Taxpayers foot £1.5m bill for bosses who land jobs at rival
Demand for inquiry as managers at council firm join competitors
CONCERNS have been raised about the exits of senior managers from a council construction firm given lucrative pay-offs – only to join its main rival.
An investigation is now being demanded after it emerged executives from Glasgow’s City Building had joined competitor Morrison Scotland.
Glasgow’s arm’s-length external organisation, or Aleo, had to borrow £1.5 million two years ago to fund early retirement packages for its managers, including its first and longest-serving managing director, Willie Docherty.
Mr Docherty now heads Morrison Scotland, a joint venture with North Lanarkshire Council and Morrison. It is understood four officials from City Building are now working for Morrison, including Steve Kelly, the Glasgow council firm’s former head of corporate services.
City Building does impose some limits on future career moves for executives it pays off.
But SNP councillor Graeme Hendry has called for the council to look at ways of imposing bigger restrictions on where executives can work f ol lowi ng t hei r departure.
He said: “This seems to happen frequently with previous senior officials of City Building and it is worrying for the commercial success of the organisation.
“These ex-members of staff have commercial knowledge and contacts that could directly enhance competitors.
“All good commercial organisations insert clauses to ensure senior staff do not appear with competitors for many years after leaving with a nice package.
“I will be calling for the council to investigate why any such clauses have not been effective.”
Mr Docherty, who is married to Glasgow Lord Provost Sadie Docherty, left City Building in December 2011. In February 2012 he was unveiled as the new managing director of Morrison Scotland, which, like City Building, seeks housing repairs and maintenance contracts. He received one-off compensation for loss of office at City Building of £148,761 on top of annual compensation of £12,187.
Shortly after his departure, City Building took out a loan to pay for early retirement packages, arguing this would help deliver savings.
A spokeswoman for City Building said: “Where appropriate, staff leaving the organisation are required to sign a restrictive covenant preventing them from working with competitors.”
City Building ended 2013-14 in the red last year, but insists its loss of more than £4m was a “technicality”.
It remains a going concern and saw a substantial rise in turnover thanks, partly, to Commonwealth Games work. Executive director Graham Paterson, in annual accounts, said “we are pleased City Building delivered strong results”.
The loss is the third recorded by City Building since it was spun off from the city council as a commercial entity in 2006.
It makes returns to its owner Glasgow City Council by providing “discounts” on work it carries out for the authority.
The council had no comment on Mr Hendry’s calls for tougher restrictive covenants on executives receiving large exit packages.