A public body that spent more than £77,000 to send a senior executive to take a course at Harvard University in the US has defended the decision, by telling MSPs it invests in its staff to stop them from being “poached”.
The Water Industry Commission for Scotland (WICS) – which regulates Scottish Water – was accused of “poor governance” with public funds in a report by the Auditor General last year, and today faced scrutiny at Holyrood.
Its representatives insisted the culture had changed at the regulator, as they struggled to justify questionable spending highlighted in last year’s audit – including £2,600 to provide every staff member with a £100 gift card for Christmas and £402 on a dinner for two.
The report by the Auditor General found that the “financial management and governance issues found at the commission fall far short of what is expected of a public body”.
After the report, WICS chief executive Alan Sutherland quit with immediate effect in December and was awarded six months’ pay in lieu of his contractual notice period. While an exact figure for this was not provided, in 2021 the commission said the chief executive officer’s annual salary was more than £165,000.
A total of £77,350 was claimed for the Harvard Business School course attended by chief operating officer Michelle Ashford, which included business class flights to Boston.
Approval was only sought afterwards for the expenses, despite Scottish government approval being required in advance for any service above £20,000.
‘We find it difficult to compete with private sector’
Holyrood’s public audit committee criticised the money spent on the Harvard course during its meeting on Thursday.
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MSP Jamie Greene questioned whether the organisation had been “running like a private sector business instead of a public sector body”.
Professor Donald MacRae, chair of the board at WICS, said the board should have been asked for approval first and accepted that the value for money for the Harvard course was “not fully demonstrated and the business case was inadequate”.
However, he explained: “WICS is a small public body operating in a very complex and specialised area, and we do find it difficult to compete on salaries with the private sector and actually to retain staff.
“And our staff are frequently subject to approaches to being poached, actually.
“Now, we recognise that our staff are our most important asset, and we take the view that we have to invest in them. And we have to invest in them by offering advanced management training.”
Image: Professor Donald MacRae, chair of the board at WICS. Pic: Scottish Parliament TV
Despite Professor MacRae’s argument about retaining staff, the committee also heard no conditions were put in place ito ensure Ms Ashford stayed with WICS for a certain period of time after attending the course in the US.
Going forward, Professor MacRae said WICS will “still adhere to the policy of investing” in its staff.
But he added the organisation will look for alternative training “within Scotland or the UK at much lower cost” in the future, to deliver “better value for money”.
Richard Leonard MSP, committee convener, accused Jon Rathjen, deputy director for water policy at the Scottish government, of being “complicit” in the failures at WICS, in that he did not challenge the spending on the Harvard course.
Image: Richard Leonard MSP. Pic: Scottish Parliament TV
Mr Rathjen accepted he “made an error of judgement” in relying on an assurance from the WICS chief executive.
He said WICS had approached the Scottish government to approve the spending retrospectively and refusing it would not have achieved anything.
Image: Jon Rathjen, deputy director for water policy at the Scottish government. Pic: Scottish Parliament TV
‘Nice work if you can get it’
With regards to other spending at WICS, MSP Graham Simpson raised a £402.41 meal at the Champany Inn in Linlithgow, West Lothian, where then chief executive Mr Sutherland was dining with an official from the New Zealand government in October 2022.
David Satti, who has recently become the interim accountable officer at WICS, said no itemised receipt had been provided and the expense had been covered on an office credit card, adding: “We have no way of knowing the exact items that were purchased.”
Image: David Satti, interim accountable officer at WICS. Pic: Scottish Parliament TV
Professor MacRae said the meal had been wrongly coded as “subsistence” but nevertheless had been “instrumental” in securing income of £1.2m from New Zealand.
Mr Simpson was also told that WICS workers sent to New Zealand were allowed to book business class as the flight is over six hours.
The MSP sarcastically responded: “Nice work if you can get it.”
Colin Beattie MSP questioned whether it was “unusual” for a public body to give staff members Christmas vouchers.
Image: Colin Beattie MSP. Pic: Scottish Parliament TV
In regards to the £100 gift cards, which exceeded the £75 limit for gifts, Professor MacRae said: “You must remember the situation we were in, a situation where we were all operating remotely and still in the process of recovering from COVID.
“That was the background to the decision.”
It was heard that WICS has no intention to give out gift cards to staff members at Christmas in the future.
At the start of the meeting, Professor MacRae said there had been a “change of culture and focus on value for money” since the Audit Scotland report.
But MSP Willie Coffey delivered a damning verdict on the spending at WICS, saying: “I’ve been a member of the parliament, in the audit committee on and off for 17 years, and I have to say to you colleagues that this is one of the worst sessions I’ve ever participated in.”
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Alex Mashinsky, the founder and former CEO of the now-defunct cryptocurrency lending platform Celsius, faces a 20-year prison sentence as the US Department of Justice (DOJ) is seeking a severe penalty for his fraudulent activity.
The US DOJ on April 28 filed the government’s sentencing memorandum against Mashinsky, recommending a 20-year prison sentence due to his fraudulent actions leading to multibillion-dollar losses by Celsius customers.
The 97-page memo mentioned that Celsius users were unable to access approximately $4.7 billion in crypto assets after the platform halted withdrawals on June 12, 2022.
“The Court should sentence Alexander Mashinsky to twenty years’ imprisonment as just punishment for his years-long campaign of lies and self-dealing that left in its wake billions in losses and thousands of victimized customers,” the DOJ stated.
Mashinsky’s personal benefit was $48 million
In addition to listing massive investor losses resulting from the Celsius fraud, the DOJ mentioned that Mashinsky has personally profited from the fraudulent schemes in his role.
As part of his plea in December 2024, Mashinsky admitted that he was the leader of the criminal activity at Celsius, that his crimes resulted in losses in excess of $550 million, and that he personally benefited more than $48 million, the authority said.
An excerpt from the government’s sentencing memorandum against Celsius founder Alex Mashinsky. Source: CourtListener
The DOJ emphasized that Mashinsky’s guilty plea showed that his crimes were “not the product of negligence, naivete, or bad luck,” but rather the result of “deliberate, calculated decisions to lie, deceive, and steal in pursuit of personal fortune.”
This is a developing story, and further information will be added as it becomes available.
The concept of a Russian ruble stablecoin received special attention at a major local crypto event, the Blockchain Forum in Moscow, with key industry executives reflecting on some of the core features a ruble-backed stablecoin might require.
Sergey Mendeleev, founder of the digital settlement exchange Exved and inactive founder of the sanctioned Garantex exchange, put forward seven key criteria for a potential “replica of Tether” in a keynote at the Blockchain Forum on April 23.
Mendeleev said a potential ruble stablecoin must have untraceable transactions and allow transfers without Know Your Customer (KYC) checks.
However, because one of the criteria also requires the stablecoin to comply with Russian regulations, he expressed skepticism that such a product could emerge soon.
The DAI model praised
Mendeleev proposed that a potential Russian “Tether replica” must be overcollateralized similarly to the Dai (DAI) stablecoin model, a decentralized algorithmic stablecoin that maintains its one-to-one peg with the US dollar using smart contracts.
“So, any person who buys it will understand that the contract is based on the assets that super-securitize it, not somewhere on some unknown accounts, but free to be checked by simple crypto methods,” he said.
Source: Cointelegraph
Another must-have feature should be excess liquidity on both centralized and decentralized exchanges, Mendeleev said, adding that users must be able to exchange the stablecoin at any time they need.
According to Mendeleev, a viable ruble-pegged stablecoin also needs to offer non-KYC transactions, so users are not required to pass their data to start using it.
“The Russian ruble stablecoin should have the opportunity where people use it without disclosing their data,” he stated.
In the meantime, users should be able to earn interest on holding the stablecoin, Mendelev continued, adding that offering this feature is available via smart contracts.
Russia opts for centralization
Mendeleev also suggested that a potential Russian version of Tether’s USDt (USDT) would need to feature untraceable and cheap transactions, while its smart contracts should not enable blocks or freezes.
The final criterion is that a potential ruble stablecoin would have to be regulated in accordance with the Russian legislation, which currently doesn’t look promising, according to Mendeleev.
Sergey Mendeleev at the Blockchain Forum in Moscow. Source: Bits.Media
“Once we put these seven points together […] then it would be a real alternative, which would help us at least compete with the solutions that are currently on the market,” he stated at the conference, adding:
“Unfortunately, from the point of view of regulation, we are currently going in the absolutely opposite direction […] We are going in the direction of absolute centralization, not in the direction of liberalization of laws, but consolidation of prohibitions.”
Possible solutions
While the regulatory side is not looking good, a potential Russian version of USDT is technically feasible, Mendeleev told Cointelegraph.
“Except for anonymous transactions, everything is easy to implement and has already been deployed by several projects, but it’s just not unified in one project yet,” he said.
The crypto advocate specifically referred to interesting opportunities by projects like the ruble-pegged A7A5 stablecoin, unblockable contracts at DAI, and others.
Regulation is necessary but not enough, Mendeleev said, adding that the most difficult part is the trust of users who must see the ruble stablecoin as a viable alternative to major alternatives like USDT.
Elsewhere, the Bank of Russia has continued to progress its central bank digital currency project, the digital ruble. According to Finance Minister Anton Siluanov, the digital ruble is scheduled to be rolled out for commercial banks in the second half of 2025.
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