Plaid Cymru calls for an urgent governance review of the Development Bank of Wales
Plaid Cymru chief Adam Price has called on the Prime Minister to undertake an urgent review of the governance arrangements of the Development Bank of Wales after it emerged its chief executive had personally invested in two companies Welsh.
During Prime Minister’s Questions, Adam Price raised concerns after confirming development bank boss Giles Thorley had made two equity investments in companies Zip World and Lovetovisit.
Development Wales, which is the Welsh Government’s wholly-owned investment bank, confirmed that in the case of his investment in Lovetovisit, Mr Thorley only informed its chairman Gareth Bullock after he had invested. They said colleagues are not required to obtain approval before undertaking personal investments, but are required to take all reasonable steps to identify and manage conflicts of interest. So no rules were broken when Mr. Thorley invested.
In the case of Zip World, the development bank was asked whether Mr Thorley had obtained prior board approval before investing. Prior to being appointed Chairman of the Company, Mr Thorley obtained prior approval from the Board of Directors as well as the Welsh Government.
Mr Price asked the Prime Minister if he was ‘comfortable’ with Mr Thorley, who received a total remuneration in the last financial year of £216,000, being able to invest in businesses on a personal basis . He said a review of the bank’s governance arrangements was now needed to ensure they “meet people’s reasonable expectations that the public interest is neither overlapped nor supplanted by the private interest of people”.
Mr Drakeford replied: ‘I expect any managing director or employee of a Welsh company or government official to observe all the proprieties and rules imposed on them. I’m sure the head of Plaid Cymru is suggesting impropriety here, but if he is he should say so and then we’ll investigate it.
Mr Price said: “Mr. Thorley sought board approval and also wrote to the then Economics Minister before taking up his paid role as chairman of Zip World. Perhaps the Prime Minister could confirm whether Mr Thorley’s personal investment in Zip World was also subject to prior board approval. If so, the question is clear, why wasn’t the same principle applied to his investment in Cardiff-based start-up LoveToVisit?
“And can I ask you a fairly basic question of principle if it is stipulated that Mr Thorley, who is already among the highest paid employees of any state-funded body in Wales, should not invest in companies using the knowledge or networks he has gained through his work with the development bank and would you not agree with me that this is not an assessment that Mr Thorley should be in able to do effectively as judge and jury in his own case.
Mr Drakeford said: ‘I certainly agree with the last point that anyone who is carrying out work on behalf of the public interest in Wales and is in a publicly appointed position to do so, then they are bound by rules that are not of their own making nor should they be the sole arbiter of whether they abide by those rules.
“I don’t know the detail of the decisions made by the chief executive of the Development Bank of Wales in the same way as the leader of Plaid Cymru. If there are any specific issues that need to be looked at, they need to be brought to the attention of the government and then they will receive that attention.
Mr Price then asked: ‘Rhodri Morgan (the late former Prime Minister) was very critical of senior WDA leaders with outside interests which gave rise to negative perceptions. He said “business doesn’t just have to be done, it has to be seen, which is nearly impossible when you have interlocking relationships.” It is not enough to say that these issues only concern the board of directors, for example in the case of a public company in which the Welsh government is the sole shareholder.
“You have amended the framework document which sets out, as I understand it, the government’s expectations of the development bank in terms of governance. May I ask you to publish this document with the mandate letter that you signed with the bank And will you insist on a review of governance arrangements to ensure that they meet people’s reasonable expectations that the public interest is not overlapped or supplanted by the private interest of individuals in order to avoid some of the issues and perceptions that I raised with you?”
Mr Drakeford said: ‘I certainly agree with Mr Price’s final proposal. People certainly shouldn’t put themselves in that position and I vividly remember the former Prime Minister’s view of the WDA and its history and a number of its staff. It is the usual position of the Welsh Government to publish letters of remission to organizations we sponsor, but Development Bank of Wales deals in commercially sensitive areas where it is not always possible to put in the public domain the same level of information that is possible for organizations that do not deal with these same fields.
“I hesitate to give general undertakings on the basis of suggestions of which I am not completely certain of the basis or even of what is alleged, but I will read very carefully the account of what has been said and of course if I think any action must be taken by the Welsh Government, then that action will follow.
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Of Mr. Thorley’s investment in Lovetoviist, the development bank said: “Giles Thorley has been an active angel and SME investor for over 15 years, with interests in technology, hospitality and tourism. . Earlier this year, he made a very small passive seed investment in Lovetovisit.
“Colleagues are not required to obtain approval before undertaking a personal investment, but are required to take all reasonable steps to identify and manage conflicts of interest and, if so, the Chairman of the Board of The administration has been informed.The company has not applied for funding from the Development Bank of Wales.