Melvyn Esterman Former Finance Director Merton, Sutton & Wandsworth Strategic Health Authority
Miss Mcloughlin in statement to the Employment Tribunal said that my approach to
other NHS agencies was to distance myself from them and that this manifested
itself through evidence given by Melvyn Esterman the former Finance Director of
Merton, Sutton and Wandsworth Health Authority an organisation that ceased to
exist when the South West London Strategic Health Authority came into existence
on the 1st April 2002. It is
extraordinary that the only individual who was called to give evidence against
me at my disciplinary hearing from an external organisation was an individual
who had retired from the NHS. The
reason for this was that Mr Esterman has strong personal links with Ian
Hamilton, in that for a number of years Mr Hamilton had been Mr Esterman’s
deputy when Mr Esterman had been the Finance Director for Wandsworth Health
Authority. If the Trust had truly believed that I had a real relationship
problem with other NHS external bodies, it would surely not have been that
difficult for them to produce a witness from one of the bodies that the Trust
was having to deal with at the time of my suspension, rather than someone with
whom the Trust no longer had any relationship at all.
In any event Mr Esterman is not a credible witness for several reasons.
The first problem arose with Mr
Esterman in the late summer of 2001, when Ian Hamilton the Chief Executive told
me that Mr Esterman had briefed his own Chairman, to tell my Chairman Catherine
McLoughlin, that my finance directorate would not be suitable to provide
financial services to other NHS organisations in the local health economy.
I sent him an e-mail on the 8th November 2001 asking him to give the reasons why
he had taken this view and asking him to meet with my senior staff and myself.
He refused to meet with my senior staff but instead had a lunchtime meeting with
me and sent me a letter dated 4th December 2001
in which he made several untrue statements. The key points are listed in
the second part of the second page of his letter where he stated that he had a
number of concerns.
a)."These
include the credibility of figures which appear to keep changing, presentations
which are difficult to follow and do not show a clear audit trail".
A statement which is
completely untrue and for which no specific examples are given because there are
none.
b)."The
apparent inconsistencies between financial reporting and commissioner/Trust
discussions or agreements on utilisation of resources". Again
no examples are given of these inconsistencies because none have ever been
highlighted.
c).
"The complexity of pricing and how this delays and complicates assessments
of forecast out-turn and next years planning". Again
no examples are given. There is no pricing in the NHS; prices were
eliminated from the system by the present government several years ago.
What happens under the current arrangements is that NHS Trusts are given
an income based on their previous years income and this is then increased to
take account of inflation and agreed cost pressures and service developments.
The total is then reduced to take account of the cost reduction target
that the hospital has been given by the NHS to arrive at the total income the
Trust can reasonably expect to receive from its commissioners.
All this information is then produced in an impact statement , as
required by the NHS London office. What
all of this shows is that Mr Esterman does not understand how the system of
financing NHS Trust’s actually works and that his criticisms of my directorate
in this regard are therefore malicious and totally without foundation.
d)."The
lack of clarity of the real drivers of the financial crisis consistently
portrayed and monitored and addressed, compounded by crisis alleviation by
non-recurrent means". Again no examples are provided. There
has never been any lack of clarity as to causes of St George's
financial problems during the twelve years that I have been finance director. My
department has always provided information to a standard unsurpassed by any
other NHS Trust in terms of the causes of the financial problems at St
George’s. I would challenge Mr
Esterman to provide any examples of where the information supplied to him by
other NHS Trust’s when the NHS employed him was of a superior quality to the
information provided by my directorate.
e). "The
approach to cost pressure analysis not followed by other Trusts and not seen as very
outdated and inappropriate for a Trust with such a large income". This
is a list that was not directly produced by my directorate as the responsibility
for producing it was given to a member of the Trust’s Best Practice Team by
Ian Hamilton, but in any event the analysis provided was in a format
requested in an e-mail sent by a member of staff (Jonathan Bates) from Mr
Esterman's organisation.
I did not reply to Mr Esterman’s letter at the time as I considered the criticisms ill founded and not particularly relevant as Mr Esterman was leaving the NHS. However, I had to take the letter more seriously when at my internal disciplinary hearing, Mr Esterman produced the letter in evidence against me. In giving his evidence to the disciplinary hearing Mr Esterman repeated the untrue statements contained in the letter, plus he made another completely false and serious allegation about the way my department had raised a provision in the Trust's 1999/2000 final accounts to account for the cost of medical negligence cases. The written notes taken by the St George's Human Resources Department at the hearing confirm that not only did Mr Esterman make a false allegation about me, but the advice he gave the hearing as to how I should have handled the issue would, if I had followed it, been illegal and would have caused the Trust's external auditors to have qualified the St George's accounts for 1999/2000. This is shown in (Trust Note 1) page 9 of 12 of the written notes of Mr Esterman's evidence. You will see that in paragraph four, "ME said that there were concerns that at regional level that the provisional figures finally changed and St George's stated that they were waiting on advice from Bevan Ashford (the Trust's solicitors). PQ (my solicitor Paddy Quill) asked ME if he did not think it was reasonable to wait on this information from solicitors before submitting the information and Mr Esterman said he did not as it was the Trust's responsibility to make sure that they put the their figures in. Other Trust's put in estimates but St George's put in actual figures". If as Finance Director I had created an estimate for a liability simply to suppress information which I had been given in writing by the Trust's solicitors which showed that the Trust's liability in this matter had increased by £1.886 million I would have clearly have been acting in breach of my professional duty of care and could have quite correctly been charged with falsifying the accounts and could have lost not only my job, but also could have been struck off as an accountant by the Chartered Institute of Public Finance and Accountancy. The fact that Mr Esterman is putting this forward as a criticism of me, as recorded in the written notes produced by St George's Healthcare NHS Trust I find quite extraordinary. You will also see from the notes of the disciplinary hearing that Mr Esterman also suggested that my department had made a late submission of the figures to his organisation and this is completely refuted again with documentary evidence as evidenced by the letter received from Julia Todd on the 6th April 2000 and from the statement given by Dominc Sharp of my directorate to the Employment Tribunal who was the person responsible for making returns to the health authority.
I believe that all of this demonstrates that the allegations that Mr Esterman made are not supported by a single a single shred of evidence and are totally false. Indeed although it is not recorded in the written notes produced by the Trust Mr Esterman frequently stated during my disciplinary hearing that St George's has not balanced its books. This is a completely untrue statement and I suspect that it has been withdrawn from the written notes as the Trust know it is yet another allegation that cannot be substantiated. However, my solicitor Paddy Quill is happy to state on oath that it was an allegation that was made more than once in his presence by Mr Esterman and if you look at the handwritten notes page 18 taken by the Trust you will see that this allegation is clearly recorded even though it did not appear in the official written notes produced by the Trust. The relevant reference is at line seven and states, "IP has said to me we can't find any more savings, you will have to find the money. On more than one occasion led not balanced books. IP had a negative view of his resp. His budget holders can do anymore, HA/PCG's problem, not sustainable. IP - when did we not balance? ME - month by month, it start with overspend whittle it down and balance from non-recurring monies capital". Again this is an example of Mr Esterman making a totally false allegation about me, which is recorded in the Trust's own handwritten notes. If the St George’s accounts had at any time not balanced it should be an easy task for Mr Esterman to state the year or month that this happened and for Mr Hamilton to have had the accounts of that period checked to verify whether Mr Esterman was telling the truth. As Mr Hamilton confirmed at my internal hearing, although he was the investigating office he carried out no such check.
The last issue that needs to be raised in connection with Melvyn Esterman is that Miss Mcloughlin said in her evidence that she relied on his evidence to indicate that my approach was to distance myself from other key external stakeholders such as Primary Care Trusts. As soon as Mr Esterman had no influence in the placement of financial work in the local NHS Economy my directorate immediately supplied an interim finance director to the Nelson PCT (as confirmed by Michelle Salter in evidence she gave to the internal hearing) and then won in competitive competition with others, the contracts for providing internal audit services to all the local Primary Care Trusts which complemented the fact that we already provided this service to the local NHS Mental Health Trust. Miss McLoughlin was aware of this achievement and in fact acknowledged it in an e-mail to me in May 2002 , where she stated that she would thank me for these successes at the next Public Board Meeting. It is surely inconceivable that all these NHS organisations would place these important pieces of work with my directorate if my relationships with them were as bad as Mr Esterman, Mr Hamilton and Miss McLoughlin suggest. It is again a clear indication that Mr Esterman’s evidence against me was entirely false and clearly without any foundation whatsoever and that Miss Mcloughlin has only accepted it because she was desperate to remove me from my post because of the protected disclosures I had made. I do not believe that any fair minded chairman could have come to any other conclusion about Mr Esterman’s evidence other than that it was totally false and should have been totally disregarded.