ORKNEY Islands Council announced yesterday that its director of social

work, Mr Paul Lee, is to resign.

The council said it had agreed a settlement with him of #57,000, that

all disciplinary proceedings against him would now be dropped, and that

neither Mr Lee nor the council would make any further comment on the

matter.

Mr Lee, 44, was suspended by the council last month for his role in

the action which saw nine children taken into care in February 1991 from

four families on South Ronaldsay, amidst allegations of organised abuse.

His suspension and disciplinary action were recommended by the

council's own internal investigation committee, which had been set up

after serious and fundamental criticisms of the social work department

in Lord Clyde's inquiry report last October.

Last night his resignation was being welcomed by parents and others on

South Ronaldsay, but the financial settlement was criticised.

''It's very wrong: it wouldn't happen in any other profession,'' said

Dr Helen Martini, chairwoman of the South Ronaldsay Parents' Action

Committee.

One father whose two children were taken into care said last night:

''I never imagined that he could come back as director of social work.

But if he has received a golden handshake it is not moral. At least now

that he is a free agent there will be no obstacle to him coming and

apologising to the four families.''

He said that the parents were still pursuing their civil action

because of their suffering. It was not yet clear who the action would be

against.

The Rev. Morris MacKenzie, the Church of Scotland minister at St

Margaret's Hope, who was named as a central figure in the original

allegations of child abuse, said: ''I thought that one way or another he

had to go.

''It is a step forward but by no means has it cleaned out the Augean

stables. There are a number of others who were very much involved, both

in the social work department and the police. I think their roles should

be thoroughly investigated.

''The unfortunate thing, of course, is that because of the degree of

secrecy in this, and the limited remit of the Clyde inquiry, there is so

much that has still to come out. That is why I have always pushed for a

further inquiry which would get at all the facts.''

Dr Martini said: ''Mr Lee should have resigned two years ago. While I

welcome his going, there seems to be no attempt to look and learn from

the mistakes that have been made.

''Nobody yet is saying sorry about the suffering that has been caused

to these families. Although he was the director, there is a bit of can

carrying here. The police and the RSSPCC have got off very lightly. They

all need to examine their consciences. The Government must also take

action to ensure that proper training is given to all people working

with children.''

Mr Jim Dick, Highland region's director of social work, who is the

president of the Association of Directors of Social Work in Scotland,

said last night: ''This is obviously a very personal matter for Paul Lee

but I am pleased it has finally reached a conclusion.''

Mr Lee, originally from Leeds, was appointed to the job in Orkney in

1990, having been in charge of Gordon district of Grampian Regional

Council's social work department since 1986. He had earlier worked as

divisional social work officer in Caithness and Sutherland.

His appointment was originally seen as a step towards achieving some

improvements with the local social work department, which had earlier

been criticised by the Scottish Office after complaints about the

islands' residential children's home.

In the weeks that followed the children's care orders, Mr Lee became

the subject of international publicity and his apparently suspicious

attitude to the media was seen by many as contributing to the often

one-sided treatment the story was afforded.

Lord Clyde's inquiry report delivered some stinging criticisms of the

Orkney department and the procedures it adopted before taking the nine

children into care. Lord Clyde, however, did go out of his way to say:

''I have found that those principally involved did act in good faith and

if what was done was mistaken, at least it was honestly mistaken.''