Tram boss who set bonuses got ...£40k bonus!

A TRAM boss who sat on a committee that determined financial rewards for staff received a £40,000 bonus for his work.

The inquiry into the Edinburgh trams debacle heard Willie Gallagher received the cash even though his position on the committee went against the city council’s code of conduct.

What began as a £375million project cost £1billion. The trams were completed three years late in 2014.

It emerged yesterday Mr Gallagher was temporarily both chairman and chief executive of Transport Initiatives Edinburgh (TIE), an ‘arms-length’ company set up by the council to deliver the trams, but he was also on the remuneration committee that gave bonuses to staff when he got the £40,000 payment.

Giving evidence, Jim Inch, the council’s corporate services director until 2011, admitted both situations were against the council’s code of best practice. The inquiry was shown the code of practice which stated: ‘The remuneration committee should consist exclusively of non-executive directors who are independent of management and free from any business or other relationship,’ and also: ‘A decision to combine the posts of chairman and CEO ... should be publicly justified’.

Mr Inch told the inquiry, now in its third week: ‘It’s definitely a departure from best practice. I knew it was wrong.

‘It was not intended to last two years and the fact that he also sat on the remuneration committee was not in accordance with best practice.

‘We were acutely aware that this was not best practice. But circumstances changed and it lasted far longer than we antici- pated and far longer than desirable...’

Mr Inch became involved in bonus schemes in 2009-10 when it was decided no bonuses would be paid to TIE employees.

Council staff were anticipating a maximum pay rise of 1 per cent at the time and it was deemed unfair that TIE staff would be rewarded handsomely after £730,000 had been set aside for bonuses. The committee recommended there would be no bonus for TIE staff for 2009-10 and this was approved.

Mr Inch said: ‘The bonus scheme came to my notice when there was a proposal to introduce a new scheme. The chief executive asked me to review it and I found it to be wanting.’

He also admitted that the governance structure between TIE and the council was confusing.

An operating agreement between the two was not signed until 2008, meaning they had worked without one for a long time. He added: ‘The council’s interests and TIE’s interests were not necessarily aligned.’

The inquiry continues.