West Somerset Railway General Discussion

It would appear that three trustees (and one I know reasonably well is a very clever and astute chap) seem to have thought otherwise.

They can't all be wrong.

 

Absent knowledge of the details and it is not obvious, even if suspicious.

I might well agree with you as to what I’m inclined to believe, and I don’t know the individuals. But your argument could logically be equally true of those who voted for this decision.

We come back to the point previously highlighted that it is not so much the “what” as the “why” of this decision that is important, along with the fact that the corporate structure of WSR makes these issues especially difficult to resolve.

 

An individual trustee has to act according to their own assessment of the situation. If they feel the charity is taking a decision they can't support and which they feel could put them at personal risk, they can of course resign, but it doesn't inherently mean that what the charity has done is wrong, just that one or more trustees feel that they themselves can't support it.

Bear in mind that applies to all trustees, and presumably this funding package has majority support. There is an element of the discussion that seems to imply that because a minority of the trustees can't support it, the minority must be correct. It is worth thinking through the implications of that for effective governance. I'm not saying that the three who resigned are definitely wrong in their interpretation; rather that there is clearly not a settled view and that more than half the trustees must feel comfortable with the decision. Like lots of things in this thread, it seems that people decide first off which side of the battle lines they are on, and then interpret any bit of evidence as a posteriori support for their view.

I guess the funding proposal was robustly debated in the November meeting. What seems slightly surprising to me for such a large amount of money is that there was not lots of work and time in advance of the meeting to work up a proposal that met the objectives of the railway but which could also be supported by all the trustees. We're not talking about someone coming along to a meeting asking for £250 for a wagon tarpaulin; it is an amount that represents a sizeable proportion of the WSRA's total annual expenditure.

Tom

 

I think we must also take into account the fact that some trustees work for the plc. If they took part in the decision making then that changes the balance between majority and minority perhaps.

The mere fact we are having conversation does not auger well.

 

That I was unaware of, and is definitely more concerning. There are quite strict rules in the Charity Commission guidance for Trustees about conflicts of interest and conflicts of loyalty, and you would have thought that there is a clear conflict if a charity is deciding on paying a grant to an organisation that in turn employs one or more of those making the decision.

It would be normal in such cases for the individual trustees conflicted to remove themselves from the decision making process (and in some cases even from the discussion). However, for an organisation like the WSRA where a very substantial part of its work is to provide grants paid to the WSR plc, it is hard to imagine how a plc employee could properly discharge the duty of WSRA trustee, since they would be conflicted for most decisions. In other words, there would be a comparatively small proportion of the WSRA's work that a plc employee could decide on without conflict.

Tom

 

With ecclesiastical experience of similarly closely linked organisations, I regard the position as less clearcut, because the separation is to some extent artificial. However, especially where the decision is material or may be contentious, it is absolutely critical that the process can be seen to be beyond reproach. On what is in the public domain, including the meeting precis on the WSRA website, that's not evident. As the resignations are of 3 of the then 9 trustees, it is hard to be sure.

 

The interesting question that poses is whether they would be similalry conflicted if they were volunteers working for the PLC?

 

Unlikely to be quite the same appearance of the ability to apply pressure from the WSR though?

 

By definition, the degree of conflict would be greater - the matter would potentially extend to their livelihoods.

 

Both would have an interest. I suspect it would depend on the nature of their roles.

 

My personal view would be no, because the conflict of interest is really about a financial interest.

Hypothetical example: The PLC decides it is going to construct a large carriage shed as part of an effort to save long-term costs. It brings in a (paid) member of staff with experience in construction projects explicitly to manage the project, but that person is also a trustee of the WSRA. The PLC put in a grant application to the charity to fund the carriage shed. In that case, the employee is clearly conflicted because if the grant is refused, the project may have to be abandoned and at that point the PLC employee is at risk of redundancy because their job is no longer viable. (You can't manage a project that isn't going ahead for lack of funds).

Same example, but this time the charity trustee is a volunteer carriage cleaner. If the carriage shed goes ahead, their job will become more pleasant as carriages won't deteriorate so quickly and they can work under cover in all weathers. There is much less likelihood of a conflict, because their livelihood is not dependent on whether the grant is awarded or not, but just the degree to which they might enjoy their hobby.

Tom

 

I think this is yet another example of how you really don't understand the difference between being a volunteer for a charity and an employee of it, and the relative motivations of each group. In general, A volunteer's primary interest will be in the success and wellbeing of the organisation, whereas an employee's concerns will probably more focused on the organisation's ability to keep paying himself and his colleagues. On that basis several of the directors of the NYMR PLC are conflicted because many decisions they make impinge on their own departmewnts. Better fit a revolving door to the meeting room to speed up all those recusing themselves at various points in a meeting!

 

The hypothetical examples are fine but they are not comparing like with like. If the project manager was a volunteer he or she would also be conflicted because the core issue isn't personal interest but the potentially conflicting interests of the two entities. Relevant guidance is that for a conflict of interest to arise the individual has to be in an position to influence the outcome such as a director, trustee or senior manager. In that event whether they are an employee or volunteer wouldn't make any difference.

 

The notion that directors are conflicted if they make decisions that impinge on their own departments is plainly absurd. That is what directors are there to do! Conflict of interest can occur where there is a conflict of duty to another organisstion i.e. that the decision maker has the capacity as a director.trustee or senior manager to influence the outcome. It can also occur where the individial of a connected party stand to make a material financial benefit that is not obvious and incidental. Merely being employed would not cross the threshold of conflict but being a volunteer director, trustee or senior manager would.

 

Edit: I withdraw the first part of what I posted and replace it with,


If you mean that were the volunteer to be an officer of the company (say Chairman) and be a trustee, then I agree. Otherwise, a volunteer doesn’t benefit financially from being a volunteer.

If you’re going to pursue the line of thought that volunteers generally are conflicted then no one with any connection whatever to the supported railway can be a trustee of the supporting charity.

I was very careful to state what I see as the difficulty here, which is the appearance of a conflict of interest being a much greater risk if the trustee is an employee of the supported company. Particularly where the connections between the charity and the supported company are otherwise loose. The perception is easily one of the employee being able to be put under pressure by their company bosses to procure for them a specific outcome from the trust (to the extent they are able to influence fellow trustees)

 

For directors/trustees who are heads of department within one organisation, I agree. The trickier part, more relevant to the NYMR structure than the WSR structure, is where that employee is also a trustee/director of a separate organisation, and has to make a decision that will impact upon the subordinate organisation (in the NYMR context, that would be the Trust regarding the PLC). While it can certainly be argued that the interests of the two organisations are closely aligned, there may be circumstances (e.g. major investments, restructuring) in which a conflict might arise and recusal be necessary.

In all of this, we need to remember that the guidance is that conflicts of interest do not have to be financial. For example, a trustee might also be a councillor or council officer involved in considering a planning application that might impinge on the railway. In that situation, they would be conflicted in two ways - professionally, as they are associated with a respondent to the application when working for the council, and as a trustee because they may be constrained in what they could say ahead of the decision.

 

So then they would be required to take advice from the company secretary or Trust equivalent?

 

I'd suggest "seek advice" rather that "take advice". I'd hope that there are established protocols already, but the expectation should be that the existence of a conflict will become apparent from the agenda, and prework be done to address it - the chair will also need to consider how the meeting will be run. For example, if trustees are also employees of the charity, they might have to recuse themselves from a decision on a pay award - and it makes a lot of sense for the agenda to be structured so that minimises disruption.

The issue will be one of materiality. I gave the example of a PCC/Friends overlap. Generally, it's only necessary for Friends trustees to make it known that they have a dual role. But if there were a discussion where the position of Friends was important to the PCC's decision, they might need to recuse themselves because to participate in the discussion at PCC would compromise their ability to act freely as a Trustee of Friends.