This document explains the background to the disagreements in the SHA. To ensure validity it provides links to all the relevant available documents as a factual record.  It will be updated as things change.

Unfortunately a great deal of misinformation is being circulated and various claims are being made by members and non members.

The latest communication to members of the SHA is here.

The latest communication to members of Central Council is here.

The Officers

There is no dispute that the three Officers – Chair, Secretary and Treasurer have been properly elected.  Officers are elected by the members and accountable to the members through the Annual General Meeting process.  The Officers have the responsibility for the day to day running of the association.

Central Council may elect up to 4 Vice Chairs from amongst Central Council members to support special areas of work but these Vice Chairs do not have any role in administration and are not Officers of the association.

Three major issues are being dealt with by Officers

  1. The financial management of the association
  2. Breaches of the Constitution, particularly in respect of election of branch delegates to Central Council
  3. The call for a Special General Meeting

What has been done?

  1. Discussions amongst the Officers about the financial controls have taken place but no agreement reached. Central Council on 1 August agreed Financial Instructions.  At present the Treasurer has not implemented them.  After taking legal advice a letter has been sent to the Treasurer. Intervention is being sought with the bank as the mandates are incorrect, but the Treasurer has not notified the Bank of the necessary changes.
  1. The Officers conducted an investigation into the elections that Alex Scott-Samuel, the previous Chair, stated were invalid. They then took legal advice.  Based on the legal advice a meeting of Central Council was called, inviting only those properly elected.  In spite of legal threats, which in the end did not materialise, the meeting was properly called and held.

That Central Council meeting: –

  1. The Officers also have legal advice about calling a Special General Meeting. The matter was referred to Central Council but that item on the agenda was not reached.  It will be considered at the next Central Council meeting.

Why is legal advice required?

Legal threats were made directed at the association itself.  These threats and the allegations behind them required a competent response.  There are also instances of breaches of the constitution going back many months and competent legal advice is necessary to determine how to proceed.  Members should be able to see the advice.

How have the issues arisen?

Since taking office the Treasurer has communicated a number of issues with financial management. At the Central Council meeting on 23 May 2020 the previous Chair Alex Scott-Samuel stated that up to half of the delegates to Central Council were not elected in accordance with the Constitution.

Why have these issues arisen now?

It has been known for some time that the financial controls were not sound and for many months there was no Treasurer in post – despite the pivotal role given to the Treasurer. It has been known for some years that there are issues with record keeping as the systems are not adequate.

 

What is the Constitution?

The SHA is not a limited company or a charity – it is an unincorporated body made up of its members.  The Rules which set out the governance of the SHA, and which act as a contract between the members and the association are set out in the Constitution.  This was last revised at the Annual General Meeting in March 2018.

A group has been working on the possibility of changing the governance arrangements and to have an entirely different form of constitution (a company limited by guarantee) and some proposals may be put to the next SHA AGM.

Who makes decisions?

The Constitution sets out (but not in any detail) the arrangements for the organisation and management of the SHA.  In particular 9(b) “The execution of decisions made at Annual and Special meetings and the administration of the affairs and property of the Association shall be vested in the Central Council.”  And 10(f) “Between Central Council meetings the elected Honorary Officers will be responsible for the running of the Association.”

How are elections held?

The nature of the SHA makes for some complexity.  Elections are tied to the SHAs Annual General Meeting which is normally held in March each year.  In the run up to the AGM these are elections amongst the whole SHA membership for the three Officers (Chair, Secretary and Treasurer) and for 20 members of Central Council.  Prior to the call for nominations to the 20 positions on Central Council the SHA Branches can hold their own Annual General Meetings and to elect delegates from the Branch to the Central Council – the number of delegates depends on the membership of the Branch.  The constitution sets out specific rules about how and when these elections have to be carried out.  There is more information about the make up of Central Council below.

SHA Scotland and SHA Wales can appoint representatives to Central Council and the rules that apply to Branches do not apply.

 

FINANCIAL MANAGEMENT

What are the financial irregularities?

The banking arrangements are not as required under the constitution and this unacceptable situation has applied for some years.  Neither the previous nor the current Financial Instructions are being followed.  There have been a number of issues around authorisation and financial control during this period of many months. Recommendations from the auditors have not been implemented. The association does not have a proper accounting system even though concerns have been highlighted many times in Central Council meetings and by the 2018 auditors.

Banking Issues

The SHA operates a current and savings bank account with the Co-operative Bank.  The Chair and Secretary do not presently have access to these accounts. The Chair and Secretary are not signatories to these accounts, as they should be.  It appears that the signatories are former officers and other members.  The Chair and Secretary of the SHA cannot see the operation of the SHA bank account.

Financial Instructions

Most organisations have defined financial instructions which set out how financial management and control is established.  Discussions amongst the Officers about the financial controls have been held but no agreement was reached.  Central Council on 1 August agreed Financial Instructions.  At present the Treasurer has not implemented them. Even if the latest changes to Financial Instructions are ignored there were previous Instructions agreed, in 2008 and 2012. These have also been ignored and are not being followed either. Intervention is being sought with the bank.

Use of PayPal

Since 2014 the SHA has used PayPal as a means for collecting subscriptions – with the monies (less charges) transferring into the required Cooperative Bank account.  This has caused problems that have been reported for a long time. Reconciliation is not easy, and PayPal offers data in an inconvenient manner, mixing personal information with payment details.

Issues with PayPal

The Treasurer raised a query about having “access to and control of the PayPal account”.

In practice, money is received into the PayPal account and monies are then transferred from account to the Cooperative accounts by the SHA Administrator.  The PayPal account has both financial and personal information about the approximately 1000 members of the SHA

The SHA is a data controller under the terms of the Data Protection Act 2018 (“DPA”) and under Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation) (“GDPR”).

The Treasurer, as with previous practice, has been provided with a complete set of anonymised transactions to explain all money that has passed into and out from the PayPal account but with no access to the personal data relating to individual members.  The SHA would be acting unlawfully if it provided personal data relating to SHA members.

Role of the SHA Administrator

After the previous Director left the SHA, our current administrator, Ken Smith, was brought in as an independent contractor to continue much of the Director’s role. This includes maintaining the membership system, collecting subscriptions, sending out reminders, collecting and banking money, keeping accounts in database, pursuing debtors, website and database technical support.

He is also the SHA Data Controller.  His role is set out and managed through a contract.  Ken reports to the Chair.  (Ken is married to the SHA Secretary and any potential conflicts of interest are managed by the Chair. He is a retired ex IT support Analyst with 30 years+ experience in Commercial and Financial industries.)

 

BRANCH ELECTIONS TO CENTRAL COUNCIL

What is the make-up of Central Council?

This is set out in the Constitution in various places.

  • The three Officers – elected by the whole membership
  • 20 delegates to Central Council elected by the whole membership
  • Delegates elected at the AGMs of Branches (the number of delegates is related to the number of Branch members)
  • Representatives from SHA Scotland and SHA Wales
  • Representatives from any nationally affiliated bodies

Why were some of the elections to Central Council invalid?

There are no disputes over the election of the Officers or over the representation from SHA Scotland and SHA Wales. There are currently no nationally affiliated bodies.  The representatives from some Branches were found to be invalid as the Branch AGMs had not been held in accordance with the rules – agreed in 2018.  Some of the 20 elected by the whole membership were found to be invalid for financial reasons.

Was the Central Council meeting on 1 August valid?

Yes it was. The meeting was made up only of those validly elected.  The legal advice was that holding this meeting just with those who were entitled to attend was the correct – possibly the only – way forward. It was then up to Central Council to make the decisions necessary.

Other members, who were not members of Central Council were present and some were allowed to speak at the discretion of the Chair.

Those who attended as validly elected members were given every opportunity to participate and state their case.

Why were there problems at the meeting?

The Constitution does not insist on standing orders for meetings and Central Council has never adopted any.  The previous Chair made the point at meetings that there could be no points of order or any other challenges within a meeting.  That was followed.  But Central Council has now adopted Standing Orders and proper meeting disciplines can now be relied upon.

There are limitations on meetings held over ZOOM and it is appreciated that some members feel passionately about some issues.  But the behavior of some members of Central Council at both the meeting on 1 August and the previous one has been unacceptable with constant interruptions, orchestrated barracking and refusal to follow good order.  This will not be permitted in future as Standing Orders will apply.

When are elections held?

The rules for elections of Officers and the 20 delegates elected by all members are set out in section 11 of the Constitution.  The rules for election of delegates from Branches are set out in section 13.  The elections are strictly connected to the Annual General Meeting of the association which normally takes place each March.

There is no provision for holding elections other than those linked in this way to the Annual Meeting.  The Constitution provides for any casual vacancies to be filled by decisions of Central Council – not by election.

Why was the 2019 AGM postponed?

Elections are tied to the holding of the SHA AGM.  However, the AGM that should have been held in March 2019 was not held.  The reasons given at the time were that there were issues with the membership system and so with determination of the eligibility to vote.

When was the date of the 2019 AGM decided?

This is far from clear.  Work was carried out to improve the data quality of membership records.  At the Central Council meeting on 7 September 2019 it was reported by the Chair that the SHA AGM would be held on 7 December 2019 and the need for AGMs for Branches to be within the required times set in the Constitution was mentioned.   Detailed arrangements were not discussed.

It was later decided, but not by Central Council, that the AGM would be postponed to 29 February 2020. The request for nominations to the Central Council as from 20 January was sent out, with elections conducted between 7 and 21 February and results being announced on 24 February.

What was the impact of deferring the SHA AGM?

There is no record of any discussion about the implications that this decision on the timing of the AGM would have on the process for elections.  If new arrangements were made then the matter should have been discussed by Central Council.

After the AGM and the elections had taken place and at the Central Council meeting on 23 May 2020 Alex Scott-Samuel who was Chair at the time the revised date for the AGM was announced, stated that he had decided that the Rules around elections by Branches should not apply due to practical problems, such as the General Election.

How did that impact on Branch AGMs and elections?

This is the root of the problem – the competent legal advice is clear that the then Chair could not override the Constitution. There is no power for Chair, Officers or Central Council to dis-apply the Rules.  The timetable set in the Rules had to apply.

The rules used for these elections were the first time a rule change from 2018 about how Branches had to elect their delegates was put into practice.  Compounding the problem was the decision to defer the already once deferred SHA AGM.  Whilst the reasons for doing so, particularly the fact that there was a General Election, are understandable is appears that the consequences were not properly discussed.  The assumption that the Chair could override the rules was simply not valid.

How were the election arrangements communicated to Branches?

There does not appear to have been any consistent flow of information to Branches.  Different communications went to different Branches.

West Midlands Branch was told its AGM was invalid and had to hold it again.  Other Branches broke the Rules but were not communicated with.

London Branch went to some length to verify that it was acting correctly and to comply.  Sadly, it acted in good faith but on incorrect information.

Why were Branch delegates invalid?

The Constitution sets out the rules for elections.  A rule change from 2018 makes the process difficult and requires planning 6 months in advance of a SHA AGM.   The key passage states that Branches are expected to give 4 weeks’ notice of their AGM and that Branch AGMs must take place between 12 and 3 weeks prior to the commencement of the national Central Council (CC) election process (i.e., between 12 and 3 weeks prior to the call for national CC nominations).  The call for nominations has to take place with the formal notification of the notice of the date of the SHA AGM – which must be at least 4 weeks before the actual date of the SHA AGM.

Which Branches complied with the Rules?

The investigation carried out after the challenge from former Chair Alex Scott-Samuel showed that only two Branches held their AGMs within the dates set by the Rules. West Midlands held a second and valid AGM in order to comply and Oxfordshire held its AGM but chose not to elect any delegates.

What legal action was threatened?

A group of 4 members sent legal forms threatening legal action if the Central Council meeting on 1 August went ahead.  These papers were completed Court forms but were not served through a solicitor and (so far as anyone is aware) have never actually been to any Court.

What response was made to the legal threat?

After taking legal advice a formal response was sent. This dealt comprehensively and expertly with the points raised.  This legal advice has been provided to all members and is the basis on which the Officers proceeded.

When will elections be held?

The SHA AGM is normally held in March, elections to Central Council are tied to the AGM.  The Constitution sets out the timetable.  The rules require the date of the SHA AGM to be announced at least 5 months in advance and 6 months would be more reasonable.  A proposal will be made to Central Council to set the date for the next elections and to appoint two members to oversee the elections and to ensure members and Branches get proper advice and guidance.

It appears unlikely that the 2021 SHA AGM could be planned for any earlier that March 2021, and elections would be tied into the relevant dates.

 

THE SPECIAL GENERAL MEETING

Has a Special General Meeting been called?

Alongside the threat of legal action (and tied to it) has been a request for a Special General Meeting (SGM)  of the SHA as set out in Section 17 of the Constitution.  The wording was supported by a number of members through an assortment of communications.

The legal advice was that the wording of the motion as it was presented was not legally sound.  Any arrangements for an SGM would be a matter for the Officers or Central Council.  The issue was referred to Central Council, but that item was not reached at the meeting.

How can a SGM be arranged?

The matter would be referred to  Council rather than Officers making the decision.  Central Council would have to be assured that the wording of the request was appropriate and relevant, and this may require some dialogue with those putting forward the request.  Then practical arrangements would be made and appropriate notice sent out to all members.

The content of the motion

The legal advice set out a response to the proposed SGM wording.

It does not deal with the core issue that the elections of some Branch delegates to the Central Council failed to follow the rules set out in the constitution.  Arguably this aspect has already been overtaken by events, with the holding of the Central Council meeting and its consideration of the matter.

The proposed motion says: “Our national Treasurer has been reporting serious financial irregularities.” What it fails to say is that these relate to matters that largely happened before the election of the present officers.  There is also a list of recommendations from the SHA Auditors that have not been implemented, for example the lack of a formal accounting system.  We feel the wording does not provide the full context and therefore a fair representation of the situation.

The motion also says: “Full financial controls to be placed in the hands of our National Treasurer as required by our constitution”.  What the Constitution actually says is that “the Honorary Treasurer shall be the custodian of all the money due to the Association”.  This is completely different; showing the resolution is factually incorrect.  The claim about the role of the Treasurer is also totally at variance with how the SHA has always operated (as set out in Financial Instructions from 2008).

Further as a matter of good governance no single person should have complete control over the money belonging to an organisation.  We would be failing in our duty to set up proper governance arrangements if, for example, financial control was passed to a single individual, which the resolution calls for.

If this matter proceeds then once the wording is resolved (which should not be difficult) then Central Council would consider how such a meeting could be held consistently with the right of any member to attend and record a vote (in secret).  This aspect however is not simple at the present time due to Covid restrictions on holding physical meetings.

Timing of a SGM

Once any issues over the wording of a call for a SGM are resolved by Central Council then the date, place and time of the meeting has to be set. All members must then be given at least 2 weeks’ notice of the terms of the proposed resolution and the date, place and time fixed for the meeting.  If any part of the resolution seeks to change the Constitution – as this one did by redefining the role of the Treasurer – then 3 weeks’ notice is required, and a two thirds majority vote is required.

Issues due to Covid restrictions

Any SGM must be as inclusive and constructive as possible. The use of Zoom would appear to disenfranchise anyone who does not have online access with strong broadband.

The discretion to decide the right way to hold such a meeting lies with the Central Council.  Physical meetings cannot be held but there may be other ways to arrange for an SGM, adapting to the Covid restrictions, and this will be discussed by Central Council.  One suggested approach has already been put forward.  Central Council will need to be creative to find the best arrangement and would welcome your suggestions.

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