Introduction

Today, the Chief Minister delivered his sixth speech on the former Principal Auditor’s 2018/2019 Report. Throughout his analysis, he systematically addressed each of the Report’s major areas of criticism, closely examining the constitutional and statutory limits of the Auditor’s powers, the standards of fairness and balance required in public audit practice, and the legal and factual errors contained in several key sections.

In today's session, the Chief Minister turned to three remaining issues: public misrepresentations by the Opposition, comments made by two members of the Parliamentary Reform Commission, and the section of the Report concerning ex-gratia payments. He explained that the criticisms advanced by the former Principal Auditor and repeated publicly by the Opposition were inaccurate in fact, flawed in law, and inconsistent with long-established administrative practice.

Opposition Misrepresentations

The Chief Minister rejected claims by the Opposition that the Government sought to limit the independence of future auditors or conceal wrongdoing. He explained that the proposed legislative amendment would clarify the existing constitutional position by aligning Gibraltar’s audit framework with modern United Kingdom standards. Under those standards, auditors are restricted to examining legality and propriety of expenditure and are expressly precluded from commenting on matters of policy, which fall within the exclusive competence of Parliament and ministers.

He noted that the Opposition’s argument inverted the truth. Rather than narrowing oversight, the amendment would codify the constitutional boundaries that have always existed. The Chief Minister observed that the former Principal Auditor had departed from those limits by introducing commentary of a political nature into what should have been a professional and impartial report.

He also pointed out that the Opposition had ignored the evidence presented in earlier sessions of the debate, which showed that many of the operational inefficiencies identified in the Report had already been corrected. The reforms implemented at Gibraltar Industrial Cleaners Limited, for example, had addressed the very practices criticised. The Chief Minister stated that the Opposition’s reliance on the Report as a political instrument, rather than as an objective assessment, compelled the Government to set the record straight in defence of public servants and ministers who had been unfairly criticised.

Remarks by Members of the Parliamentary Reform Commission

The Chief Minister also addressed recent public comments made by Mr Vasquez KC and Mr Charles Gomez, both members of the Commission on Parliamentary Reform. He noted that their remarks did not represent the official view of the Commission, whose Chair, the Hon Adolfo Canepa, had made no such criticisms.

He observed that both individuals had stood for election to Parliament but had not been elected, and that their comments should therefore be treated as personal opinions rather than authoritative statements. The Chief Minister rejected their claim that government-owned companies lacked transparency, emphasising that this administration was the first to publish the accounts of those companies.

The Chief Minister highlighted the inconsistency in Mr Gomez’s criticism, pointing out that his law firm had received approximately £1.2 million in government-related legal fees, including for work on the McGrail Inquiry. This, he said, undermined any suggestion of opacity or misuse of public funds.

In relation to Mr Vasquez, the Chief Minister acknowledged his intellectual consistency and longstanding interest in issues of parliamentary reform, while expressing his good wishes for his recovery from illness.

Ex-Gratia Payments

Turning to the section of the Report concerning ex-gratia payments, the Chief Minister explained that such payments are a standard and legitimate instrument used by governments and organisations to resolve disputes or provide discretionary compensation where no strict legal entitlement exists. The payments are made in the public interest to avoid unnecessary litigation, reduce exposure to higher liabilities, and bring closure to complex matters in a fair and proportionate way.

The Report had alleged that ex-gratia payments amounting to £11.08 million over six years were excessive. The Chief Minister demonstrated that this figure was misleading. Once the £3.61 million Gibtelecom pension settlement—explicitly accepted by the Auditor as legitimate—was excluded, the remaining payments averaged £1.36 million per year, equivalent to 0.02 per cent of total annual government expenditure.

He confirmed that all such payments were subject to review and approval by senior officials, including the Chief Minister, the Chief Secretary, and the Financial Secretary, and were supported by legal advice. The suggestion that they were “uncontrolled” or “unrestricted” was incorrect.

The Chief Minister also explained that many of the payments achieved significant cost savings by avoiding litigation that would have been more expensive for the taxpayer. In one example, a payment of £260,000 prevented an estimated liability of nearly £400,000. He stated that these were prudent fiscal decisions, not acts of political favour or indulgence.

He emphasised that confidentiality is an integral part of ex-gratia settlements. Publishing detailed information would invite speculative claims, infringe personal privacy, and undermine ongoing negotiations. Confidentiality, he said, was a safeguard for both the public purse and individual rights, not a form of secrecy.

He reminded Parliament that ex-gratia payments had been openly reported in the Government’s Estimates and discussed in parliamentary sessions on multiple occasions. The former Auditor’s claim that they were hidden or irregular was therefore unfounded.

Legal Assessment

The Chief Minister reaffirmed that the making of ex-gratia payments lies within the lawful discretion of the executive. Judicial authorities such as Padfield v Minister of Agriculture (1969) and the GCHQ case (1985) confirm that such decisions may only be questioned if they are unlawful, irrational, or procedurally improper. None of these conditions applied in this instance.

Independent legal advice from Mr Fisher KC supported this view. Mr Fisher found that the former Auditor’s treatment of the issue was procedurally unfair, legally unsound, and beyond his constitutional remit. He described the use of speculative and emotive language such as “golden handshakes” and “uncontrolled payments” as unprofessional and contrary to accepted audit standards of balance and objectivity. Mr Fisher concluded that the section of the Report dealing with ex-gratia payments should be withdrawn.

Conclusion

The Government’s position was that the former Principal Auditor’s criticisms of ex-gratia payments were unsupported by law or fact, failed to meet the required standards of accuracy and fairness, and disregarded established administrative and accounting practice. The payments were lawful, transparent, and represented prudent management of public finances.

The Government confirmed that the motion before the House would be amended to reject the section of the Report concerning ex-gratia payments. The Chief Minister reiterated the Government’s commitment to maintaining transparency, accuracy, and fairness in Gibraltar’s public administration.