Handling of rail services contract defended

Thursday, 15th January 2009

First ScotRail’s franchise was extended last April for another three years, and when it came to light that the Transport Scotland finance chief, Guy Houston, was involved in meetings about the contract extension, he resigned his post.

Transport Scotland’s chief, Malcolm Reed, heard from MSPs of Houston’s "material interest" in the extension of the franchise. It was after the auditor’s report was released that showed his involvement in the discussions that Houston quit.

Houston owned shares in First Group, although this fact had been disclosed in the annual report issued by Transport Scotland.

Reed was forced to respond to tough questions when he met with the public audit committee of the Scottish Parliament, but asserted that Houston only participated when the discussions were at a "very late stage."

Reed told MSPs: "He attended two meetings after the deal had been struck. He played no part at all in either the shaping of the deal or the management of the deal."

After taking up his post in May, 2006, Houston had declared his First Group shareholding, and protocols were established in order to "manage" the situation.

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