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Scottish Charity Regulator concludes Diamond payment went against interests of the University

The regulator found University trustees' actions to be 'treated as misconduct’ in the administration of the University

By: Harry Keightley

Caption: Ian Diamond speaks at the Government's coronavirus press conference

The Scottish Charity Regulator (OSCR) has finished its investigation into a large severance payment made to the former Principal of the University of Aberdeen, Sir Ian Diamond. It has concluded that the University charity trustees sitting on the remuneration committee breached their duty to act in the interests of the charity and their actions are “to be treated as misconduct in the administration of the University”.

For the 2017-18 financial year, former Principal Sir Ian Diamond received a pay package totalling £601,000. This included a payment of £289,000 for a period of ‘gardening leave’.

Earlier this year the Scottish Funding Council found this amounted to a breach of its financial memorandum with the University and ordered it to pay back a sum of £119,000 and undertake an external review of its governance procedures.

Finance and administration of the University is the responsibility of the University Court which is partly comprised of charity trustees. Charity trustees have a duty to “act in the interests of the University and with the care and diligence that it is reasonable to expect of a person who is managing the affairs of another person”. The OSCR investigation assessed whether charity trustees acted in accordance with this duty when approving Diamond’s severance payment.

The OSCR report states they received evidence which indicates that “difficult issues” had developed in the professional relationships within University Leadership. It says that this left the Court with a need to address the situation urgently and resolve the issues.

Caption: OSCR report detailing breaches of the Remuneration Committee

Diamond’s employment contract with the university entitled him to 12-months’ notice and gave the university the right to suspend the Principal from some or all of his duties. In the severance agreement agreed between the Court’s Remuneration Committee and Diamond, it was agreed that his notice period would begin when his successor was appointed, at which point his duties were suspended and he was placed on gardening leave for 12 months.

Between Diamond’s announcement of his intention to retire and the appointment of his successor, interim leadership arrangements were put in place which relieved the Principal of some of the duties associated with his office.

Negotiation of the settlement was delegated to the Convener of the Remuneration Committee, Dr David Steyn. The report notes that negotiations were opened on Diamond’s terms which were described as “ambitious” and "exceeding his contractual entitlements". The University’s Lawyer and Secretary presented alternative arrangements of better value to the University but these were rejected.

Caption: Convener of the Remuneration Committee, David Steyn, is set to leave his post at the end of July 2020

The Remuneration Committee met with 12-hours’ notice – in the absence of the Students’ Association president and one other member – to decide upon the draft settlement terms negotiated between Dr Steyn and Diamond. The OSCR note that there was no evidence that Committee members were “presented with any other information of the kind we would expect to assist their consideration”. Some Remuneration Committee members told the OSCR they took it in good faith that the terms presented to them were consistent with Diamond’s contractual entitlements and that there were no other viable options.

Caption: screengrab from the OSCR report

The OSCR conclude that the University charity trustees failed to observe their statutory obligations to act in the interests of the University and with the care and diligence necessary when managing the affairs of another person. The OSCR state that this should be treated as “misconduct” in the administration of the University.

The report notes the OSCR’s positive engagement with the University and recognises the proactive measures it is taking to identify and review issues identified in the SFC and OSCR reports. It further states that the university must implement a severance policy in line with the SFC’s financial memorandum.

The report is likely to be a source of embarrassment for the University which has sought to distance itself from the scandal caused by Sir Ian Diamond’s generous severance package. The University paid the £119,000 fine imposed by the SFC almost immediately after the publication of its report in February this year. Although the report does not recommend further enforcement action, it is likely to frustrate senior administrative officials who have been keen to stress that their governance figures and policies have since changed.

Esther Roberton, Senior Governor of the University of Aberdeen and member of the Remuneration Committee, said: “The University acknowledges the findings of both the SFC and OSCR reports and the importance of responding to them, however, these relate to decisions made three years ago, and since then the University has new leadership and a new direction.

“The University Court will meet shortly to consider the implications of the OSCR Report together with the wider review of governance already underway.”

The OSCR report raises a number of questions due to its more in-depth analysis of leadership failings than the SFC report, which largely concerned the breach of its financial memorandum with the University. It leaves open the question of what “dramatic issues” led to such a generous payment package being deemed necessary and how Diamond’s behaviour contributed to these issues.

The University has recently asked for Diamond to pay back £119,000 in order to cover the cost of the fine imposed upon it by the SFC. It is unclear whether Diamond intends to pay this back. Diamond is currently the UK’s National Statistician and is providing statistical information to the government to aid its response to the Coronavirus crisis.

Asked whether Diamond would pay back the £119,000 he has been asked to return to the University, a spokesperson said: “We understand that Professor Sir Ian Diamond is considering the University's request."

Caption: Ian Diamond's salary as head of the ONS is "£160-165k per year".

The Gaudie has contacted Sir Ian Diamond for comment several times but he has failed to respond.


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