Shona Robison: Poor financial culture at NHS Tayside ‘in a league of its own’, amid claims auditor threatened

FINANCIAL mismanagement at NHS Tayside was "in a league of its own" at a time when charity cash was used to plug a budget shortfall, Scotland's health secretary has said.

Giving evidence to MSPs for the first time since the Herald revealed that the health board raided its endowment fund to cover core spending – including buying new IT equipment – Shona Robison said she had been particularly shocked to learn that Tayside's finance directors "put pressure" on an internal auditor in 2014 to water down warnings over the legality of the move.

Read more: NHS Tayside axed own rules to use charity cash for IT equipment

The chief internal auditor claimed that Tayside's then director of finance, Ian McDonald, and assistant director of finance, David Carson – who have both since retired – threatened that unless he changed his report, FTF (Fife, Tayside and Forth Valley) internal audit service faced having its contract axed or he would be removed as its chief auditor.

The allegation emerged in a report into the scandal by accountants Grant Thornton, which was published on Tuesday.

Although the accountants said they "were unable to substantiate these allegations", they noted that changes had been made between the draft and final version which "reduce the concerns initially raised".

This included removing any reference to the fact that the Scottish Office of the Charity Regulator (OSCR) had not been contacted, and erasing a statement that the advice provided by NHS Scotland's Central Legal Office was "undoubtedly insufficient" to rule out a conflict between national guidance on the use of charity funds and how NHS Tayside proposed to use the money.  

Ms Robison said this revelation had "jumped out" at her.

She said: "I haven't seen that level of behaviour anywhere else. We have had problems elsewhere in other boards, but the lack of openness and transparency and the culture within Tayside at that time I think is in a bit of a league of its own."

Read more: New Tayside boss says charity cash will be repaid after outcry

The Grant Thornton report found that the £3.6m of charity money used retrospectively cover the cost of projects NHS Tayside had previously agreed to pay for out of its core budget was "not subject to fully open and transparent governance processes". The sum is higher than the £2.7m previously acknowledged.

Using money from the endowment fund in this way was in breach of its constitution. As a result, the trustees were asked to agree to temporarily suspend the rules.

The trustees were given the impression that this transaction was endorsed by OSCR, but Grant Thornton "did not find any evidence that OSCR had been consulted".

It added that then-chairman of NHS Tayside, Sandy Watson, who died in 2015, advised trustees that unless they agreed the chief executive and director of finance "would have to put together a massive cuts package".

Read more: Former Tayside chief executive took sick leave day after being told she was losing job

Ms Robison said there was "no excuse" for dipping into the charity fund when the health board could have sought interest-free loans, known as brokerage, from the Scottish Government instead.

She said: "Parts of the leadership chose to go down a route that meant setting aside the rules. This is not something other boards were doing…they were wrong to do that."

Ms Robison, whose Dundee City East constituency falls within NHS Tayside, has been under pressure to resign as health secretary in the wake of the scandal.

However, she insisted that auditors never "escalated" concerns to the Scottish Government.

SNP MSP Alex Neil, who was health secretary at the time, added that "it was never flagged up to me that there was a problem with misuse of funds, despite all the checks and balances in place".

Read more: NHS Tayside 'misrepresented' accounts for six years

Management at NHS Tayside has been overhauled since the charity cash scandal emerged in April. 

Chief executive Lesley McLay – who was newly in post at the time of the transaction in early 2014 – was stripped of her "accountable officer" status and replaced by Malcolm Wright, who is also chief executive of NHS Grampian. 

Amid pressure to resign, she was signed off sick and remains on full-pay as an NHS Tayside employee – although she is not expected to return. 

Professor John Connell, who replaced Mr Watson as chairman, resigned and has been replaced by John Brown, who is also chairman of NHS Greater Glasgow and Clyde. 

Alan Gray – the finance director at NHS Grampian – has also taken over the running of finance at NHS Tayside.

He replaced Lindsay Bedford – Mr McDonald's successor – who took early retirement in March in the wake of a previous critical report which found that NHS Tayside's accounts had been "misrepresented" for six years. is the online edition of Scotland's favourite newspapers, that brings you your Daily news. Every day we bring you the best in Scottish news, sport, entertainment and opinion, including breaking news, picture galleries, videos and live blogs.

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