Part 3: The blameless board – by Kenneth Roy
Although many people reading this will never have heard of him, Lord Smith of Kelvin is one of the most important figures in Scottish public life. He is chairman of two of our largest companies – the Weir Group and Scottish and Southern Energy – as well as chairman of the organising committee for the 2014 Commonwealth Games in Glasgow.
He is also – as if all that were not enough – a non-executive director of Standard Bank Group and chancellor of the University of the West of Scotland.
Lord Smith – born Robert Haldane Smith in 1944 – is indeed a busy bee. He is living proof of this magazine’s consistent claim that Scotland depends on too small a talent pool and that no serious effort is ever made to enlarge it. As a result, the same people do everything.
So we find the versatile Smith variously cast in the last decade or so in such roles as a watchdog (with the Financial Services Authority), a patron of the arts (as chair of the National Museums of Scotland), a recruiter of judges (on the Judicial Appointments Board for Scotland) and – rather improbably, perhaps – an adviser on journalism (in his capacity as national governor for Beebus Scotticus). In the more distant past, he was a banker (RBS when it was known as the Royal Bank), a chartered accountant and a director of MFI.
Only his association with household furniture – the construction of which was a source of domestic friction across the land – cast a slight blemish on the otherwise highly polished CV.
Sir Robert (as he had by then become) joined the Weir Group as a director in February 2002 and was appointed chairman in July of that year. Six months before his arrival, the initial damage had been done: the company had embarked on a criminal enterprise, boosting the coffers of Saddam Hussein’s bloody regime with kickbacks in exchange for contracts, these payments supposedly processed through Swiss bank accounts. The wheeze began following a meeting in September 2001 attended by a still un-named director of the parent company and still un-named directors of a subsidiary. As we have complained earlier in this series, none of these people has ever been prosecuted.
Sir Robert knew nothing of this meeting or of the subequent wrongdoing. He was not around at the time; and, even if he had been around, a person of his complete integrity would have put an immediate stop to it.
Somehow undetected by successive audits internal and external, quite unobserved by senior management, the kickbacks continued in instalments totalling £3 million (plus fees of £1.5 million to a corrupt agent in Baghdad who channelled the money to Saddam’s henchmen) for two years and seven months until April 2004 when the crime finally came to light. Sir Robert gave an immediate assurance that the board had known nothing of it and should not be blamed. There was no suggestion that, despite its state of ignorance, the board should nevertheless hold itself accountable in some way.
Various investigations were instigated, although six years elapsed before the case came before a criminal court. A small fine of £3 million was imposed on the company: less than 1% of its annual profit. No individual – none of those present at the September 2001 meeting – has ever faced charges.
When the scandal blew up in July 2004, Sir Robert was not only chairman of a company which would soon be attracting the attention of the police; he was also the BBC’s Scottish governor and responsible for a major review of BBC Scotland’s journalism. A week later, the BBC announced that Sir Robert was stepping down at the end of the year because of ‘additional external commitments impacting on his time’. The controller of BBC Scotland, Kenneth MacQuarrie, thanked him profusely for his services and said that Pacific Quay – the corporation’s bleak new citadel by the Clyde – would be a ‘fitting testament to the vast contribution Lord Smith has made to broadcasting in Scotland’.
Promotion beckoned: a life peerage in 2008. With the peerage he became a member of the House of Lords, albeit not a particularly active one. His business commitments in Scotland must leave Lord Smith very little time to pursue a political career; and there is the increasingly urgent matter of the Commonwealth Games to consider. Lord Smith, not content with organising ’11 days of sporting excellence’, says he wishes to provide, through what is called the ‘legacy’ of such spectacles, ‘long-term motivation for disaffected youth’. It is a grand ambition, perhaps his most laudable yet, although quite how it is to be done is less clear.
Meanwhile, as the tireless peer looks forward to the 10th anniversary of his association with the Weir Group, two developments this week are startling. The Scottish Government is donating, from the proceeds of the company’s crime, the equivalent of 12 pence a head to the million women of Iraq widowed by war – a donation of £120,000; while the Weir Group has just paid £431 million in cash for a Texas-based shale oil operator.
A question remains. Well, many questions. But one will suffice. Where, ultimately, does accountability rest in the case of Saddam Hussein and his ill-gotten gains from Scotland? Not with Lord Smith of Kelvin, who knew nothing of the company’s criminal activities, the authorisation for which preceded his arrival; nor with those servants of the company who did know but who no longer work for it.
Who, then? Whodunnit?
It is a cliff-hanger of an end to a classic Scottish detective story. Possibly a writer of fiction could have done better. Though not much.
Courtesy of Kenneth Roy – read Kenneth Roy in the Scottish Review