Sir John Bourn, head of the National Audit Office, today reported to Parliament that in October 1998 the National Museum of Wales made an irregular payment to Mr Tim Arnold, their departing Assistant Director (Resource Management). Sir John nevertheless issued an unqualified opinion on the Museum’s 1998-99 Accounts, as he did not consider the payment to be material in the context of the overall accounts.
Mr Arnold’s departure from the Museum after 14 years’ service followed allegations of mismanagement, although these did not relate to any suggestion of impropriety or fraud. The Museum, acting on legal advice, sought to reach a negotiated departure settlement with Mr Arnold rather than conduct a potentially protracted investigation of the allegations. Under this settlement, the Museum agreed to:
- pay Mr Arnold £30,000 as compensation for loss of office;
- pay his legal costs in respect of the settlement up to a maximum of £1,450 plus VAT; and
- provide an employer’s reference for Mr Arnold using an agreed form of words which is silent on the reason for his departure.
In return, Mr Arnold undertook to:
- accept the payment as full and final settlement of any claims he might have for breach of contract, unfair dismissal, etc; and
- not to disclose the terms of the Agreement to any third party.
National Audit Office staff established that written approval for these payments had not been obtained by the then Director of the Museum, as required under the terms of the Museum’s Financial Memorandum.
The current Director of the Museum had not been made aware of the details of the payments on taking up her position in November 1998. When in July 1999 the National Audit Office brought the payments to her attention, she acted correctly in applying to the National Assembly for Wales for retrospective approval. This was refused by the Principal Finance Officer of the National Assembly in October 1999 on several grounds, including that:
- the Museum might have avoided this expenditure if they had tackled the problem under normal disciplinary arrangements;
- he could not have accepted any settlement which included a confidentiality clause; and
- the principle of making special payments in order to save further costs is not generally accepted in the public sector.