a. Initial Writ
Sheriffdom of Glasgow, 1
In the cause
72 Hillhouse Street,
G21 4HP GLASGOW
LENA WILSON and IAIN SCOTT
c/o Scottish Enterprise, Atrium Court,
50 Waterloo Street, GLASGOW G2 6HQ
The pursuer craves the court:
1. To grant decree against the defenders for payment to the pursuer of the sum of THREE HUNDRED AND ELEVEN THOUSAND TWO HUNDRED AND FORTY TWO POUNDS (£311,242), with interest thereon at the rate of eight per centum per annum from the date of decree until payment.
2. To find the defenders liable in the expenses of the action.
COND. 1 The pursuer resides at
72 Hillhouse Street, Springburn, G21 4HP. The addresses
of the defenders are not known to the pursuer but the defenders are employed by
Scottish Enterprise which has a place of business at Atrium Court, 50 Waterloo
Street, GLASGOW G2 6HQ and this court has jurisdiction since the damage to the
pursuer took place in Glasgow. To the knowledge of the pursuer, no proceedings
are pending before any other court involving the present cause of action and
between the parties hereto. To the knowledge of the pursuer, no agreement
exists between the parties prorogating jurisdiction over the subject matter of
the present cause to another court. GLASGOW
COND. 2 On 27 November 2013 Mr Iain Scott wrote to Mr Bob Doris MSP in agreement with Ms Lena Wilson regarding the pursuer including the words that are reproduced below, in italics for convenience:
‘Thank you for your letter of 5 November 2013 to our Chief Executive, Lena Wilson. I am responding to your letter in my capacity as Chief Financial Officer and Company Secretary and as a follow up to my conversation with your office on the background to this case on 21 November 2013.’
‘As you will note from our response to Ms Patricia Ferguson MSP in May 2012, Mr Cairns' complaint dates back to 1993. Mr Cairns remains dissatisfied with the outcome of the original investigation and in the intervening period he has used various routes to continue to highlight his concerns.’
‘I understand that Mr Cairns has fully exhausted the complaints and review procedures of all the organisations that he has involved, including Scottish Enterprise and the Scottish Public Services Ombudsman.’
‘For a complaint to continue to be raised beyond all the review processes places Scottish Enterprise in a difficult, indeed, unprecedented position.’
‘In our view, given the complaint has exhausted even the processes beyond Scottish Enterprise’s complaints procedure, the length of time since the original complaint and that staff involved at the time are no longer in the employment of Scottish Enterprise we do not believe that it is the public interest (sic) to dedicate any further public resource to re-addressing questions posed by Mr Cairns that were the subject of the original complaint.’
In July 2016 the pursuer obtained disclosures from Scottish Enterprise showing that on 15 April 2016 Mr Iain Scott had communicated to Police Scotland and Scottish Enterprise the following words about the pursuer, the first two paragraphs of which had originated from Ms Mandy Dickson of Scottish Enterprise on 20 August 1993 and the rest from the Press Office of Scottish Enterprise on 1 September 1993:
‘Following an allegation by a member of EA’s temporary staff, Tom Woodbridge requested that I visit EA to investigate the facts behind the report.’
‘A review of the bank reconciliation indicated that the bank statements had been reconciled only to the cash book. As the entry had been made in the cash book for the ERDF income, no discrepancy arose. Had the cash book balance been subsequently reconciled to the bank account in the financial ledger the difference would have been highlighted. There was no evidence that this reconciliation had been carried out.’
‘STATEMENT GIVEN TO KIRSTY SCOTT, THE HERALD regarding allegations of mis-accounting at Enterprise Ayrshire’
‘Scottish Enterprise National took these allegations seriously, and investigated them thoroughly on the day that they were made. There is no substance to any of the allegations made regarding the receipt of European funds by Enterprise Ayrshire. Our enquiries are complete and there are no grounds for taking any action.’
Copies of the letter from Mr Iain Scott to Mr Bob Doris MSP dated 27 November 2013 and the communications from Mr Iain Scott to Police Scotland and Scottish Enterprise on 15 April 2016 are produced and referred to for their terms which are held as incorporated herein brevitatis causa.
COND. 3 The letter from Mr Iain Scott to Mr Bob Doris MSP dated 27 November 2013 and the communications from Mr Iain Scott to Police Scotland and Scottish Enterprise on 15 April 2016 contain significant falsehoods and indicate that by 27 November 2013 the defenders entered into an unlawful means conspiracy to harm the pursuer economically that began in August 1993 and is in operation up to the present time.
In a conspiracy each of the participants is responsible for the acts and omissions of all the other participants.
Available evidence confirms that beginning in August 1993 Mr Andrew Downie of Enterprise Ayrshire, Mr Tom Woodbridge of Scottish Enterprise, Detective Sergeant William Watters of Strathclyde Police and Ms Mariot Leslie, Mr John Patterson and Ms Julie Kane of the Scottish Office entered into an unlawful means conspiracy to pervert the course of justice by concealing material evidence with an intention to harm the pursuer economically.
On 18 October 1993 Enterprise Ayrshire’s Company Secretary, Mr Andrew Downie, falsely stated the following to the Herald about the pursuer’s allegations of financial irregularities:
‘I viewed the original allegations of fraud and financial irregularities as completely without foundation..........Allegations of this nature can damage the probity which Enterprise Ayrshire insists on in all aspects of its operations, and we are delighted that, after a thorough investigation, Strathclyde Police have confirmed that there is no substance to the allegations. ’
An article in the Scotsman on 3 September 1993 stated:
‘The allegations centred on a claim that the money was not entered in the company’s computerised accounts until two months after it was received, during which time it was placed in a high interest account.’
Later disclosures revealed that this main allegation had in fact been found to be true.
On 23 September 1993 Mr Tom Woodbridge, the Head of Finance at Scottish Enterprise, wrote to the government including the following:
‘Mr Cairns reported his allegations to Scottish Enterprise by telephone on the morning of 18 August. Scottish Enterprise investigating accountant carried out an examination of the books and records at Enterprise Ayrshire premises that afternoon. A full report on the investigation was presented on 20 August.’
‘The report showed that there was no question of fraudulent activity.’
In fact the report made no such statement.
The available evidence indicates that the £187,069 ERDF grant was deliberately omitted from the balance sheet and from the statement of funds received, as directed by Mr Gary Tracey of Enterprise Ayrshire, for the dishonest purpose of obtaining interest that otherwise would not be obtained.
Mr Woodbridge’s letter dated 23 September 1993 continued:
‘The issue at the centre of the allegations involved a technical accounting matter in regard to when a credit should have been disclosed in the management accounts.’
‘This matter was resolved by the Scottish Enterprise investigating accountant during the visit on 18 August.’
What Mr Woodbridge significantly omitted to say here was that the pursuer was swiftly removed from the premises of Enterprise Ayrshire around lunchtime on 18 August 1993. The pursuer never met or spoke to the investigating accountant and she disregarded the evidence of the pursuer’s reconciliation work and the pursuer’s communications on the matter in her report.
The matter was supposedly ‘resolved’ by the investigating accountant on 18 August 1993 according to Mr Woodbridge but in reality he knew it was by Enterprise Ayrshire correcting the accounts in the morning of 18 August 1993 and terminating the pursuer’s contract shortly afterwards.
In plain language, the receipt of £187,069 was fraudulently excluded from the management accounts until after the pursuer insisted upon its inclusion and available evidence of that was either concealed or not sought out by investigators.
Detective Sergeant William Watters of Strathclyde Police, the police officer in charge of the 1993 investigation into financial irregularities at Enterprise Ayrshire, accepted the report produced by Scottish Enterprise’s investigating accountant Ms Mandy Dickson and sent a copy to the Scottish Office with a compliments slip attached upon which were printed the words ‘With the Compliments of the Chief Constable of Strathclyde Police’ to which Mr Watters added his signature and position ‘W. Watters D/S Fraud Squad’.
Disclosures from Scottish Enterprise to the pursuer in July 2016 included a scanned copy of the pursuer’s bank reconciliation showing the omission of the £187,069 in question from the company’s balance sheet as at 2 July 1993. The report produced by Scottish Enterprise falsely stated that there was no evidence that this reconciliation had been carried out.
The disclosures included a scanned copy of the pursuer’s email to his supervisors in Enterprise Ayrshire Mr Gary Tracey and Ms Janie Maxwell dated 17 August 1993 which stated the following, reproduced here in italics for convenience:
‘For the record, as I said to you both today, I am not comfortable with your instruction to exclude from Enterprise Ayrshire’s balance sheet funds received from the EC.’
‘Your comment that the management accounts do not matter so much, being produced only for internal use, seems to underplay the potentially serious consequences of circulating figures that are incorrect.’
‘I stated to you both that I know this aspect of Scottish Enterprise’s finances is under investigation by the National Audit Office therefore you must accept my concern as genuine.’
‘I have been advised that such omissions from management accounts are in breach of the Institute’s ethical guidelines.’
The report produced by Scottish Enterprise completely excluded this very important evidence.
The disclosures included a scanned copy of an extract from the manual cash book showing the following words at the record of £187,069 received on 25 June 1993, reproduced here in italics for convenience:
‘NO JOURNAL REQUIRED AS PER G.TRACEY’
The report produced by Scottish Enterprise referred to a later version where the words ‘TO GO THROUGH JULY ACCOUNTS’ had been added. The report offered no explanation for this note, which corroborated the pursuer’s allegation of having been instructed by Mr Gary Tracey to falsify the accounts in respect of this receipt from the European Regional Development Fund. Further corroboration is provided by the actions of other finance staff who acted in accordance with Mr Tracey’s fraudulent instructions to falsify the accounts.
The report produced by Scottish Enterprise concluded the following, reproduced here in italics for convenience:
‘The receipt of ERDF money was brought into the July financial ledger on 18 August. The money was received in June 1993 and should therefore have been accounted for in this month.’
This conclusion corroborates the pursuer’s concern about the Enterprise Ayrshire accounts as they stood when he wrote his email to his supervisors in Enterprise Ayrshire Mr Gary Tracey and Ms Janie Maxwell on 17 August 1993.
The report produced by Scottish Enterprise included a scanned copy of the press release detailed in Article 2 above. Since the accounts had been corrected by £187,069 within hours of the pursuer’s written objections to the financial irregularities, plainly the press release was false.
Mr Iain Scott included a scanned copy of this press release in his communication with DC Stewart of Police Scotland on 15 April 2016. Clearly, Mr Scott is persisting in concealing material evidence and knowingly providing false information to the police to this day, a very grave matter, with an intention to harm the pursuer economically.
If the government had wanted a copy of the Scottish Enterprise report they would have requested and obtained it from Scottish Enterprise, not from the police.
Therefore this also points to the Scottish Enterprise report being adopted and utilised by the police instead of the police carrying out an independent investigation and producing their own report.
Further evidence of this fact is contained in a memorandum from Ms Mariot Leslie, the Scottish Office, to Mr Stewart, Minister for Industry and Local Government, dated 14 June 1994 which included the following statements:
‘...... after Mr Cairns’ dismissal an investigating accountant from SE examined the records of EA and presented a report of the investigation to SE on 20 August. This found that the £187,069 was paid into EA’s main bank account on 25 June 1993 ........’
‘The report found however that the money had not been entered into the LEC’s July management accounts until 18 August and concluded that they should have done so in time for the June accounts.’
‘The report and evidence were also examined by Strathclyde Police ......’
Significantly, there is no mention here of any independent investigation having been carried out by Strathclyde Police.
The government was asked by two Members of Parliament to investigate this case.
Available evidence indicates that instead of getting the facts and carrying out an independent review the Scottish Office just contacted Scottish Enterprise by letter. The pursuer was excluded from the government’s inquiries and treated unfairly later when he tried to have major discrepancies properly addressed.
The Scottish Office accepted Scottish Enterprise’s version of events and rejected the pursuer’s version despite the available evidence indicating the opposite to be correct.
Disclosures from Audit Scotland in 2009 show that Audit Scotland recognised years ago that official responses from Scottish Enterprise and the Scottish Office had been ‘disingenuous’.
The person supposed to be looking into this case on behalf of the government, Ms Mariot Leslie, wrote to Mr Woodbridge on 4 October 1993 including the following:
‘.......I am afraid that, given the serious nature of Mr Cairns’ allegations, the contents of the documents which Mr Cairns took from Enterprise Ayrshire and the use which could be made of them by the press, this is an issue which is not likely to go away quietly.’
Publicly however the Scottish Office dishonestly tried to pass off these serious allegations as ‘an essentially technical accounting matter’.
Further, Ms Leslie revealed that her response would be biased in favour of Scottish Enterprise by including in her letter to Mr Woodbridge:
‘Thank you for your letter of 23 September to Alastair Wilson with the welcome news that your investigating accountant did not find any evidence of fraud in the Enterprise Ayrshire accounts. It was helpful, too, to have suggestions for the ground which we could cover in the draft reply.’
‘Before we commit the Secretary of State to any particular form of words in his reply to Mr Hogg, we need to have more details about what happened. I should be grateful if you could let us see a copy of your investigating accountant’s report, which might help to clear the matter up’.
Ms Leslie already knew that the pursuer had important evidence of public interest and what that evidence contained, having already referred to ‘...... the contents of the documents which Mr Cairns took from Enterprise Ayrshire and the use which could be made of them by the press..... ‘.
Significantly, Ms Leslie would then have seen that the documents the pursuer had taken contradicted the Scottish Enterprise report, which was also adopted as the police report, on the important point about the pursuer’s reconciliation showing the £187,069 missing from the balance sheet and the pursuer’s related email dated 17 August 1993.
Also, Ms Leslie’s letter to Mr Woodbridge had concluded with the following comment:
‘As Alastair Wilson may have told you, I succeeded him here last week. I look forward to meeting you and your colleagues in the near future.’
This comment on looking forward to a future working relationship with those Ms Leslie was meant to be investigating for financial malpractice would tend to raise in the mind of an independent observer a further suspicion of bias and impropriety.
Another internal Scottish Office document written by Ms Leslie to Mr Smith on 4 October 1993 included the following:
‘I attach papers from a Green Folder case alleging malpractice in the way in which officials in Enterprise Ayrshire accounted for receipts of £187,000 from the European Social Fund. I am also enclosing a letter of 23 September from Tom Woodbridge, the Head of Finance at Scottish Enterprise. I do not find his letter sufficiently detailed to be wholly reassuring, and have asked him for a full copy of the report of SE’s investigating accountant, to which he refers. In the meantime I should be grateful for your expert advice about this case. Does it look to you as though this was merely a relatively minor technical accounting matter, as Mr Woodbridge suggests?’
The government’s formal responses to the MPs, in a letter to Mr Norman Hogg MP from the office of Mr Allan Stewart MP, the Minister for Industry and Local Government, the Scottish Office on 24 September 1993 and in a letter to Mr Michael Martin MP from Mr Allan Stewart dated 16 June 1994, both of which contained exactly the same words and which appear to have been drafted by Ms Leslie on the basis of the falsehoods communicated to her by Mr Woodbridge, included the following:
‘The issue at the centre of the allegations appears to involve an essentially technical accounting matter concerning when a credit should have been disclosed in the local enterprise’s management accounts. SE assure me that this has now been satisfactorily resolved.’
But there was nothing technical about understating bank balances and statements of funds received. And the matter was not ‘resolved’ until after the pursuer had objected in writing to having been instructed to overlook the omission in his reconciliation work.
The pursuer continued to protest to the Scottish Office and in a letter to the pursuer dated 17 February 1995 the Scottish Office admitted that Scottish Enterprise had found a ‘delay in entering the receipt in the appropriate account which did not accord with best practice.’
And what was the reason for that delay, which the Scottish Office had been entrusted to investigate? Plainly, they didn’t want to say.
That same letter stated:
‘I explained in my letter of 14 December that we saw no grounds for the Scottish Office to ask Scottish Enterprise to re-open the investigation.’
‘I should perhaps add that we naturally agree that correct accounting practice requires that receipts should be entered into accounts promptly and accurately. However if that does not happen, it does not necessarily follow that the person who omitted to complete the accounts promptly and accurately had fraudulent intentions.’
Ms Leslie was supposed to have been investigating the issue but failed to elicit a plausible explanation for the omission of the £187,069 from the balance sheet and its simultaneous deposit in a high interest bank account in the name of Mr Gary Tracey.
Apparently Ms Leslie was sure that these irregularities were not fraudulent in the face of overwhelming evidence to the contrary which the pursuer repeatedly brought to her attention.
And in his letter dated 23 September 1993 Mr Woodbridge indicated that he already knew, as recorded in the following extract, that there was a recognised problem in accounting for and controlling European grants received by the Local Enterprise Companies directly:
‘Examination of European receipts is part of the annual Financial Appraisal and Monitoring plan. We discussed this point after the 100% plan meeting on 7th September and I suggested that Scottish Office may be able to assist our monitoring arrangements in this respect by notifying us of European funding payments made directly to Local Enterprise Companies.’
This category of financial irregularity had already been reported in the public domain as mentioned in the pursuer’s email to his supervisors Mr Gary Tracey and Ms Janie Maxwell dated 17 August 1993 detailed above.
In a letter to the pursuer dated 14 December 1994 Ms Leslie admitted that Scottish Office officials had considered the evidence and that Scottish Enterprise was responsible, through the Scottish Office, to the Secretary of State for Scotland for the overall performance of its duties which included monitoring the LECs’ performance.
The Scottish Office’s Mr John Patterson’s wrote to the pursuer on 14 October 1996 including the following, indicating that Mr Patterson was concealing material evidence:
‘As explained to you in earlier correspondence we are content that Scottish Enterprise investigated your claims thoroughly at the time and we can see no new grounds for asking them to re-open the case.’
Since the evidence available to Mr Patterson revealed that the Scottish Enterprise investigation had concealed material evidence and misrepresented the facts in the context of assisting the police in their enquiry into alleged financial irregularities in Enterprise Ayrshire, Mr Patterson’s statements indicate that he gravely failed to act in accordance with the Scottish Office’s obligations and that beyond reasonable doubt Mr Patterson conspired with Scottish Enterprise officials to pervert the course of justice in this case.
Instead, Mr Patterson ought to have addressed Scottish Enterprise’s failures and reported these to the police for their enquiry to be reviewed.
The Scottish Office’s Ms Julie Kane wrote to the pursuer on 5 February 1997 including the following, indicating that Ms Kane was concealing material evidence:
‘As explained in Mrs Leslie’s letter of 17 February 1995, Scottish Enterprise found a delay in entering the receipt in the appropriate account which did not accord with best practice. It did not however find any evidence of fraud.’
Ms Kane’s further letter to the pursuer dated 12 March 1997 included the following, indicating that Ms Kane was persisting in concealing material evidence:
‘As confirmed in my letter of 5 February, there is no evidence to suggest the bank account was deliberately falsified.’
‘I am unable to add to my earlier reply.’
Since the evidence available to Ms Kane revealed that the Scottish Enterprise investigation in August 1993 had concealed material evidence and misrepresented the facts in the context of assisting the police in their enquiry into alleged financial irregularities in Enterprise Ayrshire, Ms Kane’s statements indicate that she gravely failed to act in accordance with the Scottish Office’s obligations and that beyond reasonable doubt Ms Kane conspired with Scottish Enterprise officials to pervert the course of justice in this case.
Instead, Ms Kane ought to have addressed Scottish Enterprise’s failures and reported these to the police for their enquiry to be reviewed.
Copies of the Herald article dated 18 October 1993, the Scotsman article dated 3 September 1993, the letter from Mr Tom Woodbridge to the Scottish Office dated 23 September 1993, the letter to Mr Norman Hogg MP from the office of Mr Allan Stewart MP, the Minister for Industry and Local Government, the Scottish Office dated 24 September 1993, the letter from Ms Mariot Leslie to Mr Woodbridge dated 4 October 1993, the internal Scottish Office memorandum from Ms Leslie to Mr Smith dated 4 October 1993, the memorandum from Ms Mariot Leslie, the Scottish Office, to Mr Allan Stewart, Minister for Industry and Local Government, dated 14 June 1994, the letter to Mr Michael Martin MP from Mr Allan Stewart dated 16 June 1994, the letter from Mr Stewart to Mr Michael Martin MP dated 16 June 1994, the letter from Ms Leslie to the pursuer dated 17 February 1995, the letter from Ms Leslie to the pursuer dated 14 December 1994, the notes from the review by Audit Scotland’s Mr Jim Martin dated 20 August 2004, the letter from Mr Patterson to the pursuer dated 14 October 1996, the letter from Ms Kane to the pursuer dated 5 February 1997 and the letter from Ms Kane to the pursuer dated 12 March 1997 are produced and referred to for their terms which are held as incorporated herein brevitatis causa.
COND. 4 The available evidence shows that participants in the conspiracy had concealed material evidence and falsely portrayed the pursuer as an incompetent accountant and a false accuser thereby rendering the pursuer unemployable in his profession since August 1993.
COND. 5 The pursuer is entitled to reparation from the defenders for economic losses resulting from the operation of the conspiracy since August 1993.
COND. 6 At the date of the inception of the unlawful means conspiracy to harm the pursuer economically the pursuer’s earnings were £18,000 annually. Economic losses after tax and national insurance from August 1993 to retirement are estimated at a present value at the date of the claim of £538,742 (for past losses over 22 years and nine months at £23,681 per year, the estimated loss of net annual income after tax and national insurance based upon gross earnings of £30,608, which is the gross annual income of £18,000 inflated by the movement in the Retail Prices Index from August 1993 to April 2016).
The pursuer’s actual income for this period averaged less than £10,000 annually but is estimated at a total of £227,500 (£10,000 annually for 22 years and 9 months) for the purpose of this claim, resulting in a net claim of £311,242.
COND. 10 The defenders have been called upon to make reparation to the pursuer but refuse or at least delay to do so. This action is accordingly necessary.
PLEAS-IN-LAW FOR THE PURSUER
1. By 27 November 2013 the defenders had entered into an unlawful means conspiracy to harm the pursuer economically that began operating in August 1993 and has been in operation up to the present time.
2. The defenders are responsible for the acts and omissions of all the participants in the conspiracy since its inception in August 1993.
3. The pursuer incurred economic losses as a result of the operation of the conspiracy.
4. The sum sued for being a reasonable amount of reparation in respect of estimated economic losses resulting from the operation of the conspiracy, decree should be granted as craved.
5 October 2016