Incompetence, chaos...sabotage?

ASLEF has careered off the rails. Officials at the train drivers' union are reeling after a savage report accused it of almost every conceivable kind of financial incompetence over recent years.

Shaun Brady replaced left-wing firebrand Mick Rix as General Secretary last year and soon after taking office he launched an inquiry into the recent history of the union's finances and computer systems.

He told the Financial Mail Mail on Sunday: 'I quickly became aware that the finances were in need of close scrutiny. I set in motion a thorough investigation by external professionals.'

But even he seemed shocked by the findings. 'The results do not make comfortable reading,' he said.

And he's right. The report is a catalogue of incompetence, financial mismanagement, perhaps even sabotage.

The documents report on poor investments, misuse of assets, and computer files wiped out in mysterious-circumstances. The 71-page report was written by Paul Blagbrough, once finance chief of the Labour Party and now a financial consultant to union and labour bodies.

Heading his report is a damning indictment of the way Rix was paid off. Under his contract, he was entitled to four months' pay when he was ousted by a vote of members. With a salary of £66,000, his pay-off should have been £22,000. But the report states: 'In the event, the severance payment to Mr Rix was about £42,000.'

It adds: 'It is unclear by what authority this severance payment was made since it was not in accordance with his contract of employment. It is also unclear who, and with what authority, authorised the actual payment.'

As part of his post, Rix was also entitled to use of a flat in Aslef's head office in Hampstead, northwest London. On leaving office, Rix granted the lease to the caretaker 'without reference to his colleagues and without approval'.

The report says: 'On the worst case, the caretaker could occupy the premises for a further 50 years.' The report concludes that if the caretaker cannot be convinced to vacate the flat, 'the real cost to the union would be in excess of £1.8m'.

Rix's colleague, head office manager Debbie Dwight, also quit when he stood down. But the report says she was not made redundant: 'Severance was inappropriate.' Dwight was paid £41,270 as a golden goodbye.

Rix vigorously dismissed the allegations of wrongdoing. 'My severance payment was fully approved by the executive committee and was in accordance with my contract of employment,' he said. 'I am very surprised that the authors of this report have never asked me about this.'

Rix said the flat caretaker was entitled to the tenancy under his contract because he was expected to be available 24 hours a day.

The union's computer systems form the core of the second major concern. The union signed a five-year contract with maintenance firm Paralogic in 2003. But the report says: 'It is known that there is a long-term personal relationship between Ms Dwight, the former head office manager, and Adam Plant, the union's client director at Paralogic. To avoid any suggestion of taint, dealings with Paralogic needed to be transparent and at arm's length. They were not.'

Last October, a review of computer security found that a number of directories on the computers had been deleted. There was a 'thorough, sophisticated and successful deletion' of 'several thousand files', the report says.

It says that back-up tapes in a fireproof safe were studied to see if they could provide clues as to what was on the files, but the tapes were blank. 'It is believed they were systematically wiped clean,' the report concludes.

The report also examines at length the financial state of the union, which has 17,000 members. Aslef had employed investment adviser Jeremy Harris St John since 1988 to manage a multimillion pound portfolio of shares and bonds, but his services were terminated in November 2001.

The report says just before he left, Harris St John had planned to pull the investments out of split capital investment trusts, notorious investment vehicles that have destroyed the savings of thousands. But they were never sold.

It says this decision and the fact that Harris St John had not been retained to advise the union had cost it a further £100,000 and 'possibly considerably more'.

Brady said: 'I don't believe my members would welcome more public discussion of these matters before they have had the chance to consider them for themselves.'