of the operation of the company or organisation. 14 You had to be flexible because these are large and 15 complex organisations, and they are administering large 16 and complex projects. 17 Q. That being so, and perhaps the individuals within these 18 arm's length companies having been recruited for their 19 experience and expertise, is it helpful to have the 20 Council nonetheless intervening in operational matters 21 and dictating how matters are to be done? 22 A. Sorry, you said it's unhelpful? 23 Q. Is it helpful to have the Council interfering in 24 operational matters? 25 A. They might not see it as helpful. I think from 199 1 the Council's point of view, it is the organisation that 2 has established the arm's length company. It's the 3 organisation that has a strategic need to see that 4 deliver objectives on behalf of the Council. So the 5 Council has to have the right to intervene if it feels 6 it's necessary to achieve its objectives. 7 The organisation wouldn't exist except at the behest 8 of the Council. So ultimately it's the Council's 9 decision how much it wants to intervene in the 10 administration of the company, and how much it wants to 11 give guidance to what it actually does. 12 Q. You referred in your answers there both to conflicts and 13 tension. What do you have in mind? Can you explain 14 that? 15 A. Well, there are always -- I mean, local government is 16 about managing conflicts and conflicts of interest and 17 different pressures. So there are always going to be 18 issues around any organisation, whether it's inside the 19 Council as a Council department, whether it's an arm's 20 length company, whether it's a third party organisation 21 that the Council funds or whatever, there will always be 22 issues that need to be managed and resolved. That is 23 part and parcel of local government. 24 Councils are large and complex organisations, with 25 20,000 staff. It had a budget of about GBP1 billion 200 1 when I was involved in it. So these are big 2 organisations with lots of complicated issues, and that 3 doesn't come without conflict that needs to be resolved. 4 Q. The Council is a large organisation. Many issues for it 5 to consider. 6 The companies in question may be significant and 7 handling quite big budgets, but why does that generate 8 tension or conflict? 9 A. I think just in terms of administering large scale 10 operations, large scale capital budgets, complicated 11 projects, it does actually generate issues and 12 difficulties from time to time, and those can generate 13 the conflict. I'm not suggesting that there's conflict 14 all the time. In lots of the arm's length companies, 15 you know, you wouldn't have any particular difficulties 16 year on year and you would have lots of success. But 17 from time to time, there are difficulties and those need 18 to be managed. Those need to be resolved. Elected 19 members and officers of the Council need to take 20 decisions about how much they intervene. Are the 21 management of the organisation behaving appropriately 22 and properly in line with what the Council's aspirations 23 are, or do we need to give additional guidance to the 24 staff there to make sure that they are doing what the 25 Council set them up to do, and what they're -- actually 201 1 their purpose is in being there. 2 Q. In terms of what you mean by intervention, obviously you 3 have referred there to additional guidance being given, 4 and that would be perhaps one end of the spectrum of 5 what the intervention is. What other interventions 6 might the Council wish to take -- 7 A. Ultimately it could be the removal of a Chief Executive, 8 if the behaviour of the organisational Chief Executive 9 was deemed to be inappropriate. 10 It can be just giving advice or guidance, making 11 sure that behaviour is amended or actions are taken, or 12 ultimately it could be, you know, the removal of staff 13 or the winding-up of the organisation itself. 14 Q. If I could ask you in your statement, please, to look at 15 page 99. 16 I'm interested in paragraph -- sorry, it's the typed 17 page 99 which must be scanned page 98. 18 Paragraph 247. You record at the outset there that: 19 "An arm's length organisation is generally a useful 20 thing ..." 21 But you say: 22 "... the arms cannot be too long and in the case of 23 TIE, the arms were so long, they were almost infinite. 24 There was no coherent strategic direction or control 25 over TIE from within the Council that I could see." 202 1 Was that a problem that evolved as matters went 2 along with TIE, or was it structural in the sense there 3 was just no direction at all? 4 A. I think it's fair to say in the early stages of TIE, 5 there were lots of tensions. In particular I think 6 there was at times a strange relationship between senior 7 figures within the Council such as myself, 8 Michael Howell as Chief Executive and Ewan Brown as 9 Chair. And we did feel that there wasn't an adequate 10 understanding of the political environment and the 11 political realities of operating a project like that in 12 Edinburgh, with the complications of some of the 13 politics associated with the congestion charging and 14 issues around that. 15 So there were tensions and difficulties from the 16 very beginning. But they were managed in a way that 17 kept TIE in line with what the Council wanted to achieve 18 at that stage. I think what happened towards the end 19 of -- really towards the commissioning of the tram 20 project and the signing of the contract was that TIE 21 developed a life of its own, and actually went beyond 22 the control of the Council; and from my perspective 23 I couldn't see that there was proper administration and 24 management and direction given to TIE in a whole swathe 25 of issues in relation to the delivery of the tram 203 1 project; and in a lot of ways it kind of told the 2 Council what it was doing, rather than took guidance and 3 advice. 4 Q. Can you give me any illustrations of areas or decisions 5 where you felt TIE were doing their own thing and not 6 being guided by the Council? 7 A. I think one of the things that struck me about the 8 coverage of the Tram Inquiry so far is some of the 9 information that's emerging and the information that was 10 fed back to the Council in relation to things like the 11 progress of design work. The fact that design -- you 12 know, the case was misrepresented by TIE back to the 13 Council shows that it was dysfunctional from a fairly 14 early stage after the tram contract, and in the run-up 15 to the period in which the tram contract was signed. 16 So it was not discharging the functioning that the 17 Council set it up to discharge. The Council would 18 expect a Council company to behave in the same ethical 19 framework and with the same guidelines as exist in local 20 government, and in ways consistent with the aspirations 21 of the Council. I think in a number of key aspects, 22 it's emerged that TIE was not behaving in line with 23 these aspirations and that ethos. 24 Q. You are talking about things that have emerged in the 25 course of this Inquiry, both in the run-up to it and 204 1 perhaps the hearings themselves. Was this a concern 2 that the arms were too long? Was that a concern you had 3 at the time? 4 A. Not when we set up, no, because it's inconceivable to me 5 that TIE would, if you like, go off and do its own thing 6 without recourse to the Council in any kind of serious 7 way. If it tried to, frankly, we would haul it back. 8 Q. Not so much when it was set up, but in the period when 9 it was implementing the tram project, the final run-up 10 stage, 2006 onwards, were you happy with the performance 11 of TIE at that time? 12 A. Generally, I think I was happy with the performance of 13 TIE. TIE was going through a disruptive period. The 14 loss of a Chief Executive, Willie Gallagher taking over 15 wasn't an entirely satisfactory state of affairs, but 16 I wasn't in any sense worried that TIE was taking off 17 and developing a life of its own and I didn't have at 18 that time any concerns that it would do so in the 19 future. 20 Q. Before I move on to something else in paragraph 247, 21 I just want to pick up what you said there about the 22 loss of a Chief Executive, of Willie Gallagher taking 23 over. So the concern was the loss of the 24 Chief Executive prior to Willie Gallagher? 25 A. I think there were concerns, certainly I had concerns, 205 1 about the performance of the Chief Executive. So that 2 in itself was an issue. And the removal of -- the end 3 of period of employment of a Chief Executive and the 4 changeover between him and Willie Gallagher was 5 obviously an issue. 6 So that in itself would cause some uncertainty, but 7 not in a fundamental sense of worrying about the 8 direction of travel of TIE at that stage. 9 Q. Referring to the last sentence of the paragraph we see 10 on screen, it's gone. 11 The lack of coherent strategy -- the lack of 12 coherent strategic direction or control over TIE from 13 within the Council; the way that is phrased, it's not 14 a problem arising from TIE; that is a problem arising 15 from the Council, failure on their part? 16 A. I think there are issues there in terms of the way the 17 Council interacted with TIE and I don't think from what 18 I have seen that elected members or officers exercised 19 sufficient control over TIE. I think they were too 20 deferential in terms of allowing senior members of staff 21 in TIE to give direction to the Council, rather than 22 give advice and guidance to TIE about how best to 23 proceed in terms of development of the tram. 24 Q. That might be the control aspect, but -- or is that 25 intended also to be the lack of coherent strategic 206 1 direction as well? 2 A. I think it's both. 3 Q. What would you have expected the Council to have done or 4 Council officers -- 5 A. I think you would expect senior elected members and 6 senior officers of the Council to be clear what they 7 expected TIE to do in terms of meeting the performance 8 aspirations that they had for it, be clear and honest in 9 terms of the information that they presented to the 10 Council about the progress of the project, and I think 11 there were significant failures in that regard from, you 12 know, the period in which the tram project was signed 13 off by the Scottish Parliament and began to be 14 implemented. 15 Q. I think we're aware that councillors sat as directors 16 within these organisations. Did you regard that as 17 a good idea? 18 A. I think generally, yes. It's not to say that it doesn't 19 come without issues and complications. Elected members 20 vary in their qualities and their abilities. So that 21 can sometimes bring issues in itself. 22 But in general terms, across the family of Council 23 companies, elected members played a positive role in 24 Council companies, and it operated, I think, in a fairly 25 healthy and helpful way. 207 1 Q. What in your view are the advantages of putting elected 2 members on to boards? 3 A. I think it helps to -- it helps the organisation to 4 understand the political context in which it operates. 5 This is not like a private company that's, you know, 6 selling Coca-Cola or anything like that. These are 7 organisations that are set up to deliver a specific 8 purpose on behalf of the Council. 9 So they do need to understand the political context 10 in which they operate, and the Council's aspirations in 11 terms of the areas of activity in which they operate. 12 So it's important that elected members are there to give 13 advice, guidance and insight to the companies to ensure 14 that there's as little friction as possible in that 15 regard, and they can focus with getting on with the job 16 that they are actually discharged to do. 17 Q. That would be the provision of information, advice or 18 guidance from those councillors into the company? 19 A. Yes. 20 Q. What about passage of information the other way, from 21 the company back to the Council? Do you see it as a 22 conduit for that? 23 A. I think that helps as well, because you have a two-way 24 resource there, that can give insight back into the 25 Council about the issues that affect these companies. 208 1 In some cases that may not be significant because the 2 functions of the company are straightforward. 3 In other instances it can be really helpful to have 4 elected members who understand the intricacies of the 5 debates and discussions and the decision-making 6 processes, when a Council company is handling something 7 complex or comes across a challenge or an issue. So 8 that two-way feed of information can be very helpful all 9 around, I think. 10 Q. When an elected member is sitting as a director, sitting 11 at a board meeting, whose interests will they promote? 12 A. Primarily, in a legal sense, they are responsible for 13 the interests of the company. But there's a shared 14 interest between the Council and the company. So 15 generally speaking, those interests are aligned. So 16 there isn't necessarily a case in which the elected 17 member would be expected to do anything inappropriate or 18 different to the interests of the company, in terms of 19 the role as an elected member of the City Council. 20 So from that point of view, I think there is 21 a shared interest between the company and the Council, 22 and it's in the company's interests to deliver the 23 objectives that the Council established it for, and for 24 that reason, I don't really see there being too many 25 problems in terms of a huge conflict of interest in the 209 1 operation of the companies that I was involved in, but 2 obviously conflicts can occur. 3 Q. What happens then? 4 A. You've got to resolve them. 5 Q. How? 6 A. Well, there's a variety of different means. We had, 7 I remember, when I chaired the EICC, one of the partner 8 organisations wanted to register the company offshore 9 for tax reasons which I felt was inappropriate. We 10 thrashed that out. There was conflict over that issue. 11 I didn't think it was appropriate that a Council company 12 should be registered offshore for tax reasons. I felt 13 that was unacceptable from a political point of view, 14 and from a moral point of view actually. And we 15 thrashed that out. 16 So you can get issues like that that arise from time 17 to time. 18 What you've got to try and do in every case is look 19 at the circumstances that you are in, look at the 20 aspirations of the organisation, look at the suggestion 21 and the proposal, and try to take the best decisions you 22 can in light of the information that you have, and to my 23 knowledge, that's what we always sought to do when I was 24 in the Council. 25 Q. In terms of the advantages you have talked about of 210 1 having the elected members as directors, the provision 2 of information two-way, is that something that could not 3 be better dealt with by agreements and guidance from the 4 parties both ways? 5 A. I don't think it's an either/or. I think there's no 6 doubt that you can have agreements with an organisation 7 to deliver objectives. Indeed, the Council does deliver 8 many policy objectives through agreements with third 9 party organisations. It's just about picking the right 10 vehicle and structure for an individual project or an 11 individual initiative and making the best decision that 12 you can in terms of the circumstances. 13 So for different aspects of Council activity, there 14 will be different structures and different approaches to 15 resolving the issues. This just happened to be the way 16 that was felt to be the best for delivering a number of 17 transport projects associated with the potential of 18 congestion charging. 19 Q. Over time, TIE came to have just the one project, the 20 trams. It was decided nonetheless to keep TIE 21 implementing that project rather than bring that back 22 in. Was the matter reconsidered? 23 A. I think there was a real difficulty in there for TIE. 24 And I think that does cut to the very centre of some of 25 the issues in relation to the way that TIE chose to 211 1 operate, because initially it was set up to deliver 2 a wide range of transport initiatives, and it was set up 3 in view of the potential of congestion charging in 4 Edinburgh, which would have provided a huge revenue 5 stream and an ongoing workload of transport projects. 6 By the time that it got to being made responsible 7 for just the tram project, that was all that the officer 8 cohort of TIE were working on. So you had the entire 9 infrastructure of a company on one project. You didn't 10 have the critical mass or the ability to spread costs 11 across different projects. 12 I think that should have raised some questions about 13 whether it was right to continue with the structure that 14 TIE had at that time. However, you also had a situation 15 in which Transport Scotland wasn't involved with the 16 tram project. I think the obvious thing would have been 17 to do, as happened with many other transport projects in 18 Scotland, was that the activity to support those 19 projects should have been subsumed within Transport 20 Scotland. 21 It took over a number of different transport 22 projects. It took over the responsibility for 23 delivering the Borders railway from Borders Council, and 24 that could have happened in terms of trams. It didn't 25 happen because obviously the Scottish Government took 212 1 a different view about the tram project than it took 2 about the Scottish Borders railway. 3 On reflection, I think it probably would have been 4 better, had TIE been absorbed into Transport Scotland 5 and the project delivered that way. However, Transport 6 Scotland wasn't set up when we initially set up TIE. It 7 was still evolving in the period when I was still on the 8 Council. So there wasn't an obvious mechanism for 9 carrying that out then, and of course by the time the 10 tram project got the go-ahead, the Scottish Government 11 didn't want to proceed with the project and took the 12 view that it wanted to step back from it. So that 13 option wasn't really available to the Council. 14 Q. You do say in your statement, had Transport Scotland 15 existed, it would have been the delivery vehicle? 16 A. Sorry? 17 Q. You do say in your statement, had Transport Scotland 18 existed at the time, early days, it would have been -- 19 A. It would be the obvious. You wouldn't set up a separate 20 transport company in a Council now because you have the 21 facility of Transport Scotland. It's got a proven track 22 record of delivering a number of very, very difficult 23 and complicated projects to a high standard, and that 24 would be the obvious mechanism. If you had funding for 25 a transport project in Scotland, you would use Transport 213 1 Scotland. 2 Q. Is it something that's always likely to be of benefit in 3 a country the size of Scotland, to centralise the 4 experience rather than split it up among the Councils? 5 A. I don't know if I would say always. I think Scotland is 6 a pretty small country and we have the Scottish Futures 7 Trust and we have Transport Scotland, which I do think 8 are both very good organisations of providing an 9 experience, an expertise and a critical mass for 10 handling some of these big and complicated projects. 11 It's not easy to deliver these big complex capital 12 projects. The skills required are extensive and the 13 number of people who have the necessary skills can be in 14 relatively short supply. 15 If you're a small organisation, the Council isn't 16 a small organisation, but if you're a small 17 organisation, to actually have that resource available 18 to you can be very, very expensive and time-consuming to 19 deliver. 20 In terms of the period in which we were making these 21 decisions in the Council, there wasn't the option of 22 Transport Scotland at that time. So we took the best 23 decisions that we could at the time, but that's not to 24 say that that structure could not have evolved over 25 time, and it's not to say that it wouldn't have been 214 1 advantageous, had TIE been absorbed into Transport 2 Scotland, where there was already a significant 3 expertise developing. 4 CHAIR OF THE INQUIRY: Could I just ask Mr Anderson what you 5 have in mind? Are you saying that with the nature of 6 transport project in Scotland, even though it was 7 perceived by many to be a local project such as the 8 Edinburgh tram project, or for that matter, a proposal 9 to have a Glasgow airport rail link, say, are you saying 10 that that sort of project should always be done by the 11 national body of Transport Scotland, and the local 12 authorities be cut out of that? 13 A. I think the question needs to be asked in terms -- 14 I think it probably depends on the scale of the project. 15 I mean, I think in Edinburgh we're quite fortunate in 16 that we do have a large local authority. In Glasgow 17 there's a large local authority with significant 18 experience within the Council. But even then for 19 delivering something on the scale of the tram or the 20 airport rail link, we didn't have the expertise in-house 21 to deliver that. 22 So I think you've got to look at the project on an 23 individual basis and come to a view, is this something 24 that you can easily deal with within the local 25 authority, and if it's beyond the range and experience 215 1 of the local authority, and it's -- there's an obvious 2 link there with an organisation like Transport Scotland, 3 or it's a project that might benefit from the input from 4 the Scottish Futures Trust and advice from them, then I 5 think it would be foolish not to take that on board. 6 CHAIR OF THE INQUIRY: Would that then, take the example of 7 the proposed extension of the tram, would that also be 8 appropriate to take away from the city and put into -- 9 A. I think that's a possibility. If the Council was of 10 a view that Transport Scotland input into the project 11 would be very helpful, and it might be, then that would 12 be something that could be explored. I think that would 13 be very difficult at the moment, because the Scottish 14 Government actually takes quite a negative view about 15 the tram project. 16 So to get them to overcome their political 17 objections would be a challenge, I think, to say the 18 least. But I think there would be a lot of benefit from 19 having Transport Scotland at the table in implementing 20 the next phase of the tram project. 21 MR LAKE: You are aware that in the period up to when you 22 left the Council, Transport Scotland did continue to 23 have an involvement with the project? 24 A. Yes. 25 Q. That ended in 2007 following the Scottish General 216 1 Election and the decisions taken after that. 2 Did you have a view on the effect of Transport 3 Scotland withdrawing from the project? 4 A. I think at the time I was -- I had come off the Council 5 in 2007. So I wasn't taking an active interest in the 6 sense of looking at the intricacies of the delivery of 7 the tram project at that time. I was still a passionate 8 supporter of the tram project. 9 I would have seen it as regrettable that Transport 10 Scotland weren't as involved in the project. I'm not 11 sure I would have foreseen that that could have caused 12 the scale of difficulties that I think it contributed 13 to. 14 Q. And do you think it did contribute to the difficulties? 15 A. I think it was a contributory factor. I think the 16 situation that you got into, as I have said in my 17 statement, was that TIE became the resource for all the 18 information on the tram project for the Council, and 19 I think it's clear from what -- the documentation I have 20 now seen and the interview process and some of the 21 information that's come out from here is that there was 22 a deliberate, if not campaign, then a deliberate, 23 co-ordinated series of actions to prevent key figures in 24 the Council from having accurate and important 25 information in order to take the decisions that they 217 1 needed to take in relation to the tram project. 2 I think it's inconceivable that if Transport 3 Scotland had been at the table, TIE would have been able 4 to behave in that way. 5 Q. When you say concealment of information, is that from 6 councillors or Council officials or both? 7 A. Sorry? 8 Q. Was the information not made available to councillors or 9 Council officials or both? 10 A. I think it's clear from the information we have, it 11 wasn't made available to councillors. Whether it was 12 made available to Council officials, I can't comment on. 13 I haven't seen relevant information. I suspect it's 14 probably a bit of both. But I can't put a finger on who 15 exactly organised it and who co-ordinated what was 16 clearly a very -- how should I word this? There was an 17 organised attempt to prevent elected members in 18 Edinburgh from having important information on which to 19 base their decisions about how the tram project was 20 delivered, and a lot of the very, very significant 21 problems associated with the delivery of the tram 22 project were hidden from elected members for a prolonged 23 period of time, which lengthened the dispute between the 24 contractor and TIE and increased significantly the cost 25 of the tram project. 218 1 Q. You stated that in quite high terms, and you are saying 2 it was organised, and that the information was hidden. 3 Do we take from that that you are saying that this was 4 a deliberate course of action on the part of people 5 within TIE? 6 A. I think it was deliberate. I'm not sure I could be 7 specific about what exactly the motives were of each of 8 the people who were involved in it, but if you haven't 9 progressed the design work and you say you have, that is 10 a deliberate statement of -- and that's misinformation 11 that is being conveyed from TIE to the Council. 12 If you lose adjudications and you present them as 13 being successes, that's deliberate misinformation that 14 you are presenting to the Council that gives the elected 15 members the wrong impression of how the project is 16 proceeding, and makes it almost impossible for them to 17 take legitimate decisions in terms of the ongoing 18 management of the project. 19 Q. I think you were still -- you left the Council in 2007. 20 So when it came to taking the final decision in 21 December 2007, and the state of the design then, that 22 wasn't something you were privy to? 23 A. No. 24 Q. And again, when we come to the adjudication decisions 25 they were obviously still later than that. 219 1 From where is it that you've got your understanding 2 about these? Is this from your role later on with 3 Bilfinger and Siemens? 4 A. Yes. I mean, we were advising Bilfinger during that 5 period when the adjudication process was ongoing, and it 6 was clear from the information that we were getting that 7 although Bilfinger and Siemens had lost the first 8 adjudication, in terms of the rest of the adjudications, 9 they were by and large being won by Bilfinger and 10 Siemens. 11 But they were being presented to the Council as if 12 TIE had won them, and that was an inaccurate assessment 13 of where they were. I think that's now emerged 14 unequivocally from the information we now have and is 15 accepted. But in terms of the way that was presented to 16 the Council, it gave the impression that the contractor 17 was being difficult and was trying to extrude money from 18 the Council and from TIE in the way that they were 19 behaving, whereas actually what they were trying to do 20 was to stand up for legitimate interests in terms of the 21 contract, and that was presented to the Council in a way 22 that was completely false. 23 Q. We will come back to that a little later in my questions 24 for you. Going back a little bit to the things you said 25 earlier, you referred to Transport Scotland as having an 220 1 established track record in relation to delivery of 2 projects. 3 By about 2006/2007, when you were still there, were 4 you aware of what the track record of TIE was on 5 delivering the projects that had been committed to it? 6 A. Yes. 7 Q. Was it good or bad? 8 A. I think there were bad elements within it. I think -- 9 I can't remember which park and ride it was, but there 10 were problems associated with that. I'm not sure at 11 what stage I was aware of the issues on the 12 Stirling-Alloa project, but there were issues there. So 13 there were mixed, I think, and some difficult issues in 14 terms of TIE's track record. 15 Q. When you say you weren't aware of the issues on that, 16 but the issue arises, would it have been useful to know 17 about these things when you came to take the decisions 18 in 2006 and 2007? I appreciate you were away at the end 19 of that time? 20 A. Sorry, I'm not exactly sure how you -- 21 Q. Would knowledge of TIE's track record be relevant to 22 taking decisions and trusting it with the tram project? 23 A. I think -- I think at the time it was more that I had 24 serious reservations about the performance of the 25 Chief Executive of TIE, that coloured my impression of 221 1 the organisation at that time, and I felt there needed 2 to be a change in there. His contract wasn't renewed 3 because of concerns I had and other senior figures in 4 the Council had about his performance and we felt that 5 that would improve over a period of time. 6 Certainly we associated his involvement and some of 7 the other staff's involvement in some of those failures 8 as something that we could move beyond with new figures 9 appointed to administer TIE. 10 Q. Another thing you said when discussing matters 11 earlier -- I'll start the question differently. 12 You talked about the need for expertise and 13 experience, and how that might be brought into the 14 Council. You will be aware perhaps from just your 15 knowledge from dealing with the contractors that 16 ultimately the Council did resume direct control of the 17 contract? 18 A. Ultimately it did. 19 Q. So they did implement matters on an alternative model, 20 that instead of using an arm's length company, it was 21 done directly by the Council? 22 A. It was done directly by the Council but it was overseen 23 by an independent consultant. 24 Q. They engaged the services, I think several consultants, 25 Turner & Townsend and HG Consulting? 222 1 A. And my understanding is HG Consulting were the 2 overseeing organisation in terms of running the 3 remainder of the contract at the time. So you can do it 4 that way, and you can have large scale projects 5 delivered in that way. 6 That doesn't necessarily guarantee that there won't 7 be issues, and I think if you look through the history 8 of the tram project, from time to time there were 9 companies who were involved who made significant errors 10 and had problems along the way. So you've got to try 11 and again go back and make the best decisions you can 12 with the information that you have at the time, and 13 that's what we felt we were doing. 14 Q. When you said you looked through the tram project, there 15 were significant -- companies making significant errors. 16 Are you talking about the Edinburgh tram project? 17 A. Yes, I think there were issues in terms of deliveries of 18 things like the on-street utility diversions that were 19 procured. Even if you'd taken these companies on to 20 carry out the work directly for the Council, it doesn't 21 necessarily mean to say there wouldn't be problems. 22 If you look at the work that the Council has done on 23 things like road renewals and road repairs, there are 24 difficulties with some of the aspects of the capital 25 budget that's delivered directly by the Council, and 223 1 through employing contractors. 2 So there's no magic bullet, I don't think, in terms 3 of, you know, this is the model that works for 4 everything. I think you've got to try and look at it in 5 terms of what you think is the best approach for that 6 individual project. But you also have to manage it 7 properly, both between the elected members and the 8 officers of the Council, to make sure the problems are 9 picked up and addressed as early in the process as 10 possible and before they become major issues, 11 particularly when you've got a project on the scale of 12 the Edinburgh Tram Project which involves over half a 13 billion pounds of expenditure. 14 Q. And did you consider that was done after the mediation, 15 picking up problems and dealing with them? 16 A. I think largely it was done successfully, yes. 17 Q. And was it done before the mediation? 18 A. I don't think you could say that the tram project was 19 managed as well as it could have been before the 20 mediation. 21 Q. Going back to your time in the Council, at the time you 22 were there in 2006/2007, and I stress at the time, did 23 you feel you were getting the information that you 24 required to take decisions? 25 A. Yes. 224 1 Q. I take it with hindsight you no longer consider that to 2 be the case from what you say? 3 A. No, I think at the time -- I don't think I had any 4 concerns that TIE were seeking to misinform or misdirect 5 either myself or the senior officers of the Council at 6 that time. 7 Q. So when did that start? 8 A. I think because TIE found itself in the position where 9 it had a project that it was wholly reliant on, that the 10 Scottish Government didn't want to proceed, but the 11 Council and many in the Scottish Parliament wanted to 12 proceed, and they felt that the project was fragile and 13 might not actually take place, which would put at risk 14 all of their personal aspirations, at that stage I think 15 there began to creep into the mentality of TIE a degree 16 to which it was about securing the future of the 17 project, rather than necessarily carrying out good 18 governance or good project management. 19 I think that the priority was given to making sure 20 that the tram project was secured, rather than 21 necessarily it was successfully delivered. 22 Q. Was that a view you formed at the time or you formed 23 since? 24 A. I think I formed that view over a period of time. 25 I think in particular at some of the feedback I got 225 1 around about the time that the Princes Street works 2 began, because, you know, we had enormous frustration at 3 the delays in terms of the tram project going forward. 4 It was politically contentious, and then the works began 5 on Princes Street, and my response to that was 6 "Fantastic, at last, we are beginning to see the project 7 delivered". Feedback I got from some contacts that 8 I had in the Council and TIE was that the mentality in 9 TIE was not "Great, yes, it's going ahead", it was 10 "Great, now it can't be cancelled". 11 Q. When you sought information while you were a councillor, 12 was it ever refused to you on the basis that matters 13 were confidential? 14 A. No. 15 Q. Not at any time? 16 A. Well, if there was information that was inappropriate 17 for me to have, then, generally speaking, I wouldn't ask 18 for it. 19 If I felt I needed information on which to take 20 a decision, then I got that information. There are very 21 few examples where I can think where information was 22 withheld from me. 23 I know that one that springs to mind was the price 24 of the sale of a significant site in the west of the 25 Edinburgh city centre at Haymarket, where there was 226 1 a significant gap between the leading bid and the bids 2 underneath that, and officers felt they didn't want to 3 share that with anyone just in case it got back to the 4 bidder how significant that gap was, and I was 5 comfortable not to get that information, frankly. 6 But I can't think of any instance where I thought it 7 was appropriate for me to have information and officers 8 of the Council withheld it. 9 Q. When it came to taking the big strategic decisions on 10 the part of the Council while you were there, do you 11 consider that these were taken on a properly informed 12 basis? 13 A. Generally, yes. 14 Q. Was there sufficient time for discussion and evaluation 15 of the proposals that were put forward? 16 A. In my experience, yes. Quite often, to be honest, 17 because the Council is a bureaucracy, quite often there 18 was too much time spent on decision-making. Trying to 19 get things done can sometimes be a challenge in local 20 government. It will be like treading through treacle to 21 get projects delivered. So at times one of the 22 handicaps of the democratic process is that it can be 23 cumbersome and bureaucratic. 24 So my frustration was more often with trying to get 25 ahead and do things than necessarily trying to spend 227 1 enough time on discussing them and talking about them. 2 But part of the democratic process is you have to 3 robustly discuss these issues and you have to thrash out 4 any problems that you have. That's just one of the 5 complications of being in local government and in the 6 public sector. 7 Q. Taking account of what you said there, was there an 8 effective evaluation of the material being submitted by 9 Council officers and others to you? 10 A. I think it would be brave to say, you know, it was 11 perfect all the time. I don't think it was, and I think 12 if you look back at that period, we were engaged in an 13 enormous amount of investment in Edinburgh that actually 14 made a significant difference in terms of moving the 15 city forward, both in terms of our educational 16 facilities, but also in terms of transport as well, and 17 that put a huge pressure on the Council as an 18 organisation to deliver that, and elements of it were 19 done well. Elements of that were not done as well as 20 they should have been. There were mistakes made. There 21 were errors in terms of that. There were errors that 22 were down to failures on the part of the way the Council 23 administered some of the capital projects, but there 24 were also errors on the way that contractors delivered 25 some of these projects. If you look at the Edinburgh 228 1 Schools Partnership, there were significant issues 2 there. 3 But this was a Council that had some of the most 4 experienced practitioners in Scottish local government 5 and people who were at least as good as anywhere else in 6 Scotland. 7 So we had, generally speaking, a good level of 8 officer support for these and, generally speaking, we 9 made huge progress in the ambitions that we had for the 10 city and delivering an improvement to its infrastructure 11 and its capabilities. 12 Q. Could I ask you please to look at your statement on 13 page 37. In paragraph 77 you note that: 14 "On any of these projects that run over a long 15 period of time you need a high degree of political 16 confidence because they run across different 17 administrations. The person that is the leader of the 18 Council at the start of the project is unlikely to be 19 the leader of the Council at the end of the project. 20 Therefore, you need a robust political base to take it 21 through and we had that in Edinburgh." 22 Can we just pause there. There were quite 23 significant changes in the composition of the Council 24 obviously in 2007. 25 A. Yes. 229 1 Q. So while there had been a fairly consistent base up to 2 then, there was really quite a dramatic change in the 3 creation of the coalition in 2007. Does that not rather 4 give you the opposite to what you say there, that the 5 political base changed markedly and became more fragile? 6 A. Well, we had -- we had virtually unanimous and for 7 a long time we had unanimous support for the trams in 8 the Council. 9 Q. During your period? 10 A. Yes. 11 Q. It wasn't unanimous after that? 12 A. No, but you can't guarantee -- we live in a democracy. 13 You can't guarantee from one Council administration to 14 the next that things aren't going to change 15 dramatically, and you can't necessarily plan for that 16 because you wouldn't necessarily do anything if you felt 17 that you needed a guarantee for, I don't know, five, 18 ten, 15 years beyond the period you were immediately in. 19 So you have to take the decisions you can on the 20 basis of the knowledge you have at the time, and at the 21 time we had overwhelming support for Edinburgh trams, 22 and I didn't anticipate that changing dramatically. 23 Indeed, although the administration changed quite 24 dramatically in 2007, in terms of the majority in the 25 Council, there was still a very significant majority in 230 1 favour of trams amongst the major political parties. 2 Q. So allowing for that, within the coalition post 2007 of 3 the division, would you say that there was still 4 a robust political base after that, allowing for the 5 totality of votes within the Council? 6 A. Within the coalition? 7 Q. Within the Council. The coalition, I think, was divided 8 in relation to the trams. But making up the totality of 9 political parties within the town, would you call that 10 a robust political base? 11 A. Yes. 12 Q. Later in that paragraph you refer to the need for 13 a strong leadership and continuity at officer level, but 14 you do not think we necessarily had that. 15 Where do you consider the leadership issues arose? 16 A. I have to say it's something that I've pored over in my 17 mind many, many times. I worked closely with 18 Andrew Holmes and Tom Aitchison over a long period of 19 time. I worked with Dave Mackay for a period of time as 20 well. 21 I just don't think there was the strength of 22 leadership and direction given to TIE from the officers 23 within the Council that it should have had. I didn't 24 see it. There may be things going on behind the scenes 25 that I didn't know about, but from what I saw, looking 231 1 in from the outside, I couldn't see what Tom Aitchison 2 and Andrew Holmes were doing to control TIE and make it 3 comply with the Council's aspirations and wishes. 4 Q. You're talking about officers there taking action? 5 A. Yes. 6 Q. If you go back to page 2 of your statement, looking at 7 paragraph 2. It's perhaps easiest to read it from the 8 start: 9 "The tram project was one of the major projects the 10 Council was involved in over a prolonged period of time 11 and I was involved in overseeing it alongside my other 12 duties leading the operation of the Council as a whole. 13 It was therefore a very important and significant part 14 of what I did as leader and I would provide oversight 15 strategic guidance where I believed it was necessary." 16 Was that in relation to TIE? The tram project? 17 A. In relation to the tram project and in relation to TIE. 18 Q. And you say you would get involved in the detail if you 19 felt it was necessary: 20 "... and give advice and guidance to colleagues and 21 officers in the Council if I was either concerned or 22 keen to see a particular aspect of the project 23 developed, emphasised and taken forward." 24 So was that as Council Leader you took that degree 25 of control? 232 1 A. Yes. 2 Q. Can you remember any particular aspects in which you 3 intervened in that way? 4 A. In relation to trams or -- 5 Q. Yes, trams. 6 A. I think one of the things that concerned me in relation 7 to trams was that I did, and I think -- I think this is 8 true of other senior elected members and officers in the 9 Council. We lost confidence in the Chief Executive of 10 TIE and that we had to take action to try and address 11 that issue. Ultimately what that meant was his contract 12 wasn't renewed. 13 So that was an issue that I certainly took 14 a personal interest because I really didn't think that 15 he had the potential and the capabilities to deliver 16 a complicated project like that in a satisfactory 17 manner. 18 Q. If you were to get involved in matters of strategic 19 guidance or direction, was that a matter on which you 20 had in turn to take guidance from the Council as 21 a whole? 22 A. Well, initially, I mean, you would take advice and 23 guidance from the senior professional advisers in the 24 Council, the Director of City Development and the 25 Chief Executive. 233 1 If there was advice and information coming from 2 other sources within the Council, from the other 3 political groupings or colleagues, Andrew Burns who was 4 the executive member at the time, then you would take 5 advice and guidance there. 6 Ultimately you made up your own mind and you 7 thrashed out these issues with your colleagues to try 8 and get the best decision that you could, but you didn't 9 necessarily just make up your mind on a whim. You did 10 take advice and try it as robustly as possible to test 11 your opinions before you took a decision. 12 CHAIR OF THE INQUIRY: Is this a convenient point? 13 MR LAKE: Yes, my Lord. 14 CHAIR OF THE INQUIRY: Mr Anderson, we'll rise for the day 15 and resume again tomorrow. 16 A. Sorry, you couldn't speak up a little bit, could you? 17 CHAIR OF THE INQUIRY: We will rise for the day and resume 18 tomorrow. Let's start giving your evidence again at 19 9.30. Ms Fraser will keep you advised about the 20 details. 21 I'm sorry we haven't managed to finish your 22 evidence, but I think we indicated that it was likely 23 anyway that it would spill into tomorrow. 24 A. No problem. Thank you. 25 (4.33 pm) 234 1 (The hearing adjourned until Thursday, 7 September 2017 at 2 9.30 am) 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 235 1 INDEX 2 PAGE 3 MS LESLEY HINDS (continued) ..........................1 4 5 Examination by MR LAKE (continued) ............1 6 7 MR EWAN AITKEN (affirmed) ..........................113 8 9 Examination by MR LAKE ......................113 10 11 MR DONALD ANDERSON (affirmed) ......................193 12 13 Examination by MR LAKE ......................193 14 15 16 17 18 19 20 21 22 23 24 25 236