Edinburgh Tram Inquiry: Tram boss awarded £40,000 bonus by committee he ran

Willie Gallagher was awarded a bonus of 40k.
Willie Gallagher was awarded a bonus of 40k.
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A FORMER tram boss who received a £40,000 bonus for seven months’ work sat on the committee which decided rewards during his time in charge, the tram inquiry has heard.

Willie Gallagher, who was both chairman and chief executive of the council’s arms-length tram company TIE from June 2006 until November 2008, was a member of the remuneration committee which set bonuses for those involved in the project.

Picture; Lesley Martin

Picture; Lesley Martin

The inquiry, chaired by Lord Hardie, was shown a code of practice stating that remuneration committees should consist entirely of non-executive directors.

Jim Inch, the council’s director of corporate services from 2002 until 2011, agreed such a situation was “clearly a departure from best practice”.

READ MORE: Edinburgh Tram Inquiry: How did Edinburgh’s trams become a fiasco?

In 2009, the Evening News revealed Mr Gallagher, who had been on a £170,000-a-year salary, was receiving a £41,000 bonus for his work between April and November 2008, when he quit the scheme.

Mr Inch also agreed the fact Mr Gallagher was both chair and chief executive was also “clearly” not best practice.

But he said: “At the time the arrangement was made it was not intended for it to last any great length of time, but circumstances changed and it lasted far longer than we anticipated and far longer than desirable.”

Mr Inch said the governance arrangements for the tram project were confusing. The council had set up TIE to deliver the project, but for a long spell there was no formal “operating agreement” between them.

And he said TIE was resistant to providing all the information requested by the council.

He said: “I guess there was a cost-benefit consideration in terms of how much information the council required and how long it would take to prepare that information.”

Inquiry counsel Euan Mackenzie asked why, since TIE was wholly owned and funded by the council, it did not just impose control.

Mr Inch said: “At various stages that did happen. What we had put together was a team of experts and we had to have regard to the views they had about the appropriateness of the sorts of control we were wishing to exercise. There was on our part a view that maybe we didn’t understand sufficiently why controls of a particular nature were not appropriate.”

READ MORE: Edinburgh tram inquiry: Council not told about £40m cancel fee

Mr Inch, who is now retired, told the inquiry it was Scottish Government agency Transport Scotland who had insisted on the council setting up TIE to deliver the trams project.

“Transport Scotland were very clear they were not happy with the prospect of the council carrying out this project in-house and were quite sure that they expected us to set up an arms-length organisation.

“Transport Scotland insisted it could not be held in-house, it needed to be placed in some sort of governance arrangement which did not involved the council taking direct responsibility. That was a condition of Transport Scotland’s support for the project.”

Mr Inch said he did not believe the council’s interests and TIE’s interests were always aligned.

“The council had wider interests and the fact TIE was focused purely on the tram project meant TIE didn’t have any understanding of some of the situations we might encounter.

“One of TIE’s frustrations as time went on was we did have to regard what the general public had to say and what the elected members had to say. TIE took an entirely businesslike approach to that, which is understandable but they had little room for taking account of the wider interests of the council.”

Mr Inch also described how in 2006 the council chief executive at the time, Tom Aitchison, had set up a new Internal Planning Group (IPG) which brought together senior officials in a bid to ensure the council was ready to approve the business case for the trams before the 2007 local elections to avoid delaying the project.

He said it was “a bit unclear” whey he was asked to join the group because he was not in charge of the council’s finances and had no technical expertise useful to the project.

“I think I was there to ask the daft laddie questions no-one had thought of. I think I did that quite well because I’m quite used to doing that.”

He said the setting up of the IPG reflected Mr Aitchison’s feeling that “he did not have enough direct involvement with the tram project”

“I think the chef executive wanted to be more directly involved. He didn’t feel he knew enough about what was going on and wanted to take a bit more control over what was going on.”