New trams turmoil as chairman quits 'hell'

Published on Tuesday 2 November 2010 19:14

EDINBURGH'S trams project was plunged into yet more chaos today with the sudden resignation of chairman David Mackay, who branded the controversial scheme "hell on wheels".

&#149 David Mackay has quit as chairman after branding the project 'hell on wheels'

Mr Mackay cited personal reasons for his decision to stand down as chairman of tram firm TIE, Lothian Buses and the new Transport Edinburgh Limited, to be created from the merger of the two firms.

But insiders suggested he went after concerns were raised over the merger, and today there were growing calls for it to be halted amid mounting concerns about a "conflict of interests" as Lothian Buses faces being forced to subsidise the tram for at least three years.

Many insiders feared that the subsidies could cripple the bus company - and leave it at risk of a takeover by a private operator.

Announcing his resignation, Mr Mackay claimed a Scottish-based firm may have made a better job of the project than German contractors Bilfinger Berger, whose dispute with TIE has been at the heart of the delays and cost increases.

He said: "Bilfinger Berger was a delinquent contractor who scented a victim, who probably greatly underbid and who would use the contract to make life extremely difficult for the city. And they have done exactly that."

City transport convener Gordon Mackenzie said he learned two days ago that Mr Mackay was quitting but insisted his departure did not reflect deeper problems. He said: "Despite the public perception, we have a really strong team in place. David has been a very loyal and good chairman and he has left the project in a better place than he found it."

Cllr Mackenzie rejected suggestions the question of the merger of TIE and Lothian Buses played a part in Mr Mackay's resignation.

But deputy council leader Steve Cardownie said his departure should lead to a pause in the planned merger.

He said: "Given that David Mackay was earmarked for the chair of the merged board on the basis that he fitted the bill, and given that he is no longer there, it would now make sense to step back from that merger and reassess it when the situation is clearer."

Mr Mackay, 67, a former Scottish Rugby Union and John Menzies boss, has been at the helm of the tram scheme for almost two years and took over the chairmanship of the bus company earlier this year. But many senior figures are known to have thought of him as a "tram man" and concerns were growing about the bus company's future if the merger of the two companies goes ahead.One insider said: "There have certainly been questions about his role looking after the trams and Lothian Buses.".

Trade union leaders at Lothian Buses organised a protest before last month's full council meeting about the impact of any merger - and the conflict of interests of Mr Mackay, who is paid more than 94,000 a year.

Former Lothian Buses chairman Pilmar Smith: "I don't know the whys and wherenots about David Mackay, but my worry was that the creation of TEL would lead to the assets and profits of the bus company being used to prop up the tram. That is the concern of a lot of people in Edinburgh."

Council group leaders were brought into a hastily-arranged briefing with council chief executive Tom Aitchison early yesterday evening to inform them of the resignation.

One council source said: "It is the second senior person that has gone, after (former chief executive) Willie Gallagher, in two years. We were told it was because of his work/life balance but you have to wonder if there was more to it."

Conservative councillor Jason Rust said: "This is an extremely concerning development. The situation is becoming absolutely farcical. Lothian Buses is the outstanding bus operator in the UK and it is vital that we have strong leadership at the top."

Councillor Andrew Burns, leader of the Labour group on the council, said: "I think it's now imperative that the Lib-Dem/SNP administration ensures that a report is presented to the next full council meeting, on November 18, outlining measures to ensure some degree of continuity."

A MOVER AND A SHAKER

David Mackay spent 46 years at newspaper distribution and air cargo group John Menzies, rising from trainee transport manager to group chief executive.

Mr Mackay joined John Menzies in Edinburgh in 1964. The firm moved him to Northern Ireland as transport manager in 1965, and brought him back to Edinburgh in 1970 as an assistant to the wholesale director.

Next, he was sent to London, and brought back to Edinburgh in 1978. He was appointed managing director of wholesale operations in 1984. He was appointed group managing director and chief executive on New Year's Day 1997 in a bid to revive the fortunes of the group, which was struggling.

His decision to shed the high street stationery stores that had made the name John Menzies famous across the country was controversial, but his accounts showed him there was more profit to be earned in moving items around the country.

Mr Mackay was credited with acquiring the United States-based ground services group Ogden for 79 million in 2000, doubling John Menzies' aviation services business, and turning it into a global organisation.

The son of a Fife police sergeant, Mr Mackay is unusual among top Scottish business figures, in that he never attended university and chose to earn a living rather than study for four years.

He later attended management classes at Bradford University and Edinburgh University, studied Latin and became fluent in modern languages. He has a son and daughter, Euan and Katy, both in their mid-to-late twenties and in his spare time he works on his three classic cars.