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Scottish Ministerial Code
9. MINISTERS' PRIVATE INTERESTS
Conflicts of Interest
9.1 Ministers will want to order their affairs so that no conflict arises or is thought to arise between their private interests (financial or otherwise) and their public duties. It is the personal responsibility of each Minister to decide whether and what action is needed to avoid a conflict or the perception of conflict, and to defend that decision, if necessary by accounting for it in the Parliament. The role of the Permanent Secretary is to ensure that advice is available when it is sought by the Minister, either by providing it personally, drawing on precedent and if need be other parts of government, or by securing the services of a professional adviser. Where there is a doubt it will almost always be better to relinquish or dispose of the interest. In cases of serious difficulty or doubt the matter may be referred to the First Minister for a view. But ultimately it is the responsibility of Ministers individually to order their own private lives in such a way as to avoid criticism, and the final decision about what action to take to achieve that is theirs.
9.2 Where it is proper for a Minister to retain any private interest he or she should declare that interest to Ministerial colleagues if they have to discuss public business in any way affecting it, and the Minister should remain entirely detached from the consideration of that business. Similar steps may be necessary should the matter under consideration relate in some way to a Minister's previous private interests such that there is or may be thought to be a conflict of interest. Particular care needs to be taken where financial interests are involved: see 9.9 to 9.18.
Procedure
9.3 On appointment to each new office Ministers are advised to provide the Permanent Secretary with a full list in writing of all interests which might be thought to give rise to a conflict. The list should cover not only the Minister's personal interests but those of a spouse or partner, of children who are minors, of trusts of which the Minister or a spouse or partner is a trustee or beneficiary, or of closely associated persons. The list should cover all kinds of interests including financial instruments and partnerships, financial interests such as unincorporated businesses and heritable property, as well as relevant non-financial private interests such as links with outside organisations, and previous relevant employment.
9.4 On receipt of the written list the Permanent Secretary will arrange a meeting with the Minister to discuss it and to consider what advice is necessary and from what source, and what further information is needed. The Permanent Secretary will stand ready either to give a considered view on the issues which the Minister raises, drawing on precedent as necessary, or to arrange for expert or professional advice also to be made available to the Minister from inside or outside the Executive. At the end of the exercise Ministers are advised to record in writing what action has been considered and taken, and to provide the Permanent Secretary with a copy of that record.
9.5 The personal information which Ministers disclose to those who advise them is treated in complete confidence and may not be disclosed without their permission. If an allegation is made that a particular Minister has a conflict of interest it must be for that Minister to explain their position and justify what has been done. In doing so, they may wish to make public the list of their private interests (required under paragraph 9.3) and the steps taken to avoid an actual or perceived conflict. It is open to them if they wish to confirm (if it is the case) that they have consulted the Permanent Secretary in accordance with the Code. The Minister should however consult the Permanent Secretary about the content of any such statement before making it to ensure that there is agreement about the content, and any disagreement should be referred to the First Minister.
Public Appointments
9.6 When they take up office Ministers should give up any other public appointment they may hold. Where it is proposed that such an appointment should be retained, the First Minister must be consulted.
External Organisations and Groups Etc
9.7 Ministers should take care to ensure that they do not become associated with organisations or groups etc whose objectives may in any degree conflict with the Executive's policy and thus give rise to a conflict of interest. Hence Ministers should not normally accept invitations to act as patrons of, or otherwise offer support to, pressure groups, or organisations dependent in whole or in part on funding from the Executive. There is normally no objection to a Minister associating him or herself with a charity (subject to the points above) but Ministers should take care to ensure that in participating in any fund-raising activity, they do not place, or appear to place, themselves under an obligation as Ministers to those to whom appeals are directed (and for this reason they should not normally approach individuals or companies personally for this purpose). In any case of doubt, the First Minister should be consulted before a Minister accepts an association with such a body. Ministers should also exercise care in giving public support for petitions, open letters etc.
Trade Unions
9.8 There is, of course, no objection to a Minister holding trade union membership but care must be taken to avoid any actual or perceived conflict of interest. Accordingly, Ministers should arrange their affairs so as to avoid any suggestion that a union of which they are a member has any undue influence; they should take no active part in the conduct of union affairs, should give up any office they may hold in a union and should receive no remuneration from a union (although a nominal payment purely for the purpose of protecting a Minister's future pension rights is acceptable).
Financial Interests
9.9 Ministers must scrupulously avoid any danger of an actual or apparent conflict of interest between their Ministerial position and their private financial interests. In order to avoid such a danger, they should be guided by the general principle that they should either dispose of any financial interest giving rise to the actual or apparent conflict or take alternative steps to prevent it. It is particularly important that the procedure described in paragraphs 9.3 and 9.4 is followed in the case of financial interests. The Permanent Secretary as Principal Accountable Officer has a personal responsibility for financial propriety and regularity across the Executive's business, and his advice must be given particular weight where such issues arise. Two particular ways in which a conflict of financial interest or the perception of it, can arise are as follows:
(a) From the exercise of powers or other influence in a way that does or could be considered to affect the value of interests held; or
(b) From using special knowledge acquired in the course of their Ministerial activities in ways which bring benefit or avoid loss (or could arouse reasonable suspicion of this) in relation to their private financial interests.
9.10 Apart from the risk to the Minister's reputation, two legal obligations must be borne in mind:
(a) Any exercise or non-exercise by a Minister (including a Law Officer) of a legal power or discretion or other influence on a matter in which the Minister has a pecuniary interest could be challenged in the courts and, if the challenge is upheld, could be declared invalid. The courts interpret conflict of interest increasingly widely; and
(b) Ministers are bound by the provisions of Part V of the Criminal Justice Act 1993 in relation to the use or transmission of unpublished price-sensitive information obtained by virtue of their Ministerial office.
9.11 It is not intended to inhibit the holding of Ministerial office by individuals with wide experience, whether of industry, a profession or some other walk of life. In order to avoid the danger of an actual or perceived conflict of interest, Ministers should be guided in relation to their financial interests by the general principle that they should either dispose of any financial interest giving rise to the actual or perceived conflict or take alternative steps to prevent it.
9.12 If for any reason a Minister is unable or unwilling to dispose of a relevant interest, he or she should consider, with the advice of the Permanent Secretary and, where necessary, of external advisers, what alternative measures would sufficiently remove the risk of conflict. Such measures fall into two categories: those relating to the interests themselves, and those relating to the handling of the decisions to be taken or influenced by the Minister.
9.13 As regards steps other than disposal which might be taken in relation to interests, the Minister might consider placing all investments (including derivatives) into a bare trust, i.e. one in which the Minister is not informed of changes in investments or of the state of the portfolio, but is still fully entitled to both the capital and income generated. This course would normally be useful only in the case of a widely-spread portfolio of interests. Once a bare trust has been established the Minister should not be involved in or advised of decisions on acquisition or disposal relating to the portfolio. Alternatively a power of attorney may be suitable. However, this is a complex area and the Minister should seek professional advice because, among other things, there may be tax implications associated with the establishment of this kind of arrangement. Ministers should remember that Part VI of the Companies Act 1985 allows companies to require information as to the true owners of its shares, which could result in the fact of a Minister's interest becoming public knowledge despite the existence of a trust. It should also be remembered that even with a trust the Minister could be assumed to know the contents of the portfolio for at least a period after its creation, so the protection a trust offers against conflict of interest is not complete. Another step which (perhaps in conjunction with other steps) might provide a degree of protection would be for the Minister to accept an obligation to refrain from dealing in the relevant shareholdings etc for a period.
9.14 Unless adequate steps can be taken in relation to the financial interests themselves, the Minister and the Executive must put processes in place to prohibit access to certain papers and ensure that the Minister is not involved in relevant decisions. The extent to which this can be done depends on the specific powers under which the Minister would be required to take the decisions. For example:
(a) In the case of a Deputy Minister, it should be possible for the Minister to whom he or she reports to take the decision;
(b) In the case of a member of the Executive, it should be possible for the First Minister to take the decision; or
(c) In the case of the First Minister or the holder of a specific office in whom powers are vested, it should normally be possible without risk of legal challenge to pass the handling of the matter to another Minister or an appropriate official. In such cases, legal advice should always be sought to ensure that the relevant powers can be exercised in this way.
9.15 In some cases, it may not be possible to devise such a mechanism to avoid actual or perceived conflict of interest - for example, because of the nature or size of the investment or the nature of the Minister's responsibilities. In such a case, or in any case where, after taking legal advice and the advice of the Permanent Secretary, the Minister is in doubt whether adequate steps have been or can be taken, he or she should consult the First Minister. In such a case it may be necessary for the Minister to cease to hold the office in question.
9.16 In addition to this general guidance, the following specific guidance on partnerships and directorships should be followed:
(a) Partnerships: Ministers who are partners, whether in professional firms (for example solicitors, accountants etc), or in other businesses, should, on taking up office, cease to practise or to play any part in the day-to-day management of the firm's affairs. They are not necessarily required, however, to dissolve their partnership or to allow, for example, their annual practising certificate to lapse. Beyond this it is not possible to lay down precise rules applicable to every case; but any continuing financial interest in the firm would make it necessary for the Minister to take steps to avoid involvement in relevant decisions, as described in paragraph 9.12 above. Ministers in doubt about their personal position should consult the First Minister;
(b) Directorships: Ministers must resign any directorships they hold when they take up office. This applies whether the directorship is in a public or private company and whether it carries remuneration or is honorary. The only exceptions to this rule are that directorships in private companies established in connection with private family estates or in a company formed for the management of residential property of which the Minister is a tenant may be retained subject to the condition that if at any time the Minister feels that conflict is likely to arise between this private interest and his or her public duty, the Minister should even in those cases resign the directorship. Directorships or offices held in connection with charitable undertakings should also be resigned if there is any risk of conflict arising between the interests of the undertakings and the Executive.
9.17 In all cases concerning financial interests and conflict of interest Ministers may wish to consult financial advisers as to the implications for their (or their families') affairs of any action which they are considering to avoid any actual or potential conflict of interest. They should also consult the Permanent Secretary, who, as Principal Accountable Officer, has a personal responsibility for financial propriety and regularity. It is in the end for Ministers to judge (subject to the First Minister's decision in cases of doubt) what action they need to take; but they should record, in a minute to the Permanent Secretary, whether or not they consider any action necessary, and the nature of any such action taken then or subsequently to avoid actual or perceived conflict of interest.
9.18 Any Minister who is or has been a member of Lloyd's should make this known to the First Minister and the Permanent Secretary so that they can advise on whether the connection has any implications for his or her activities as a Minister.
Nominations for International Awards
9.19 From time to time, the personal support of Ministers is requested for nominations being made for international prizes and awards, e.g. the annual Nobel prizes. Ministers should not sponsor individual nominations for any awards, since it would be inevitable that some people would assume that the Executive was itself thereby giving its sponsorship.
Acceptance of Gifts and Services
9.20 No Minister or public servant should accept gifts, hospitality or services from anyone which would, or might appear to, place him or her under an obligation. The same principle applies if gifts etc are offered to a member of their family. This is primarily a matter which must be left to the good sense of Ministers. But any Minister in doubt or difficulty over this should seek the First Minister's guidance. The same rules apply to the acceptance of gifts from donors with whom a Minister has official dealings in this country as to those from overseas (see Section 7 on Ministers' Visits).
9.21 Within the context of the general principle outlined above, the following specific rules apply to the acceptance of gifts from donors with whom a Minister has official dealings:
(a) Receipt of gifts should, in all cases, be reported to the Permanent Secretary;
(b) Gifts with a value up to 140 may be retained by the recipient;
(c) Gifts of a higher value should be handed over to the Permanent Secretary for disposal, except that:
The recipient may purchase the gift at its cash value (abated by 140);
If the recipient wishes to reciprocate with, and pay for, a gift of equivalent value, the gift received may be retained;
If the Permanent Secretary judges that it would be of interest, the gift may be displayed or used in a property used by the Executive;
If the disposal of the gift would cause offence or if it might be appropriate for the recipient to use or display the gift on some future occasion as a mark of politeness, then the gift should be retained by the Permanent Secretary for this purpose for a period of up to five years; and
(d) Gifts received overseas worth more than the normal travellers' allowances should be declared at importation to Customs and Excise who will advise on any duty and tax liability. In general, if a Minister wishes to retain a gift he or she will be liable for any tax or duty it may attract.
9.22 Gifts given to Ministers in their Ministerial capacity become the property of the Executive and do not need to be declared in the Register of Interests of Members of the Scottish Parliament unless the Minister wishes to keep the gift (if it is below the threshold of 140) or to purchase it (see paragraph 9.21). Gifts given to Ministers as constituency MSPs or members of a political Party fall within the rules relating to the Register of Interest of Members of the Scottish Parliament.
9.23 In the event of a Minister accepting hospitality on a scale or from a source which might reasonably be thought likely to influence Ministerial action, it should be declared in the Register of Interests of Members of the Scottish Parliament. Registration of hospitality would normally be required for hospitality over 250 in value.
Outgoing Ministers: Acceptance of Appointments Outside the Executive
9.24 On leaving office Ministers should seek advice from the independent Advisory Committee on Business Appointments about any appointments they wish to take up within two years of leaving office, other than unpaid appointments in non-commercial organisations or appointments in the gift of the Executive. Although it is in the public interest that former Ministers should be able to move into business or other areas of public life, it is equally important that there should be no cause for any suspicion of impropriety about a particular appointment. If therefore the Advisory Committee considers that an appointment could lead to public concern that the statements and decisions of the Minister, when in the office, have been influenced by the hope or expectation of future employment with the firm or organisation concerned, or that an employer could make improper use of official information to which a former Minister has had access, it may recommend a delay of up to two years before the appointment is taken up, or that for a similar period the former Minister should stand aside from certain activities of the employer.
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