Revealed: inside story of Lothian Buses dispute

Dismissing boss Ian Craig would apparently cost Lothian Buses more than �500,000. Picture: Phil Wilkinson
Dismissing boss Ian Craig would apparently cost Lothian Buses more than �500,000. Picture: Phil Wilkinson
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From the outside, it’s one of the most successful bus companies in the UK – popular, publicly owned, and breaking passenger records on a regular basis.

Only last week, Lothian Buses revealed that three million more journeys had been made on its madder red and white fleet, taking total passenger numbers north of 118 million for the year.

That’s the public face of Edinburgh’s council-owned bus company. Behind the scenes, things haven’t been running as smoothly since three executive directors lodged a grievance against the chief executive, Ian Craig, prompting a probe into his management and leading to the departure of the chairwoman and an employee director.

Based on investigation documents and accounts from within Lothian Buses and the council, the Evening News can tell the story behind 14 weeks of intrigue at the top of the bus company.

The News can reveal that:

n The possible dismissal of Mr Craig was raised as early as mid-October;

n Council chief executive Sue Bruce wrote to the Lothian Buses chairwoman to tell her the outcome of the grievance was “a matter for the board”;

n The transport convener was informed of a potential £400,000 pay-off to Mr Craig via text message.

The top men at Lothian Buses were poached from the private sector with promises of big salaries and chained to the publicly-owned company with “golden handcuffs”.

As chief executive, Mr Craig earns more than the Prime Minister, with a salary package including bonuses of roughly £270,000. His three most senior deputies take home £190,000 including bonuses.

Crucially, the terms of their contracts mean it would cost the council an eye-watering sum to dismiss even one of them for anything short of gross misconduct: all are believed to have two-year notice periods, so sacking even one of the so-called “Annandale Three” would cost in the region of £400,000, while Mr Craig’s dismissal would see the council fork out more than £500,000.

Fears over a huge payout have been heightened since a formal complaint about Mr Craig was lodged on August 22 by operations director Bill Devlin, engineering director Bill Campbell and finance director Norman Strachan.

“We feel Mr Craig’s management and leadership has become of such concern that we no longer have any trust or confidence in his actions,” they claimed. “He displays intimidating and petulant behaviour when challenged, which has made it impossible to discuss the issues raised in this grievance with him.”

Mr Craig has never faced any disciplinary action as part of the grievance, but the Evening News understands he would have been suspended from his post on September 8 had he not voluntarily agreed to stay away.

It has also emerged that chairwoman Ann Faulds was told by city officials that the council had “no appetite” for Mr Craig to be suspended.

Investigations weren’t carried out by Ms Faulds, but by the senior independent non-executive director on the Lothian Buses board, John Martin, who upheld five of eight grievances, while concluding that no disciplinary action was necessary.

The report was presented to senior councillors by Ms Faulds at two crucial meetings on October 13 and 14. The first was attended by council chief executive Sue Bruce, council leader Andrew Burns and his deputy Steve Cardownie. Transport convener Lesley Hinds was out of the country and was briefed the following day.

According to correspondence seen by the News, Ms Faulds presented a summary of the report, and having secured advice from leading employment lawyers Burness Paull, said a range of options was on the table, including Mr Craig’s dismissal on grounds of the irreparable relationship between him and his colleagues. Council sources deny that dismissal was raised as a prospect at the meeting, and say they never gave their blessing for that to be pursued.

However, a letter sent from Ms Bruce to Ms Faulds seen by the Evening News does suggest that the Lothian Buses board was given the power to make its own decision on Mr Craig’s fate. Sent shortly after the October 13 meeting, it states: “Your summary of the matter was appreciated and of course any decisions arising will be a matter for the Lothian Buses board.”

Before any decision was made, a one-day mediation session was scheduled for October 31, with a trained mediator 
flying up from London to take part. The session is described as having gone “terribly”.

Insiders say that for most of the day, the two sides remained in separate rooms, engaging in shuttle diplomacy via their legal teams. At one point in the afternoon, the group was called together into the same room, only for the session to disintegrate.

At some point during the day, Mr Craig was told that he faced the prospect of being dismissed, and was made an offer of £400,000 to quit voluntarily. The other three executives had all agreed to waive their bonuses and slash their notice periods to offset the cost of the pay-off. Mr Craig texted Cllr Hinds at home to tell her he was facing the sack, and ask whether the council – as majority shareholder – had given its consent.

Cllr Hinds was shocked by the message, and city director of corporate governance Alastair MacLean was dispatched to tell Ms Faulds that whatever the outcome of mediation, the council did not want Mr Craig to be dismissed.

Despite the Hallowe’en fright, senior councillors say they retained faith in Ms Faulds to resolve the situation.

A meeting of non-executive board members was convened by Ms Faulds on November 5, accounts of which are as chaotic as the failed mediation bid. One non-executive, Donald MacLeod, was unable to attend because he still had the meeting in his diary for the previous day. Tony Depledge, now installed as interim chairman, was also unable to attend and had to take part via conference call.

The non-executives were briefed on the contents of the report into Mr Craig, but weren’t shown the full document. Nevertheless, everyone in the room felt sufficiently well informed to support Ms Faulds’ judgement that the chief exective should go. “If he’s lost the trust and confidence of the board then his position is untenable,” is how one board member is said to have summed up the debate.

Mr MacLeod added his 
support after being filled in via telephone later that day.

That united front has since crumbled, with Mr Depledge taking on leadership of the Lothian Buses board and putting in place a plan to bring the two sides together. He and Mr 
MacLeod are both believed to now claim they weren’t properly informed of all the facts of the investigation, and no longer favour Mr Craig’s departure.

Ms Faulds resigned the day before a full board meeting on November 12.

With the first full board meeting since the Annandale Three returned to work due tomorrow, council sources insist that throughout the affair they have tried to get the best result for taxpayers and passengers, and that grounds for dismissing Mr Craig have never existed.

Ms Faulds’ allies and supporters within Lothian Buses, meanwhile, wonder why she couldn’t carry on in her role, even though she saw the outcome differently.

That isn’t the only question that remains. Why has the council maintained its support for Mr Craig in the face of recommendations from two senior directors, and backed by an internal investigation? And after the recent turmoil of the past few weeks, who will the council be able to find to run its bus service in future?