A SCOTTISH Labour council chief has been found to have broken the rules by failing to declare that a Labour peer was his landlord, The National can reveal.
Inverclyde Council leader Stephen McCabe was found to have broken the councillor’s code of conduct by failing to declare his relationship with Labour grandee Willie Haughey, who gave him discounted rent.
The Sunday National exposed the link between the two, which resulted in McCabe being reported to the Ethical Standards Commissioner.
He was initially referred to the commissioner by two individuals, and then referred himself a month after the story broke.
Now, a copy of the commissioner’s report shared with this paper has shown that McCabe has been rapped for failing to come clean about his connection with Haughey.
However, it cleared him of receiving a “gift” in the form of discounted rent from the peer, whom McCabe (below) had recommended for the influential position of chair of the Greenock Town Board, with the report saying that this pertained to his “private life”.
McCabe told the commissioner he had approached Haughey in 2019 to see if the peer “could offer assistance” so he could remain at his home.
He was facing the prospect of having to move home after the breakdown of his marriage, which McCabe told The National would have caused intense distress to his autistic son.
The Scottish Labour councillor claimed that Haughey “was the only person he knew of who had the financial capacity to assist” and a deal was struck whereby one of the peer’s associates, Edward Stopps, bought it for £50,000 under the market price.
“This was so that the respondent’s [McCabe’s] rent was lower,” the report found. It was later transferred to Haughey’s firm, Stevens Property Development Co Limited.
Inverclyde Council’s monitoring officer said that because this arrangement was akin to a sale and lease back scheme, it should not be considered “a gift” because those are perceived to be “far riskier and potentially disadvantageous for the tenant than the landlord”.
The report said: “The respondent [McCabe] failed to declare an interest when he informally suggested that the council consider Lord William Haughey as a potential independent chair for the non-remunerated position as chair of the Greenock Town Board despite there being a financial connection in that Lord Haughey is the director of a company which owns and lets the respondent’s property to him.”
But it cleared McCabe of the second complaints made against him on the nature of his arrangement with Haughey (below).
The report said: “Having considered the information as set out above from all parties, the commissioner is of the view that the sale of the respondent’s property does not relate, in any way, to the respondent’s councillor duties.
"The sale of his property occurred in his private life while acting in a personal capacity and therefore, the [councillor’s code of conduct] would not apply.”
It added: “The respondent sold his property for £50,000 less than that for which the property had been valued. This was an agreement made by the respondent and [Stopps]. This was so that the respondent’s rent was lower.
“Therefore, the commissioner is satisfied that there was no gift involved, given the respondent had given up equity in return for the reduced rental amount. The commissioner is also of the view that it is not for this office to determine whether the rent that the respondent pays is sufficient. This is a matter for the landlord to determine.
“In addition, at the time of the sale of the property, and during the time the respondent rented his property from [Stopps], [Stopps] had no business dealings with the council. Accordingly, there was no risk of any preferential treatment towards [Stopps] in return for the lower rent.”
The report also noted that Haughey had no business interests in Inverclyde.
McCabe told The National: "When I became aware in December 2024 that I may have inadvertently breached the councillors' code of conduct I immediately took the highly unusual step of referring myself to the Ethical Standards Commissioner, more than seven weeks before complaints were submitted by the other two complainers.
"I co-operated fully with the investigation by the Ethical Standards Commissioner, including sharing very personal information about my marriage break-down and my son’s mental health.
"I accept the findings of the commissioner’s report and apologise for my inadvertent breach of the code of conduct. During 30 years’ service as a councillor, I have never before breached the code of conduct. I have received refresher training from the council’s monitoring officer on the code and on managing personal connections.
"I note that the Ethical Standards Commissioner has submitted his report to the Standards Commission for Scotland, and I would hope that considering my self-referral, apology and the refresher training I have undertaken, the Commission will be satisfied that I made a genuine mistake.
"I am pleased that the Ethical Standards Commissioner has found that I did not breach the code of conduct in relation to the sale of my house."
Haughey previously told The National: " I got the deal of the century, no that’s a bit heavy but right, I got it for less than it was worth but it had to be what he could only afford to pay as a mortgage.”
It is understood the house, sold for £240,000, is now valued at around £350,000.
