1 Thursday, 23 November 2017 14 (11.17 am) 15 MR NEIL RENILSON (continued) 16 Examination by MR LAKE (continued) 17 CHAIR OF THE INQUIRY: Mr Renilson, sorry we are a bit later 18 than we anticipated. There were some technical 19 difficulties at the beginning with the videolink. 20 You're still under oath. 21 MR LAKE: Mr Renilson, when I was questioning you yesterday 22 afternoon, one of the issues that arose was whether or 23 not there were changes to be made to your statement. 24 A. I don't have a paper copy of the statement that was here 25 yesterday. (Pause) 53 1 Okay, thank you. Sorry, yes. 2 Q. Did you have a chance to look at a copy last night? 3 A. I did. 4 Q. Did you discover there were things you felt it would be 5 appropriate to change? 6 A. Well, yes. Certainly things I would wish to, yes. 7 Q. Do you have a record of what they are or -- 8 A. Yes. I would say that there's over 100 pages of it, and 9 I by no means went through the whole thing. 10 Q. If you have the statement on screen, I should say, just 11 to make it easier to start with, we are looking at the 12 version with the amendment marked on to it, which is 13 TRI00000176. 14 A. Yes. 15 Q. Could you tell me, which is the first correction that 16 you -- 17 A. Well, I would like to go to paragraph 255 to start with, 18 please. 19 Q. That is on page 79? 20 A. Sounds right. 21 Q. It starts at the foot of the page. 22 A. Right. Yes. 23 Now, there's a reference there to a document -- yes. 24 Now, I see that's -- that was not on. This red mark at 25 the side was not on -- until I'd been using the version 54 1 I sent, not this version with -- that's been corrected, 2 where it picks up that the -- the document reference was 3 incorrect. 4 So that's already been picked up. 5 In which case can we just scroll down to the next 6 part of 255. 7 Okay. That document 79774, could we go to that 8 document? 9 Q. Could you call that up, please. 10 A. And to page 40 of that document. 11 Q. What is the issue that arises here? 12 A. Now, the issue here, this is -- if I remember correctly, 13 the signature sheet from a meeting on 13 May. The top 14 signature of somebody Campbell, countersigned by 15 Gill Lindsay, is dated 12 May. Scrolling down, there's 16 then my signature dated 13 May, and also the signature 17 of Bill Campbell. 18 If we can then scroll to page 44, exactly -- very 19 similar signature by Gill Lindsay and on this occasion 20 on behalf of tie, it's Willie Gallagher and Kenneth Hogg 21 who have signed it, although they haven't dated it. 22 Now, having looked at 80738 and having looked at 23 this document, and also having looked at 0129240 -- 24 sorry, 01289420, which also is a meeting that took place 25 the same day, I have a problem here in that neither 55 1 Mr Hogg nor Mr Campbell were present at these meetings. 2 Any of the meetings that day, as far as I can see. 3 There's no indication that they were on the premises. 4 I just wonder if somewhere along the lines, some -- 5 some stuff, some documents have become misplaced. 6 Now, at that point all I would say is I do not think 7 it would be helpful if I went through a forensic 8 examination looking for -- coming across things where 9 there are inconsistencies and things that aren't. 10 So to enable things to move forward, I would -- 11 Q. Could I assist here. Could you look, please, in this 12 document. You referred firstly to page 40. If we go 13 back to see the one we were looking at. 14 A. Yes. 15 Q. Above the signatures in the testing clause, we see: 16 "In witness whereof this Agreement consisting of 17 this and the preceding 15 pages." 18 Do you see that? 19 A. Yes. 20 Q. Sure enough, if we scroll down to the foot of the page, 21 this is page 16. 22 A. Mm-hm. 23 Q. If we go back through 16 pages to page 25, so going back 24 15 pages, to find page 1, we see this isn't a minute of 25 a meeting. This is an agreement that was signed between 56 1 the City of Edinburgh Council and Transport Edinburgh 2 Limited. 3 So those signatures -- do you understand those 4 signatures are not bearing to be signatures of a record 5 of a meeting, they are signatures of an agreement which 6 may or may not have taken place at that meeting. Do you 7 understand? 8 A. I understand the point you make. But those signatures 9 are dated 13 May. 10 Q. Indeed. 12 and 13 May. 11 A. All right, sorry. I'm not disputing 12th with the two 12 CEC signatures. 13 I am happy to take the evidence that has been 14 submitted in terms of my original statement, my amended 15 statement, and the amendments, as being whatever the 16 word is, as being my evidence. I don't need to pursue 17 this any further. 18 Q. Okay. 19 Now, I still want to ask you a few additional 20 questions about what's contained in your statement. 21 What I would firstly like to do -- 22 A. Sorry. May I -- things were a bit disconnected 23 yesterday afternoon with the breakdown in the machinery 24 and so on. 25 There was one question that Mr Lake asked me which 57 1 I failed to answer properly. 2 Q. Which question was that? 3 A. Well, it was with regard to the CERT project. Would it 4 be possible for me to provide what I would deem 5 a satisfactory answer to that question before we 6 proceed? 7 Q. Before we go any further, I would like to understand 8 what question in relation to the CERT project is it to 9 which you would like to provide an answer? 10 A. You were asking me about the behaviour of Lothian Buses 11 vis-a-vis the award of the CERT contract to First Bus. 12 You repeatedly asked me versions basically of 13 a question which said: had Lothian Buses -- you seemed 14 to be implying that Lothian Buses had acted improperly 15 by taking a robust commercial response to the prospect 16 of new competition from FirstGroup in that area; and 17 with the implication that because the impact of that 18 robust competitive response had been that FirstGroup had 19 then decided not to proceed with the project, CEC had 20 been unable to get somebody else to proceed with the 21 project, the project fell, and CEC lost a substantial 22 amount of money, a number of millions of pounds; that in 23 some way this was wrong or inappropriate. And I wish to 24 clarify there that my understanding is, and always has 25 been, that the primary responsibility of a company 58 1 director is to protect the interests of that company. 2 Yes, it has responsibilities towards its 3 shareholder. Indeed -- and in the case of Lothian Buses 4 at that time, it had a major shareholder of 91 per cent 5 of the shares which was CEC. 6 But on the paper wraps stone principle, the 7 responsibility to the company trumps the responsibility 8 to the shareholder. I'm not a lawyer. I don't know the 9 Companies Act off by heart, but that's obviously advice 10 I had been given over the years, certainly up until 11 2008. I'm not aware if things had changed then. 12 Therefore, the position that my predecessors took 13 and I continued with was that our primary responsibility 14 under the Companies Act was to protect Lothian Buses. 15 If as a by-product of that City of Edinburgh Council 16 were damaged financially or suffered financially, that 17 was an unfortunate by-product, but my responsibility 18 under the Companies Act, my primary responsibility was 19 to protect the business and interests of Lothian Buses, 20 not to protect the business or to protect the interests 21 of my primary shareholder; and therefore we took the 22 action we did and no doubt whatsoever in my mind, or the 23 mind of the rest of the Board at that time, that that 24 was -- and the previous Board, because this was ongoing 25 when I arrived, was the correct course of action. 59 1 Yes, primary shareholder suffered, but it was not 2 the wrong thing to do. It was exactly the right thing 3 to do. 4 Q. We have your answer to that. 5 Could you look, please, then at page 6 of your 6 statement, at paragraph 22. 7 Enlarge paragraph 22? 8 A. Yes. 9 Q. At the start of that, you can see we considered this 10 yesterday: 11 "After the CERT project collapsed there was a lack 12 of trust in government of CEC's ability to deliver 13 transport projects, and of their being entrusted with another 14 project as they had failed to deliver on past projects." 15 Now, can we just be clear, from what you're saying 16 about the collapse of the CERT project, that was caused 17 by the reaction of Lothian Buses to it? 18 A. Yes. By the reaction of Lothian Buses specifically to 19 the award of the operating contract to First Bus. 20 Q. So the failure was more attributable to that than any 21 particular aspect of CEC's ability to deliver projects? 22 A. No. I would read that the failure was due to the 23 palpably inappropriate strategy that CEC followed of 24 awarding a contract for a business that would damage one 25 of their own 91 per cent owned companies to its primary 60 1 competitor. 2 If CEC had chosen, as they did, to award that 3 contract to FirstGroup, then that was effectively on 4 their own head be it. 5 Q. Right. Now, can we just, following that through, 6 I think you said yesterday that had it been awarded to 7 someone other than First Bus, there wouldn't have been 8 concern on the part of Lothian Buses? 9 A. No, that's not what I said. 10 Q. Do we understand that anyone then that was doing that 11 project would have drawn the same response from 12 Lothian Buses? 13 A. That's not what I said yesterday. 14 Q. Can you tell me which it is? 15 A. I will tell you what I said yesterday. I said that the 16 prospect of a remote bus company that did not exist in 17 Edinburgh, did not have a presence in Edinburgh, taking 18 on the CERT project, would be unwelcome. It would not 19 be viewed, however, with the same concern, the same -- 20 anything like the same level of concern as FirstGroup 21 taking it on. 22 I will explain why if you wish. 23 Q. No, what I would like you to do is just answer the 24 question, which is: would the reaction of Lothian Buses 25 have been the same if it was someone other than First Bus 61 1 had been awarded CERT? 2 A. It would not have been the same. It would have been 3 similar, but by no means the same. 4 Q. So the only thing you consider that could be said that 5 CEC had done wrong, was awarding it to the principal 6 competitor of Lothian Buses? 7 A. At that point -- 8 Q. Could you answer my question, please. 9 A. It's not a yes or no question, I'm afraid. 10 Q. I think you will find it is. I will ask it again so you 11 can be sure. 12 The question is: would the reaction of Lothian Buses 13 have been the same -- pardon me, wrong question. 14 So the only thing that could be said that CEC had 15 done wrong was awarding the CERT contract to the 16 principal competitor of Lothian Buses? 17 A. No, that's not correct. 18 Q. What caused CERT to fail was when First Bus walked away 19 in light of the Lothian Buses response. Am I correct? 20 A. Yes. 21 Q. So essentially the problem, what CEC might be said to 22 have done wrong, was failing to accommodate or comply 23 with the wishes of Lothian Buses? 24 A. No. 25 Q. Lothian Buses gave a demonstration of their power to 62 1 scupper a City Council transport scheme? 2 A. No. 3 Q. Could we look, please, at page 9 of your statement. 4 I would like to look at the paragraph at the top of the 5 page here, above the heading "My role"? 6 A. Yes. 7 Q. What I'm interested in reading is from the sixth line of 8 this. I think I will have to read the whole thing to 9 get the context for the reference to those periods. If 10 we go to the previous page to pick up the start of 11 paragraph 31. It begins: 12 "One concern about a number of externally recruited 13 tie staff was that they had endured periods of 14 unemployment and were highly motivated to keep their 15 jobs. The tram scheme was frequently, even from the 16 early days, under threat. It was always an issue at 17 both local and Scottish elections. There was always the 18 belief amongst tie employees that the project could be 19 cancelled and they would lose their jobs. That 20 situation led to a number of things, including making 21 sure in the run up to elections that there was no bad 22 news. During those periods, delays, overspends and 23 problems were diligently suppressed from politicians and 24 the media, sometimes for six or nine months." 25 Firstly, take note of that. You're talking about 63 1 information was deliberately suppressed. 2 A. Yes. 3 Q. What information do you consider was suppressed? 4 A. The general state of the project. I think I've listed 5 them there. Delays, overspends and problems. 6 Q. When you talk about overspends, are you talking about 7 actual expenditure or projections of expenditure? 8 A. Projected. 9 Q. So basically we're just talking about estimates of cost? 10 A. Estimates of the future cost of the project. 11 Q. Which delays are you referring to there? 12 A. Delays in the progress of the project. 13 Q. Now, which elections are you referring to? 14 A. This was fairly early on. It would be difficult for me 15 to put a precise time on it, but it was certainly during 16 the period when tie were still in Verity House and we 17 had the Board meetings in Verity House, before they 18 moved to Citypoint. So this was after Hanover Street 19 and before Citypoint. 20 Q. Which elections are you referring to? 21 A. Now, the Council elections were 1999 and then they would 22 have been 2004. I think the Scottish Parliament 23 elections and the Council elections coincided at that 24 point. So if that is correct, I'm talking about the 25 run-up to the 2004 Council and Scottish Parliament 64 1 elections in May 2004. If I've got my year wrong, 2 then -- I can't have got my year wrong because it 3 wouldn't have been as early as May 2003. It must have 4 been May 2004. 5 Q. So we're talking about the period there, even at the 6 stage of trying to get the Bills through Parliament, at 7 an early stage? 8 A. Correct. Absolutely. It was early stage stuff. 9 Ewan Brown was still the Chairman. 10 Q. Could we look at page 23 of your statement. 11 Could we look at paragraph 83. You say: 12 "A clear example of bad news being suppressed was 13 the GBP375 million cost figure. That was being stuck to 14 for nine months after tie knew the final cost was going 15 to be way in excess of that figure. As soon as the 16 election was out of the way that news came out very 17 quickly." 18 Which GBP375 million cost figure are you referring 19 to there? 20 A. Yes. This is exactly the same point as you raised 21 earlier. This is an amplification that occurs later on. 22 At that point in time, and, as I say, let's -- 23 unless you can correct me, we will say this is the 24 May 2004 elections, then what I'm saying is that the 375 25 cost figure was stuck to from, let's say, late autumn 65 1 2003. Well, no, late 2003 until mid-2004. Ie the 2 election in May. 3 And that 375 cost figure was the original figure 4 that was meant to include construction of what became 5 line 1a, line 1b, the section from Granton to Newhaven, 6 and the line from Newbridge -- sorry, from -- from, 7 from, from -- Ingliston Park and ride stop to Newbridge. 8 Q. What I'm interested in is you say -- let's go back to 9 your statement -- nine months after tie knew the final 10 cost was going to be way in excess of that figure? 11 A. Yes. 12 Q. When did you say that tie knew the final cost was going 13 to be way in excess of that figure? 14 A. I've said nine months there. I might have actually been 15 strictly more accurate to say six/nine months. Clearly 16 I cannot put at this length of time we're talking -- 17 where are we? 18 Q. Can I just be clear -- 19 A. 14 years ago. 20 Q. I'm not interested in whether it was six or nine months. 21 What I'm interested is when do you say that tie knew the 22 final cost was going to be different? 23 A. Six months, say, before the May 2004 election. In other 24 words, late 2003. 25 Q. Okay. Going on now to page -- go back to page 9 of your 66 1 statement, please. 2 A. Yes. 3 Q. Paragraph 36 at the foot of the page. 4 A. Yes. 5 Q. You note here that you had concerns about tie's 6 reporting: 7 "... including, in particular, whether information 8 was always fully and accurately reported." 9 Reporting to whom? 10 A. May I read the rest of that paragraph, please. 11 Q. Of course. It starts: 12 "There were a number of close calls when the project 13 came close to being cancelled. It received considerable 14 negative publicity in the local media, and there was 15 a groundswell of negativity amongst the population and 16 the electorate. Anybody who did not show blind faith in 17 what was being promoted was viewed as being negative and 18 against the project, rather than being viewed as having, 19 perhaps, something to contribute and that perhaps not 20 everything was being done as well as it could have 21 been." 22 A. Can we go back to the point you were actually asking the 23 question about? 24 Q. My question, just to remind you, was: reporting to whom? 25 A. Can you put that bit back on the screen for me. 67 1 Q. Can you go to the previous page and enlarge 2 paragraph 36. 3 A. Right. This is really a sentence on its own. 4 Occasions would occur -- occasions would occur when 5 I would be talking to somebody, possibly a councillor -- 6 Q. Mr Renilson, can I interrupt, because I don't want this 7 evidence to take an awful lot longer than it has to. 8 I'm not interested in why you had concerns yet. What 9 I'm interested in at the moment, my question is, you say 10 you had concerns about tie's reporting; my question 11 is: reporting to whom? 12 A. Politicians. 13 Q. At what stage were you concerned about the reporting to 14 politicians? 15 A. I think in this section we are talking mid -- mid 16 project. Shall we say maybe 4, 5, 6. 17 Q. 2004, 2005, 2006? 18 CHAIR OF THE INQUIRY: When you say politician, do you mean 19 local or national or both? 20 A. If they were -- yes, local, and possibly when we use the 21 term "national", I would mean national politicians, but 22 with an Edinburgh constituency, who I had cause to be 23 having meetings or discussions with. In other words, 24 MPs or MSPs, but primarily -- yes, MPs or MSPs. 25 Primarily councillors. 68 1 MR LAKE: What did you consider was not being reported at 2 that moment or was not being reported accurately at that 3 stage? 4 A. I cannot accurately record -- recall precise issues that 5 long ago. All I can say is that instances arose where 6 I said: well, such and such, such and such; that's not 7 what I was told, that's not what I picked up. That's 8 all. 9 Q. Was that people were saying to you: that's not what 10 I was told. 11 A. That's not what I'd been -- that's not what I had heard. 12 That's not what I had been told. 13 I would have to say that certainly in the case of 14 the MP/MSP category, they had no direct contact from tie 15 anyway. So what they were receiving was second-hand via 16 whoever, the Council, Transport Scotland. 17 Q. Can we look at page 23 of your statement, please. Could 18 we enlarge paragraph 81. What you said there is: 19 "There was a desire in tie to not let it be known 20 when things had gone wrong, as it would attract media 21 attention and increase the chance of the project ending 22 and job losses. I believe it resulted in staff not 23 highlighting problems internally. No news is good 24 news." 25 Now, is there a particular time period to which this 69 1 concern relates? 2 A. It pretty much related across the whole time of the 3 project. It varied in intensity though, and, as 4 I mentioned before, in the run-up to elections things 5 became very tense. 6 It's legitimate -- this is not necessarily 7 illegitimate. It's quite legitimate to try and manage 8 your media, and latterly tie were getting -- or the tram 9 project was getting such a pasting that they quite 10 rightly wanted to try and damage limit. 11 Q. When you say latterly there, what stage of the project 12 are you talking about there, latterly they were getting 13 a pasting? 14 A. I left the project at the beginning of 2009. The 15 pastings got more and more intense as time went on. 16 I would say any time after late 2005, the media was 17 negative. And it just got more and more negative as 18 time progressed. 19 Q. You say it resulted in staff not highlighting problems 20 internally. So what I'm trying to understand is what 21 sort of staff, what role do those staff perform and to 22 whom are they not reporting internally or not 23 highlighting internally? 24 A. I think your question relates to the second sentence in 25 isolation, because the first sentence is a statement in 70 1 isolation and the two, although interrelated -- I think 2 there was definitely a situation on occasions where 3 something might not -- might not have been good news, 4 and that was -- the individual staff might have thought, 5 or the two or three staff involved, might have 6 thought: let's sit on that for a moment and see if we 7 can find a work around, a way in which we can try and 8 sort this out, so that it doesn't immediately pass on 9 the bad news. Inevitably, if they weren't, then it 10 would have to be passed on. But -- 11 Q. Is that -- 12 A. I was just going to say, but that process of delay 13 sometimes was perhaps not the best course of action. 14 CHAIR OF THE INQUIRY: I think the question was: which 15 category of staff, what functions were these staff 16 performing, and to whom were they not reporting bad 17 news? 18 A. I would have said primarily commercial, and -- 19 commercial and engineering. I had no evidence 20 whatsoever that that happened in financial. And the 21 question of whom, their superiors. 22 MR LAKE: Who do you mean by superiors, what level in the 23 company. 24 A. It depends entirely on who the staff were. Middle -- 25 lower ranking staff to middle managers, middle managers 71 1 to higher managers. 2 Q. How much involvement did you have in those matters, 3 those tiers of tie to be able to understand what was 4 going on? 5 A. I -- I should -- I worked in tie's offices most of the 6 time. Inevitably you would be dealing with a phalanx in 7 my TEL role, people right across the spectrum. So 8 sometimes I would be sorting out engineering matter with 9 the engineers, financial with the financial people, 10 et cetera. And it was large open plan offices and it 11 was inevitable that in the process of sitting with 12 somebody for half an hour or whatever, they would take 13 phone calls. Other people would come and discuss 14 things, and you just picked things up, and, you know, 15 I'm not quoting an exact example, but the principle of 16 you're there, the phone rings, he picks it up. It's 17 clearly, you know: oh dear, oh no, oh, right, okay, 18 don't mention that and try and see what we can do to 19 sort it out; sort of conversation that you -- you are 20 sort of party to. 21 And that sort of thing happened. 22 Q. Could we look at the following page, page 24. 23 A. Yes. 24 Q. And enlarge paragraph 85. 25 A. Thank you. 72 1 Q. You say here: 2 "The Government Gateway Reviews, Audit Scotland and 3 Transport Scotland were also 'managed' by tie. tie were 4 conscious that there were potential problems that might 5 result in delay, reduction or cancellation of the tram 6 scheme and did their best to ensure that the Office of 7 Government Commerce, Audit Scotland and 8 Transport Scotland were told what they wanted to hear. 9 Information, facts, figures and timescales were 10 massaged." 11 A. Yes. 12 Q. My first question: what was your involvement in the 13 Gateway Reviews dealing with Audit Scotland and dealing 14 with Transport Scotland? 15 A. I was involved in all the three Gateway Reviews. I was 16 part of the team that met with the Gateway Review 17 people. These -- these meetings were arranged some time 18 in advance. I think there were four participants, from 19 the OGC, and there was consistency between them in that 20 pretty much the same people came on each of the three 21 occasions. 22 Q. So when you were dealing with the Office of Government 23 Commerce carrying out their various reviews, were you 24 aware that information, facts, figures and timescales 25 were being massaged to provide to them? 73 1 A. Yes, because there were pre-meetings held. It was 2 decided who would go and meet them. It was a formal 3 meeting. There would be four of them in a room and 4 maybe six of us. Those six people would be advised 5 a couple of weeks beforehand. There would be a couple 6 of pre-meetings. 7 I can't remember if we were actually given like 8 advance notice of the questions or the areas of 9 discussion. We may have been. But certainly there were 10 pre-meetings held, a couple of pre-meetings, two, maybe 11 three, before the meetings with OGC took place, and the 12 meetings with the OGC weren't just a one-hour meeting. 13 They lasted a -- they were spread over a couple of days. 14 And everything was gone through as to what we have 15 to tell them -- well, what they want to know, and this 16 is -- this is what we'll say, and you'll say that bit 17 and you cover that bit, and that sort of thing. 18 So that's what I mean -- that's how I was involved, 19 quite intimately. 20 Q. Were you content that information, facts and figures and 21 timescales going to the OGC were being massaged as part 22 of that -- as you were part of that process, were you 23 content with it? 24 A. I don't think at any time were they given wildly 25 misleading information. Had they been, I wouldn't have 74 1 been content. 2 CHAIR OF THE INQUIRY: I think the question was: were you 3 content that information, facts and figures and 4 timescales going to the OGC were being massaged? 5 A. I went with it because it was of modest level. 6 CHAIR OF THE INQUIRY: Does that mean you were content? 7 A. Yes. I allowed it to happen. Therefore by definition. 8 CHAIR OF THE INQUIRY: Well, it would help if you gave 9 direct answers. We will get through this more quickly 10 to the benefit of everyone, including yourself. 11 A. Okay. 12 MR LAKE: Were you involved in dealings with Audit Scotland? 13 A. I cannot -- I cannot remember specifics. 14 Q. What is the basis for your conclusion or your view that 15 Audit Scotland were managed by tie, or that the 16 information going to them was massaged? 17 A. It's what I picked up, just the impression I got. I may 18 have been involved in the meetings. I cannot remember. 19 Q. What do you mean when you say an impression you picked 20 up? 21 A. If there was -- if there was a culture of ensuring that 22 bodies such as 1, 2 and 3, information given to them was 23 checked before it went and reviewed, et cetera, then it 24 would apply to all those three bodies. 25 Clearly I was aware in the case of OGC. In the case 75 1 of Transport Scotland, I cannot immediately bring to 2 mind specifics, but there would have been, and I'm sure 3 there were in the case of Audit Scotland. But it's 4 a long, long time ago. But that was the basic culture, 5 is what I'm trying to say. 6 Q. And you participated in that culture, didn't you? 7 A. I was part of it, and I was a moderating influence. 8 Q. Well, if you -- it would have been open to you, if you 9 felt something was going wrong, or something was 10 improper, to have spoken to representatives from any of 11 those three bodies? 12 A. Yes. 13 Q. But you didn't? 14 A. No. 15 Q. So you participated in the culture about which you 16 express dissatisfaction; is that fair? 17 A. Yes. Would you like me to answer why? 18 Q. No. 19 A. Thank you. 20 Q. I think, from reading through your statement in general, 21 it would be fair to say there is a concern that you have 22 from the actions and separating the operator of the tram 23 scheme from the delivery company. In the broadest 24 terms, is that fairly put? 25 A. Sorry, could you repeat the question? 76 1 Q. You have a concern as to the decision to separate the 2 operator of the trams from the delivery company, having 3 two separate entities, tie and TEL. 4 A. Oh, I have concerns, yes. It was to my mind not the 5 right thing -- not -- 6 Q. What I want to try and understand is what problems did 7 that give rise to in practical or concrete terms? 8 A. We were where we were. tie had been created first with 9 a specific single function, to deliver transport 10 projects, and as far as we were concerned, the tram. 11 TEL did not come along until some time later. So on 12 the basis of we are where we are, the system was 13 modified and tie was -- TEL was added in. 14 Had we been starting at that point with a clean 15 sheet of paper, we would have had one body that did 16 both. 17 Q. Can I just focus back on my question, please. What I'm 18 looking for is: can you identify any practical or 19 concrete problems that arose as a result of having one 20 company as operator and one company as delivery? 21 A. Only -- only from the administration point of view that 22 inevitably it led to duplication and also in some 23 people's minds confusion as to quite who was who and who 24 did what. 25 Q. Who was who? What did tie do? 77 1 A. tie's role, as regards the tram project, was to procure 2 the tram. Their job was to obtain prices for the 3 delivery of the project, and secure contractors to 4 deliver the project. So -- oh, and also to originally 5 obtain the parliamentary powers. 6 So their job was purely to effectively arrange for 7 the design and build of the project using outside 8 contractors. 9 Q. What was the role of TEL? 10 A. The role of TEL was twofold. If I may just say, and as 11 regards tie, the day the tram became operational, 12 effectively tie had no further role. They walked away. 13 TEL similarly had two phases. During the design 14 build phase, TEL's job was to ensure that what was being 15 designed and what was being built was what was required 16 or what was deemed best to provide an appropriate 17 tramway that could operate at break-even or better, 18 deliver a BCR of 1 plus, and thereby effectively to give 19 the design parameters from a commercial point of view to 20 tie. 21 tie would then, with their subcontractors, design 22 and build the hardware. 23 Once the tram became operational, TEL would assume 24 operational control of the tram and it would fit into 25 the TEL portfolio of transport operations in the same 78 1 way that it's actually worked out. You have Transport 2 Edinburgh with Lothian Buses and Edinburgh tram. 3 Q. In particular, what role, if any, did TEL have in 4 relation to the construction of the tram network? 5 A. In defining -- when you say the construction of the tram 6 network, do you mean the definition of the tram network 7 or the construction of -- 8 Q. The construction. 9 A. No direct role in the construction, other than that we 10 specified what we wanted and where we wanted it. We 11 want the tram stops there, there and there. We want -- 12 we're going to need this power feeds here, here and 13 here. We're -- et cetera. How -- where we would need 14 turn backs, where we could turn trams short. So you 15 would want to design it so that you didn't have to run 16 every tram from one terminus to the other. 17 If Princes Street was closed for Hogmanay or 18 whatever, marathons, you need to be able to turn the 19 trams at Haymarket. And also at York Place. All that 20 sort of operational stuff. 21 So there you are, tie. Here is the track layout. 22 And then tie's job was to go off and have it designed 23 and built. 24 Q. What was the role then of the Tram Project Board? 25 A. The Tram Project Board represented really where the hard 79 1 work was done. It drew people from tie and from TEL, 2 and it was really where the fundamental decisions and 3 the day-to-day hard work was done. 4 tie and TEL both had people on their Board -- 5 non-execs on the Board of tie, who lived in England and 6 came up for a Board meeting once a month. It was not 7 appropriate for them to spend huge amounts of time 8 getting into the minutiae of it, ditto TEL. 9 So the Tram Project Board drew on the people who 10 were really in both organisations, and outwith, with CEC 11 too, and Transport Scotland, when they were involved, 12 and the Tram Project Board -- Tram Project Board role 13 was really to make it happen, to drive it forward, using 14 resource pulled in from all quarters. 15 Q. If we look back at your statement, please, and go to 16 page 42. 17 A. Yes. 18 Q. If we could enlarge paragraphs 134 and 135. In 134 you 19 note: 20 "The only oversight TEL exercised over the Tram 21 Project Board prior to May 2008 was in as much as some TEL 22 directors and staff sat on the Tram Project Board." 23 A. Mm-hm. 24 Q. If I just pause there, did the position change after 25 May 2008, contract signature? 80 1 A. Yes. Sorry, was there a question there? 2 CHAIR OF THE INQUIRY: The question was: did the position 3 change after May 2008, after the contract signature? 4 A. It may well have changed in governance terms. In terms 5 of the effect on the ground, no. 6 Q. What do you mean, it may well have changed in governance 7 terms? 8 A. Graeme Bissett used to produce all the governance papers 9 et cetera. And following contract close it may well 10 have been necessary -- I don't know, not my area -- for 11 the governance arrangements to change. 12 But to answer the question, the Tram Project Board 13 continued to function as effectively where it happened 14 in terms of making the tram happen. 15 Q. Could we look at the start of paragraph 135. You note 16 there: 17 "TEL had no involvement or responsibility for the 18 actual construction of the tramway, that was tie's 19 responsibility." 20 A. Yes. 21 Q. Is that a summary of what you've said to me a little 22 while ago? 23 A. Yes. TEL -- I'm having a house built. I decide where 24 I want the rooms, the doors, the windows. tie, you 25 build it for me. I didn't -- you know, they were the 81 1 builder. I was the specifier. 2 Q. Could we look, please, at a document. It's CEC01395434. 3 We can see here this is the front page of a document 4 with the title, "Edinburgh Tram Network Final Business 5 Case Version 2", and a date of 7 December 2007? 6 A. Yes. 7 Q. You will be familiar with this document, I take it? 8 A. It certainly looks very familiar. 9 Q. Could we look, please, at page 90. 10 A. Yes. 11 Q. Sorry, I've got the wrong page, my apologies. Could we 12 go to page 92, and enlarge paragraph 6.45. We see here 13 noted in the Final Business Case: 14 "The Tram Project Board maintains its role as the 15 pivotal oversight body in the governance structure. The 16 TPB is established as a formal sub-committee of TEL with 17 full delegated authority through its Operating Agreement 18 to execute the project in line with the proposed remit 19 set out in Section 6.32. In summary, the Tram Project 20 Board has full delegated authority to take the actions 21 needed to deliver the project to the agreed standards of 22 cost, programme and quality. The Tram Project Board 23 also exercises authority over project design matters 24 which significantly affect prospective service quality, 25 physical presentation or have material impact on other 82 1 aspects of activity in the city." 2 A. Mm-hm. 3 Q. Now, would you agree that that tends to put -- without 4 any doubt, it puts the Tram Project Board as being at 5 the heart of the governance of the tram? 6 A. Yes. 7 Q. The Tram Project Board is clearly stated to be 8 a sub-committee of TEL? 9 A. Yes. 10 Q. So really it was TEL seemed ultimately to have the 11 responsibility for these matters through its 12 sub-committee, the Tram Project Board? 13 A. In -- in that context, that's exactly what the 14 governance says, yes. But I say, in reality, it was the 15 Tram Project Board that did the work. Whether the Tram 16 Project Board was a formal sub-committee of TEL was, as 17 I say, a governance issue. 18 It had the full delegated authority, as it says. 19 Ultimately, the authority was -- was City of Edinburgh 20 Council as project sponsor, but yes. 21 Q. But you were the Chief Executive Officer of TEL at this 22 time? 23 A. Correct. 24 Q. It seems almost to be a matter of which you were not 25 aware that it was TEL, through its Board sub-committee, 83 1 which was described as pivotal oversight body in 2 relation to this project? 3 A. I was aware that the governance frequently -- the 4 governance arrangements changed a number of times. 5 Q. This is the Final Business Case. I take it you'd had 6 a hand in approving the Final Business Case? 7 A. Yes. But we might even find my signature on the back of 8 it. 9 The governance issues were dealt with in the case of 10 TEL by the -- primarily by the Finance Director and the 11 Chairman. David Mackay had a particular interest in 12 governance, and was quite good at it, and the Finance 13 Director equally, it was his specialist subject. 14 Although I was the CEO, I was happy to leave governance 15 to the Chairman, by and large, to -- the governance to 16 the Chairman and the Finance Director, and they would 17 brief me as required while I got on with making the tram 18 happen, if I could. 19 Q. Could we look at page 94 of this document, please. The 20 upper part of the page. 21 A. Yes. 22 Q. You can see the heading "6.4. Governance structure for 23 Construction period"? 24 A. Yes. 25 Q. Right at the very top, "CEC including tram 84 1 sub-Committee", and in the same box with them, you can 2 see TEL? 3 A. Yes. 4 Q. Beneath that you can see the Tram Project Board, and 5 beneath that, in turn, a number of what are presumably 6 intended as sub-committees? 7 A. Yes. 8 Q. They have reports from various people below them, 9 various disciplines below them, all running through the 10 Tram Project Director; do you see that? 11 A. Yes. 12 Q. Now, the one organisation that's not referred to here as 13 the governance structure for the construction period is 14 tie? 15 A. Yes. 16 Q. Were you aware of that? 17 A. It may not be named, but clearly all those boxes down 18 the bottom, every function in those boxes is a tie 19 function, and indeed the Tram Project Director is a tie 20 person. 21 Q. They are an employee of tie? 22 A. They were all either employees or contractors contracted 23 in by tie. So everything from Tram Project Director and 24 below are tie -- yes, fundamentally they are -- they are 25 tie projects and people. 85 1 The only thing I'm slightly unsure of is the box, 2 "Operational Planning". 3 Now -- 4 Q. I don't need to go into that at the moment. 5 A. Sorry, okay. 6 Q. Talking about tie employees, how many employees did TEL 7 have at this time? 8 A. None. In my time, TEL had no employees. 9 Q. So did that not cause a problem with TEL discharging the 10 functions placed on it in terms of the final business 11 plan? 12 A. TEL drew what resources it required from elsewhere. It 13 drew staff and funds and facilities from CEC, from tie, 14 from Lothian Buses. 15 Where we did have people who worked for -- who were 16 outsiders who were brought in full time, and I can only 17 think of one, he was put on the Lothian Buses payroll. 18 Q. So if you had these people who were all employees of 19 other companies, does that not suggest the mere fact 20 that someone is an employee of another company, other 21 entity, doesn't make any difference to the actual 22 governance structure which puts TEL and the Tram Project 23 Board at the top? 24 A. I'm not sure -- I'll answer what I think is the 25 question. If I haven't picked it up right, I apologise. 86 1 All the people were seeking to deliver the tram 2 project. Whether they were employees of tie, TEL, City 3 of Edinburgh Council, consultants, contractors, 4 whatever, who was actually paying their wages was 5 largely immaterial. This is what we are going to do. 6 This is how we're going to get on with it. 7 Was that the question? If not, I'm sorry. Ask it 8 again. 9 Q. When I referred you to this diagram earlier you pointed 10 out that the Tram Project Director and other people who 11 discharged the functions known here would be tie 12 employees. 13 A. Below that, but if you look up above -- 14 Q. Could you let me finish, just so we understand the 15 question. 16 A. Below that, yes, but I do have a caveat that I'm not -- 17 CHAIR OF THE INQUIRY: Mr Renilson, could you wait. 18 A. Sorry? 19 CHAIR OF THE INQUIRY: Mr Lake asked you to wait because he 20 was going to go on and explain his question. 21 MR LAKE: tie discharged all its functions or most of its 22 functions through employees of other companies or 23 entities; I understand that's what you've told us. 24 A. tie or TEL? 25 Q. Sorry, TEL, pardon me. TEL discharged its functions 87 1 through employees of other companies and entities. 2 A. Yes. 3 Q. So the mere -- and the fact that they were employees of 4 other entities didn't change the fact that they were TEL 5 functions that were being discharged? 6 A. Yes. 7 Q. So the fact that the people who would, say, be involved 8 in financial management, health and safety, or 9 operational planning were employees of tie, doesn't have 10 any bearing on the fact that in terms of governance 11 these were all TEL functions, they were all the 12 responsibility of TEL, does it? 13 A. I'm -- I'm not following your question. I'm sorry. 14 Please ask it again. 15 Q. We will look at a different page then. Could we go to 16 page 91, enlarge paragraph 6.38. We can see what it 17 says here is: 18 "It is also envisaged that certain of the Elected 19 Members of the tie Board and its independent NXDs 20 [non-executive directors] will join (if not already 21 members) the TEL Board or the Tram Project Board 22 (including specific sub-Committees) to ensure 23 consistency of approach and to utilise relevant 24 experience productively. The re-deployment of the 25 Elected Members and the independent NXDs will reflect: 88 1 i. The emphasis of the TEL Board on oversight 2 (on behalf of the Council) of matters of significance to 3 the Elected Members in relation to project delivery and 4 preparation for integrated operations; and 5 ii. The emphasis of the TPB on delivery of the 6 tram system to programme and budget and the preparation 7 for integrated operations." 8 So although it initially describes the transfer of 9 directors, what we do see is an emphasis here that it is 10 to be TEL who have oversight of the project on behalf of 11 the Council? 12 A. Yes. 13 Q. Now, as Chief Executive, were you involved in directing 14 TEL as to how to provide effective oversight of the 15 project on behalf of the Council? 16 A. This is an extract from the Business Case. This is not 17 necessarily the governance arrangements that were in 18 place as at December 2007. Am I correct? 19 Q. We can take a look at those just now, if you wish. 20 Go firstly to document USB00000006. 21 We see this is a pack of papers for the Tram Project 22 Board? 23 A. Sure. 24 Q. For a meeting that was to take place in September 2007. 25 Do you see that? 89 1 A. Yes. 2 Q. Could we look, please, at page 32 within that. We see 3 this is a draft paper put forward to that Board meeting. 4 A. Mm-hm. 5 Q. If we look at the paragraph that begins "The fulcrum". 6 A. Mm-hm. 7 Q. Rather than use the word "pivot", they have elected to 8 use the word "fulcrum" here, and it says: 9 "The fulcrum of the existing governance structure is 10 the Tram Project Board and this key aspect is sustained. 11 Formally, the Tram Project Board reports through its 12 Chairman to the TEL Board and exercises powers delegated 13 to it by the Council through TEL." 14 Was that the position as you understood it? 15 A. The existing governance. So this is as at mid-2007. 16 Q. Yes. 17 A. Tram Project Board ... 18 I would say, yes, that's -- yes. 19 Q. So the Tram Project Board gets its powers from TEL. You 20 are clear about that? 21 A. I -- the Tram Project Board to my mind got its powers 22 from tie, TEL, CEC. It was the body entrusted to make 23 it happen. 24 The actual detail of the governance structure was 25 not my specialty, and to be honest, as long -- my job 90 1 was to make the thing happen. Senior responsible 2 officer, I think the words they use there. 3 Q. Look at the fourth line onwards in that paragraph. It 4 notes: 5 "The Project Senior Responsible Owner (SRO) has 6 delegated authority from the Tram Project Board and this 7 authority is mirrored in the authority given to the Tram 8 Project Director, in turn delegated on day to day 9 matters to the senior members of his tram project team." 10 It's correct to say that you were the Project Senior 11 Responsible Owner at this time, weren't you? 12 A. Yes. 13 Q. What are the functions of a Senior Responsible Owner? 14 A. As I saw them, my function was to use my best endeavours 15 to make the project happen. To make -- make it happen. 16 To drive it forward. 17 Q. And you had that role -- part of the reason it came to 18 you was because you had the position of Chief Executive 19 Officer of TEL? 20 A. I would be the guy left holding the baby when the thing 21 was finished. That's essentially why I was SRO, because 22 I had to be comfortable that what was specified and 23 built was what I needed. 24 Q. And you were the Chief Executive Officer of the company 25 that was charged in terms of the governance with having 91 1 the -- being the Council's principal oversight body? 2 A. Yes. 3 Q. How did you go about ensuring that you had sufficient 4 oversight over all that was happening? 5 A. We had -- well, we had regular Board meetings of both 6 tie and TEL. I attended the tie Board meeting. 7 I wasn't a Director of tie. I was a Director and 8 attended the TEL Board meeting, and over and above all 9 the Tram Project Board, and the reports given by all the 10 various parts of the organisation, every month, to -- 11 certainly to the Tram Project Board, and also to 12 a lesser degree the tie Board and TEL Board. As it says 13 there, the Tram Project Board was whatever the words 14 were. 15 The main driving force or whatever. 16 Q. If -- 17 A. And the Board papers were very -- the Board papers, 18 reports and presentations were how I kept abreast of 19 what was happening, and moved forward on issues where 20 I felt I needed to move. 21 Q. Could we look forward two pages to page 34 of this 22 document, please, and enlarge the lower half. You will 23 see there is a paragraph that begins "In overall terms 24 therefore", and it's got two subparagraphs noting: 25 "The emphasis of the TEL Board on oversight (on 92 1 behalf of the Council) of matters of significance to the 2 Elected Members in relation to project delivery and 3 preparation for integrated operations; and 4 2. The emphasis of the Tram Project Board on 5 delivery of the tram system to programme and budget and 6 the preparation for integrated operations." 7 That's the same wording we saw in the Final Business 8 Case. 9 A. If you say so, yes. 10 Q. If we look to the following page, page 35, if we look 11 under the heading "TPB and its sub-Committees", it says: 12 "The Tram Project Board maintains its role as the 13 pivotal oversight body in the governance structure. The 14 Tram Project Board is established as a formal 15 sub-Committee of TEL with full delegated authority 16 through its Operating Agreement to execute the project 17 in line with the proposed remit set out in Appendix 4." 18 So once again we see the same wording has finally 19 found its way through to the Final Business Case. 20 A. Yes. 21 Q. If we go to the papers of the following meeting, that 22 will be reference CEC01357124. 23 For convenience -- we can see these are the papers 24 for the meeting on 31 October 2007 of the Tram Project 25 Board? 93 1 A. Yes. 2 Q. If we jump forward to page 13, the Project Director's 3 report, and enlarge the lower part of the page, do we 4 see there noted under the heading "Governance" that: 5 "A paper on the governance structure for the 6 construction period was presented and discussed at the 7 Tram Project Board of 26 September. A slightly revised 8 version was agreed at the Tram Project Board of 9 15 October and incorporated in the Final Business Case 10 version 1." 11 A. Mm-hm. 12 Q. Now, can we go back to the slightly later version of the 13 Business Case version 2, which is December, whereas 14 version 1 was October. That's document reference 15 CEC01395434. 16 We were looking at page 91. 17 We had been looking at paragraph 6.38. 18 Now, it's when we were looking at this, and I was 19 asking you about the subparagraph 1, the emphasis of the 20 TEL Board on oversight, you suggested that this was just 21 the Business Case and perhaps not what the governance -- 22 had actually been agreed. Would you accept now that 23 that does accurately reflect the governance that was put 24 in place? 25 A. Yes, I didn't say it wasn't. I was just asking you if 94 1 that was what was in place at the time. We've -- sorry. 2 Yes, if that's what it says, that's what it says. 3 Q. Now, you've previously referred to the fact that you 4 thought that the Tram Project Board was getting 5 authority jointly from tie, TEL and the Council. 6 A. Yes. 7 Q. But when we look at the contemporaneous documents, it 8 seemed that in fact the Tram Project Board was 9 specifically a sub-committee of TEL. Do you accept 10 that? 11 A. Yes. 12 Q. Is it fair to say that the way the company was -- TEL, 13 affairs of TEL were conducted in practice was not one 14 which particularly adhered to the letter of the 15 governance structures? 16 A. Correct. 17 Q. Did you discuss with people that it wasn't being 18 conducted in accordance with the governance structure? 19 A. Not particularly, no. 20 Q. Did you not think that was something that might matter? 21 A. No. I felt that what mattered was that there were 22 appropriate arrangements in place to make sure that that 23 which needed to be supervised was supervised. Whether 24 it was one body or another body, this was about making 25 it happen. 95 1 Q. Was -- if you were not aware that TEL had been the body 2 charged with oversight, is it likely to be the case that 3 other members -- other Board members of TEL were not 4 aware that that was the company charged by the Council 5 with oversight? 6 A. If I have said I wasn't aware, then I have misled you. 7 I was aware. I didn't attach great significance to it. 8 Q. Would it be fair to say the remainder of the TEL Board 9 would not have attracted great significance to it if the 10 Chief Executive Officer did not? 11 A. I cannot speak for every member of the TEL Board. I do 12 not even know -- the membership changed as people came 13 and people went. But certainly there was not a great 14 focus on -- on the -- on the formalities of the 15 governance procedure. 16 Graeme Bissett was very largely the guy in charge of 17 governance. He sat in a desk in the corner by the fire 18 escape and when a new governance structure was required, 19 he would disappear out of circulation for a week, come 20 back with something. It would be presented to the Board 21 meeting. This ticks the appropriate governance boxes. 22 Right, okay, carry on. 23 That's how it was largely viewed. It was something 24 that had to be done to keep the administration in place. 25 Governance. It was not something that -- whenever 96 1 a question came up, we thought, now, which bit of 2 governance covers this? It was: does that need doing; 3 do it. 4 Q. When you say it was necessary to keep the administration 5 in place -- 6 A. The administration in order. 7 Q. The administration within the companies? 8 A. The administration of the whole project, and the various 9 constituents. tie, TEL, TPB, CEC, Transport Scotland. 10 Q. If no particular regard was being had to the governance 11 structures produced by Mr Bissett, was it really being 12 successful in keeping the administration in place and in 13 order? 14 A. You would really have to ask other people that. My view 15 was that the governance structures that Graeme produced 16 that were then discussed at the Project Board or the 17 company boards and were usually adopted with few, if any 18 changes, they seemed to -- bear in mind, CEC, they were 19 on these Boards as well. They were party to these 20 governance structures. Donald McGougan, et cetera. 21 Yes. You know, they clearly had the support of people 22 more specialised in that area than I. And if the 23 Finance Director of CEC, the Director of City 24 Development, et cetera, David Mackay, Graeme Bissett 25 were okay with it, that was okay by me. 97 1 Q. If the Council were being provided with, for example, 2 a Final Business Case which narrated what the governance 3 would be during the construction period, it's reasonable 4 to suppose, isn't it, that the Council would anticipate 5 that that governance structure was actually being 6 implemented and adhered to? 7 A. I'm sorry, could you repeat that? 8 Q. If the Council are sent a Final Business Case which 9 details the governance structure, it's reasonable to 10 suppose that the Council would assume that it was being 11 adhered to? 12 A. Well, yes, if it was in the Business Case, it said this 13 is what's happening, then that is what was happening, 14 yes. 15 Q. And if you weren't adhering to it, that means the 16 Council hadn't been given the correct information about 17 what was in fact happening? 18 A. The Council were part -- as I have said, the Council 19 were part of the whole thing. Their senior officers, 20 their committee conveners, sat on these Boards. If they 21 were unhappy, they would have said so. 22 Q. Were you -- 23 A. Senior -- you know, senior -- seriously senior officers 24 and politicians. They were fully involved. 25 Q. Were you happy with the terms of the Final Business 98 1 Case? 2 A. The answer to that is that I acquiesced. 3 Q. Could you explain what you mean by you acquiesced? 4 A. I was going to cover this earlier when you were talking 5 about -- when we were talking about the OGC, 6 Transport Scotland, Audit Scotland, but you didn't let. 7 It's the same basic principle that applies to if you 8 didn't -- if you weren't comfortable with something, 9 Final Business Case, if you weren't completely bought 10 into it, Final Business Case, signing the contracts, 11 even, it runs right through the whole thing; why didn't 12 you stand up and say? Why didn't you do something? 13 If we go back to when the project first gained 14 traction, there was GBP500 million of government money 15 given. The message from Donald Anderson at the time 16 that we had was -- or -- after the 500 million was 17 confirmed, was: right, we have to -- we have to do this, 18 Neil; we have to make this happen; it might not be our 19 preferred course of action, it might not be your 20 preferred course of action, but we have 500 million of 21 government money on offer to the city; we have to take 22 it; we cannot -- it would be politically suicidal or 23 whatever to actually turn round and say: no, we don't 24 want it. 25 I know some of the other parties took a similar 99 1 view. There was no opposition to that. 2 So we need to -- we need to make this happen, we 3 need to have a tramway; and from that point on it was 4 very clear that there was going to be a tram and that 5 the money would be used. 6 At first it didn't particularly bother me. As time 7 progressed, I started to have more qualms. 8 And I rationalised it with myself and allowed myself to 9 sleep at night by adopting the Schindler strategy. 10 I could have done Trudi Craggs or Rebecca Andrew, 11 stood up, made my point and been moved, because that was 12 inconvenient, not wanted: don't want to hear that, out 13 you go. 14 I didn't wish to be excluded. I thought I could do 15 a lot more good by staying there and mitigating the 16 effects as best I could, by arguing when it was 17 appropriate against things, by lobbying, by speaking to 18 people, to try and ensure that what the city got was the 19 best possible tramway we could. We were going to have 20 a tramway. That was a given now. So what was the point 21 in a futile display of -- a fruitless, futile and 22 pointless display which would result almost certainly in 23 my being side-lined, moved back to Lothian Buses: just 24 get on with running your buses, son. Meanwhile, the 25 tram would be built with not enough tram stops, the 100 1 overhead wires would be so low that you couldn't run 2 open-top tour buses because they require them to be 3 a certain height, et cetera. 4 The best I could do for myself, for the city -- 5 sorry, not for myself, for the best I could do for the 6 city, and for the city's transport network and for the 7 Council, in my view, was to do my best to come up, to 8 exert the influence I could, to mitigate the worst 9 excesses that occurred in certain areas. 10 That's how I slept with myself at night. 11 Q. What were the problems -- 12 CHAIR OF THE INQUIRY: Before we go on to the problems, 13 Mr Lake, what was the answer to the question? You say 14 that you acquiesced in the Final Business Case. Does 15 that mean that you weren't happy with it and you went 16 along with it for the reason -- for the reasons that 17 you've explained at considerable length? 18 A. Yes. 19 MR LAKE: Perhaps we can just look at paragraph 6.32 on the 20 page we were on of the Final Business Case at the 21 moment. 22 Under the heading, "Roles of TEL and tie Boards", it 23 says: 24 "The TEL Board is focused on its overall 25 responsibility to deliver an integrated tram and bus 101 1 network for Edinburgh on behalf of CEC. It will make 2 formal recommendations to CEC on key aspects of the 3 project and matters which have a political dimension." 4 You were the Chief Executive of the company charged 5 with that responsibility of making recommendations to 6 the Council on key aspects of the project, weren't you? 7 A. Yes. 8 Q. If we go briefly to page 24 of this document, and 9 enlarge paragraph 1.110, it notes: 10 "The responsibility for delivering this document was 11 given to the Tram Project Board by CEC through TEL. It 12 is these organisations who now have the responsibility 13 of concluding on the way forward for the project, based 14 on the evidence presented in this Business Case." 15 That once again underlines the key role being 16 discharged by TEL. 17 A. Yes. 18 Q. Now if anyone had qualms and should be in a position to 19 express those to the Council, was that not you as the 20 Chief Executive of the company charged with that 21 responsibility? 22 A. Yes, and I know what would have happened if I had stood 23 up. 24 Q. In terms of you being removed? 25 A. That really didn't bother me. It was not that. It was 102 1 the fact that then the thing would go ahead without 2 any -- well, with very little control. 3 I had sufficient power and gravitas in the 4 organisation, the larger organisation, to be able to 5 almost require things to happen. If I was removed, 6 then, yes, things would be done that would result in 7 a dramatically inferior tram project -- tramline at the 8 end of the day because it would then have become 9 cost-cutting by TEL. 10 Q. Can I suggest to you that what you're saying amounts to 11 this: that it was more important that you be in the 12 project than that the Council be given a view on what 13 you saw the problems as being? 14 A. No. There is an element of truth in what you say, but 15 Donald Anderson, I met him regularly. Tom Aitchison, 16 I met regularly. Donald McGougan. These people were 17 all well aware that I had concerns. I was unhappy. If 18 we go right back to where this started, we are having 19 a tram. We're going to have a tram. We have to do the 20 best we can. 21 And get something good out of this. 22 Q. How did you make your concerns known to Donald McGougan 23 and Donald Anderson? 24 CHAIR OF THE INQUIRY: And Tom Aitchison. 25 A. Right, okay. Tom Aitchison and I would meet regularly. 103 1 Not frequently, but regularly for an update. When I say 2 not frequently, maybe quarterly. 3 Additionally, I would be in phone contact and so on 4 regularly, particularly about specific issues. 5 Tom was well aware of -- that I was, how shall we 6 put it, critical in many ways of the project, but 7 committed to delivering it as best I could. 8 You can pretty much carbon copy that answer for 9 Donald McGougan, except that I saw more of Donald 10 because he was at Board meetings monthly as well, 11 and I also had occasion to see him about finances a lot 12 of the time. 13 Donald Anderson -- it wasn't just Donald Anderson. 14 Andrew Burns, the Convener of Transport of the day, and 15 the key interested councillors as well. Again, it was 16 in -- by way of one-to-one discussion. 17 I think I covered this in my statement. 18 Q. What then the Council were faced with was on the one 19 hand one-to-one discussions of the nature you have 20 described, where you say you expressed concerns. They 21 had that on the one hand. 22 On the other hand, they had the formal documents 23 being issued by TEL such as the Business Case, saying 24 ready to proceed. 25 Now, was it not incumbent upon you, if you had the 104 1 concerns, to make them plain in some way in a written 2 form or to qualify the Business Case, rather than allow 3 the company of which you were Chief Executive to give 4 advice to the Council that all was well? 5 A. No. If Oskar Schindler had followed that policy, 1,200 6 people would have burnt in the gas ovens. Because he 7 chose to follow a different policy, the policy 8 I followed, 1,200 people survived. 9 If he had followed the policy you are suggesting, he 10 would have been taken out and shot. 11 CHAIR OF THE INQUIRY: Mr Renilson, we're concerned with the 12 Edinburgh Tram Inquiry and not with Oskar Schindler. So 13 can you try to concentrate on the question. 14 A. The principle is exactly the same. The answer to your 15 question is no. 16 MR LAKE: Can we look at page 164 of the Business Case. 17 Can we enlarge paragraph 10.36. 18 This is just to identify that within the Final 19 Business Case, a figure you're probably familiar with, 20 the final cost estimate for phase 1a is 21 GBP498.1 million. 22 A. Yes. 23 Q. Once again, you allowed that estimate to go forward to 24 the Council? 25 A. I was part of an organisation and committees that did, 105 1 yes. 2 Q. In your statement, if we take a look at this for 3 a moment, please, at page 66, could we enlarge 4 paragraph 204, please. 5 A. Yes. 6 Q. We see here you set out: 7 "Regarding the issue of GBP498 million I remember 8 very clearly attending a heavyweight meeting in one of 9 the rooms at Citypoint in 2007. I recall there were no 10 politicians present, but that David Mackay and 11 Willie Gallagher amongst others were there. I recall 12 that the latest cost advice was somewhere well above 13 GBP500 million, GBP530 million - GBP540 million or 14 thereabouts. I recall Willie Gallagher saying words to 15 the effect of we can't possibly put that out because 16 that sounds like an absolutely huge increase. Let's 17 take it down, let's make it, say, GBP480 million. That 18 figure doesn't sound nearly so bad, it starts with 19 a four. Someone said that he could not do that and his 20 response was, watch me, well, all right, not 21 GBP480 million. What we are saying is we need to have 22 something that starts with four. GBP499 million is too 23 bloody obvious, let's make it GBP498 million. 24 A discussion ensued. That's where the GBP498 million 25 came from. This was not Gallagher acting alone, most 106 1 of those present either agreed, or acquiesced." 2 I presume you would include yourself in that? 3 A. Correct. 4 Q. I have to suggest to you that what the position was at 5 that meeting was that there were a range of costs 6 available, running from somewhere down to about 7 GBP480 million all the way up to GBP530 million. And it 8 was necessary to exercise judgement on various factors to 9 determine which figure within the range should be put 10 forward. 11 A. Absolutely. 12 Q. It was a question of trying to decide, rather than 13 taking the top end figure, say GBP530 million, where it 14 would be put, and there was a collective exercise of 15 judgement? 16 A. Correct. 17 Q. That came to be that the correct figure was 18 GBP498 million? 19 A. Correct. 20 Q. And it wasn't a situation that we just want to squeeze 21 it down beneath GBP500 million? 22 A. Yes. Well, it wasn't just that situation. It was 23 important. It was deemed important by all present that 24 the figure started with a 4. Well, as verbalised by 25 Willie. But it was where do we settle? It could have 107 1 been, as you say -- I can't remember the specific 2 figures, but quite possibly somewhere between 480 and 3 530. 4 Q. Could I jump back, please, to page 70 of your statement. 5 A. Yes. 6 Q. In fact, initially if we go to page 69 for context. On 7 page 69 we will see we have got a heading of Final 8 Business Case. In paragraph 216 you say: 9 "I am aware that in December 2006 the draft Final 10 Business Case was presented to Council as myself and 11 others in TEL had involvement in its drafting and 12 approval." 13 If we jump over the page then to look at 14 paragraph 218, and enlarge that, it says: 15 "The TEL Board may well have suspected the civil 16 engineering and utilities figures were not right, we 17 were not in a position to challenge them. We had lots 18 of other things to be doing that were our direct 19 responsibilities and considered that if that was what 20 they were saying, then it was their responsibility." 21 The first question: was it not in fact the 22 responsibility of TEL to finalise -- 23 A. Sorry -- 24 Q. -- the Business Case? 25 A. No, because at that point in time we're talking about 108 1 late 2006. The governance arrangements had not changed 2 in the manner in which you described, and TEL was not 3 responsible for tie, so to speak. 4 Q. But in terms of which body actually had the authority 5 for preparing the Draft Final Business Case, what was 6 TEL's role in that, in December 2006? 7 A. Can you go back to the previous page, please? 8 Q. Certainly. Could we look at the previous page. 9 A. Yes. Draft final ... okay. I understand what's said at 10 216, yes. What was the question? 11 Q. My question is: what role did TEL have in approving the 12 Draft Final Business Case? 13 A. Approving it. Well, TEL were happy that it be passed on 14 up the line to the Council. But TEL were not -- at that 15 point my recollection is that the governance 16 arrangements did not have TEL sat above tie. At that 17 time TEL's approval merely meant that TEL was 18 comfortable that what was in there was going to result 19 in the best -- the best tram we could get. 20 Q. Could you look, please, with me at another document. 21 Could we look, please, at CEC01821403. 22 You will recognise this as the Draft Final Business 23 Case from November 2006. I think I said December 24 earlier by mistake. 25 A. Okay, yes, sure. 109 1 Q. Can we look at page 20 of this, please. If we could 2 enlarge paragraph 1.91. We see that what was noted was: 3 "The responsibility for delivering this document was 4 given to the Tram Project Board by the City of Edinburgh 5 Council through Transport Edinburgh Limited and by 6 Transport Scotland. It is these organisations who now 7 have the responsibility of concluding on the way forward 8 for the project ..." 9 Is that not making it plain that Transport Edinburgh 10 Limited did have a role in relation to the Draft Final 11 Business Case even at this stage? 12 A. Sorry, can you remove -- can you remove the enlargement 13 so I can read above it? Conclusion, thank you. 14 Can I just read the whole -- 15 Q. Can we enlarge the lower half of the page to make it 16 easier. 17 A. Thank you. (Pause) 18 Thank you. Can you now ask me the question? 19 CHAIR OF THE INQUIRY: The question was: does the document 20 not make it plain that Transport Edinburgh Limited had 21 a role in relation to the Draft Final Business Case even 22 at that stage? 23 A. Yes. 24 CHAIR OF THE INQUIRY: It's a pretty simple question, 25 Mr Renilson. And if you look at the section -- 110 1 A. I have answered it, yes. 2 CHAIR OF THE INQUIRY: Well, I'm just wondering why it took 3 you so long. 4 A. I wanted to read the whole three paragraphs, I'm sorry. 5 CHAIR OF THE INQUIRY: If you just listen to the questions 6 and answer them as directly as possible. 7 MR LAKE: Could -- 8 A. I will try. 9 Q. Could we go back to your statement, please. 10 A. Yes. I'm just concerned that I give as full and honest 11 and accurate an answer as I can. 12 CHAIR OF THE INQUIRY: We don't want anything other than 13 honesty and accuracy. 14 A. Exactly. And I would like -- 15 CHAIR OF THE INQUIRY: Let's not get into a discussion, 16 Mr Renilson. 17 MR LAKE: Could we look at the following page, back to 18 page 70, please, and enlarge paragraph 218. This is the 19 one we looked at earlier: 20 "The TEL Board may well have suspected the civil 21 engineering and utilities figures were not right, we 22 were not in a position to challenge them. We had lots 23 of other things to be doing that were our direct 24 responsibilities and considered that if that was what 25 they were saying, then it was their responsibility." 111 1 Now, firstly, when you say "they were saying", who 2 are you referring to there? 3 A. I'm reluctant to say this paragraph in isolation. I'm 4 not sure what time it relates to. But if that -- the 5 "they" is almost certainly tie. 6 Q. Let's just provide context. We went there before, but 7 we will go back there, so there's no doubt. 8 If we look at the previous page. 9 A. Right. I understand. 10 Q. We see we have got Final Business Case, and you refer in 11 216 to the Draft Final Business Case, which is 12 December 2006, and the following paragraph, you refer to 13 the Final Business Case in December 2007. Then when we 14 come back to 218, you are talking about what TEL may 15 have suspected. So it could be either, I suppose, 16 November 2006 or December 2007. 17 A. Okay. It really doesn't matter. 18 Q. Who were you referring to when you say "if that was what 19 they were saying"? 20 A. Tie. 21 Q. Now, we've just seen that in relation to either of the 22 versions of the Business Case that it was in fact TEL 23 who had the responsibility for it; do you agree? 24 A. Yes. 25 Q. So what do you mean when you say: 112 1 "We had lots of other things to be doing that were 2 our direct responsibilities ..." 3 Did that not include the business cases? 4 A. TEL, as you pointed out earlier, had no staff and no 5 budget. TEL drew its resources from elsewhere. 6 Therefore TEL was not in a position to go and check 7 tie's figures. 8 To put in a team of -- a team of engineering 9 auditors. 10 So we took what tie supplied us with, interrogated 11 it, and accepted it. 12 Q. Who interrogated -- 13 A. That was "they". 14 Q. Who interrogated it? 15 A. TEL. TEL Board. TEL Board may have suspected, but we 16 were not in a position to challenge them. We had no 17 resource. We had nothing. 18 Q. I don't understand, on the one hand, you can say they 19 interrogated the matter. On the other hand you say they 20 weren't in a position to challenge it. Did they or 21 didn't they? 22 A. We asked questions. 23 Q. So if what you're saying that tie was hampered by a lack 24 of any staff, would it be fair to say that TEL was 25 able -- I will put it the other way round. 113 1 TEL was unable to perform any effective oversight 2 function of what was put forward? 3 A. Because of the interrelationship of the companies, 4 I think Willie Gallagher was on the TEL Board. He was 5 also IC tie. 6 So when he was at TEL, he was -- we would 7 say: Willie, is this right? 8 Q. Do you regard that as an effective oversight function? 9 A. Yes. 10 Q. Really? 11 A. No. Well, it didn't just have to be Willie. We could 12 have asked Stewart McGarrity if the finance was right or 13 whatever. 14 The people were the ones -- the people at TEL, 15 sitting on the TEL Board, many of them were also 16 intimately involved and held positions with tie. TEL -- 17 Q. Who do you mean by that? Who was sitting on the 18 TEL Board that you think had an intimate position with 19 tie that would have been relevant to oversight? 20 A. Without being presented with a list of who was on the 21 TEL Board at that time, but certainly Gallagher. 22 Mackay -- Mackay was on the -- I'm not sure if he was 23 actually on the tie Board. There was Stewart McGarrity. 24 There was Graeme Bissett. People like that. 25 Q. So these are all people from tie as well? 114 1 A. They were people from the group. Some of them were tie, 2 some were TEL, some were both. 3 Q. These were all people who were within tie as well? 4 A. They were all involved in tie, yes. 5 Q. So essentially the oversight by TEL consisted of asking 6 people from tie whether they were happy with the 7 document being put forward? 8 A. That's -- that is -- that's a somewhat cynical view of 9 it, but yes. 10 Q. If we come to the point that you say the TEL Board may 11 well have suspected that civil engineering and utilities 12 figures were not right, I assume there you're referring 13 to members of the TEL Board who weren't also part of 14 tie? 15 A. Yes. 16 Q. Now, was there a suspicion, when you say "may well have 17 suspected", did they or didn't? 18 A. I cannot recall. That's why I have said "may". 19 Q. So it's speculation? 20 A. May. 21 Q. Speculation? 22 A. May. 23 Q. Is that speculation? 24 A. Informed speculation. 25 Q. What informed it? 115 1 A. My memory. 2 Q. Sorry? 3 A. My memory. I believe that was the case. 4 Q. No, I'm talking about whether or not the people on the 5 Board -- I can leave that matter there. 6 I would like to go to a different matter. If we go 7 to page 58 of your statement. 8 A. Yes. 9 Q. If we could enlarge paragraph 179. 10 A. Yes. 11 Q. You open the paragraph by saying: 12 "There was considerable concern in late 2007 about 13 the level of design which had been completed as tie 14 moved towards contract close. We appeared to be heading 15 towards contract close with an awful lot of loose ends 16 and unfinished design business, and would be signing 17 contract completion on the basis of substantially 18 incomplete design. There was some discussion about 19 delaying the tendering until the design work was more 20 complete, but the rush to get out to tender, get prices 21 in and contracts signed overcame the more cautious 22 approach being advocated by some." 23 A. Yes. 24 Q. Now, what pressure was there not to pause at that time? 25 A. The pressure -- the pressure was -- there was concerns 116 1 as follows. And these all amounted to pressure: that if 2 we paused, the price would go up. If there was 3 a project pause, then -- if there was a project pause 4 for design and MUDFA to be completed, it wasn't going to 5 be a project pause of a week or two. We are talking 6 about a year or something. 7 And that the price would go up and the project would 8 become seriously unaffordable. 9 So there was a pressure there to see if we can work 10 around these issues and move ahead as we moved towards 11 contract close. 12 There was -- there was the pressure as well of the 13 media and public pressure, which was just relentless in 14 its build-up and had been, I think, as I mentioned 15 earlier, from mid-2005 onward. All -- if we paused the 16 project, then we were highly likely to lose a lot of 17 the -- well, it was quite possible we would lose key 18 staff from tie. It was pressure from -- yes -- and 19 those and other sources. 20 Q. Was there a concern that funding for the project would 21 be withdrawn? 22 A. I don't think there was concern that funding would be 23 withdrawn. The concern was that the funding would be 24 inadequate because the price would go up. I think the 25 fear was, if we paused this thing, we'll maybe never get 117 1 it started again. 2 Q. How much importance was placed on having the design 3 complete by the time the contracts were concluded? 4 A. Different people placed different levels of importance 5 on that. 6 Q. Who placed the greatest importance on it? 7 A. Those people with previous experience of major 8 construction problem -- projects. 9 Q. And the least? 10 A. I am not being fatuous when I say, or not trying to be 11 that, the people with least experience. You know. The 12 people who really knew about construction were the 13 people who were really wound up about it. 14 Q. Who were they in terms of names, can you recall? 15 A. I think to be fair there were some finance people 16 involved as well, because Stewart McGarrity, although he 17 was finance, had been involved in building the airport 18 in Hong Kong. So he knew about that sort of thing. 19 The Project Director and people like -- well, 20 Steven Bell, who -- people who had had significant 21 experience of major civil engineering projects. To be 22 fair, Willie Gallagher was pretty switched on about that 23 as well. Whereas somebody like Bill Campbell, no. 24 MR LAKE: My Lord, I'm about to move on to another chapter. 25 And if we are going to take a break ... 118 1 CHAIR OF THE INQUIRY: We will adjourn for lunch and resume 2 again at 2 o'clock. 3 (1.00 pm) 4 (The short adjournment) 5 (2.00 pm) 6 CHAIR OF THE INQUIRY: Good afternoon. I am satisfied that 7 Mr Renilson is no longer fit to give evidence today. So 8 we will adjourn his evidence to a date to be afterwards 9 fixed. 119 1 INDEX 2 PAGE 3 MR IAN LAING (sworn) .................................1 4 5 Examination by MR LAKE ........................1 6 7 Examination by MR DUNLOP QC ..................51 8 9 MR NEIL RENILSON (continued) ........................53 10 11 Examination by MR LAKE (continued) ...........53 12 13 MR ROBERT BURT (sworn) .............................119 14 15 Examination by MR MCCLELLAND ................119 16 17 18 19 20 21 22 23 24 25 179