A “SHROUD of secrecy” prevented city leaders from learning the full extent of the industrial dispute that derailed the Edinburgh trams project, an inquiry has heard.

Former council leader Jenny Dawe revealed how contract confidentiality meant elected politicians were denied information about the 2009 fall-out between contractors and Transport Initiatives Edinburgh (TIE) – the local authority arm’s-length external organisation running the project.

Dawe, who headed the council from 2007 to 2012, was the first to give evidence before the multimillion-pound probe into what went wrong with the city’s tram scheme, which finished years late and seriously over budget.

She said she later learned of memos suggesting councillors may have been “kept in the dark” about some elements of the dispute between TIE and the BSC consortium, but did not believe decision-making had been hampered.

On the impact of confidentiality clauses, Dawe said: “I think I found it most frustrating when it was concerning the dispute resolution process.

“The information we were getting was that the dispute resolution was going in favour of TIE – they described it as a win or lose situation; we were winning and the other side was losing. It soon became obvious that that really wasn’t perhaps quite what the situation was. It would have been useful to have been given a bit more information at times.

“Also about the costs and the timing, very often we were told, ‘oh no, we can’t tell you that,’ particularly when matters reached what might be called a stand-off with the consortium. We were basically told: ‘No, we can’t give you that information’.

“The implication was ‘you can’t be trusted not to tell the consortium what we, TIE, are thinking and so we’re not going to give you information’.”

Dawe said she formed the impression that “perhaps TIE were being bullish about things when they shouldn’t have been”.

She went on: “We did not have all the detailed figures because we were told the contract did not allow either party, TIE or the consortium, to actually discuss any matters of dispute resolution with anybody outside the two contract holders.”

The former Liberal Democrat politician told the inquiry it was “extremely disappointing” when the dispute began, stopping work on Princes Street and elsewhere.

Stating that it was “quite difficult” to find the cause of the hold-up, she went on: “We were certainly informed by TIE that there was a stand-off and that the contractor was demanding more money, which immediately called into question just how much of a fixed-cost contract it was.”

The probe heard how, in February or March of 2009, Dawe received a phone call from then-transport minister Stewart Stevenson, calling for a quick resolution.

She said she found it “surprising” that he had rung her at home, adding: “Clearly it was of great importance to the Scottish transport minister and the other ministers that things could get moving. I think he was just adding his voice and saying, ‘look, we’re aware of this situation and we didn’t give £500 million for a few holes in the ground’.”

The inquiry, which is expected to last for months, continues today.