Largs and Millport Weekly News

Article published around April 1999
 Next article on the
 Common Good Fund

Largs Common Good - Part 4

So, the Common Good had spent over £83,000 on repairs and upgrading of the carpark and was not to get any income from it.

But, wait a minute, surely the trustees can't allow that to happen? If the Common Good doesn't get a 'return' on over £83,000, the trustees (all of the Council) would be in breach of their legal duties as trustees.

Bernard Devine decides that the carpark income and expenses should be put into a 'suspense account' until it is decided what to do, and eventually CDC decides to 'give' the net income from the carpark to the Common Good. This is despite the Common Good being entitled to the income anyway.

In the year to 31 March 1994 the Common Good should have been given the £35,600 for the properties at Wilson Street, School Street and Lade Street. The 'gift' of the net income from the carpark should have been paid for that year as well, if not the actual income from the carpark being in the Common Good as of right.

But what was in the accounts for that year? Nothing.

An objection was sent to the auditor at the Accounts Commission, Graham Potter, firstly on the basis of the missing payment for the properties, and also for the failure to give the income of the carpark to the Common Good, as an absolute right, not as a 'gift' from CDC. He agreed that an 'adjustment' for the £35,600 would be made before the accounts were finalised, but ducked the issue on the carpark income. You might think that any reasonable auditor would have looked at the opinion of legal Counsel from 1993 at this point, but maybe Graham Potter is not a reasonable auditor.

So let's have a look at the accounts for the year to 31 March 1995.

These were a bit weird. If CDC had made the adjustment for the £35,600 in the previous year then certain figures in the accounts would be £35,600 more than the draft ones for the previous year, but they were £4,400 less! What had happened here? Someone had put through another adjustment for £40,000 'the other way round' to cover it up. David Nibloe of CDC Finance got quite annoyed when this was suggested to him.

Another objection was sent to Graham Potter about the carpark income, but only a very sketchy objection about this £40,000 cover-up, so he wouldn't know precisely what the objection was about before our meeting.

Remember a couple of weeks ago when I told you about the Common Good possibly being 'in the red' in 1983, that there were two 'accounts', capital and revenue? Well, you cannot willy-nilly move things from one to the other. Some of this is specifically against the 'rules' UNLESS approved by the Secretary of State for Scotland. The Secretary of State at this time was Michael Forsyth.

CDC had paid the £35,600 to the 'capital' of the Common Good, as should have been the case, but then transferred £40,000 of costs into the 'capital' from the 'revenue' to offset against the £35,600. This was confirmed by Graham Potter and the audit manager, John Clayton, knew about this. They weren't told (then) that this was illegal for a reason which will become apparent soon. If CDC and the auditors are going to back-date a cover-up transaction, we needed to make it a wee bit more difficult for them to back-date the approval to make it legal!

Graham Potter also provided information about the 'secret' opinion of the legal Counsel, which no-one else could see at that point, and stated:

'The (legal) Opinion concluded that the land on which the car park was situated was owned by CDC and not the (Common Good) Fund. CDC therefore took the view that the Fund was not entitled to the revenue generated by the car park'.

So, this was CDC's view, not the view of the legal Counsel. Very interesting!

He also went on to say that 'there is a possibility that there was a verbal contract in 1927... However...it has not been possible to obtain any evidence to support the nature of any verbal contract'. Any evidence? Graham Potter had been given plenty of evidence by then and got even more after this.

However what he didn't mention was a sentence written by the legal Counsel when answering a question about whether the Common Good was entitled to lay claim to the ground on which the carpark was built:

'The expenditure on the car park and treatment of the revenue therefrom is consonant (in agreement) with the transfer to the common good fund of the profits (the income) though not necessarily the transfer of the subjects (the ground)'. Bracketed words added by me for clarity of meaning.

So, although not directly asked the question, legal Counsel agreed that the 'profits' were legally those of the Common Good, presumably through a contract in 1927, exactly as the Community Council had told Jimmy Gordon in November 1993.

It seemed now that Graham Potter had not taken a fully objective view of matters, and had merely regurgitated what he had been told at Cunninghame House, presumably by those most interested in keeping quiet everything that was in the opinion of the legal Counsel. It also now appeared that not only were the senior officers of CDC involved in a supression of this information, but that the auditor was involved in it as well.

However the Common Good got the net income from the carpark for both 1993/4 and 1994/5 in the year to March 1995, based on the agreement of CDC to 'give' it to the Common Good. So up to then the Common Good was not actually 'out' any money.

Graham Potter probably thought that all of this nonsense about the Largs Common Good was finally finished and would go away. He had another think coming!

More research took place, especially on the law of contract and on local government accounting. Contact was made with the Scottish Office which considered that if there were issues of criminal illegality, such as a deliberate misrepresentation which resulted in a loss to the Common Good, they were matters for the Police. The Procurator Fiscal's Office also considered that the Police should be informed. We needed now to wait for the appropriate time.

Donald Dewar became Secretary of State for Scotland in May 1997.


Next week: Conspiracy, fraud and theft.


Jim Perman is a Chartered Accountant and a Registered Auditor. He is also Subject Panel Leader in Finance and Fiscal Studies at Napier University of Edinburgh.

Valid XHTML 1.0 Transitional © Copyright 1999-2017  Elmbronze Ltd  Scotland Valid CSS!