Ministers accused of 'institutional corruption on a grand scale' over ferry fiasco transparency

Scottish Conservatives' shadow transport secretary Graham Simpson has now expressed frustration at a failure by business minister Ivan McKee to adequately answer questions over the transparency row in the Scottish Parliament while he described the debacle as "institutional corruption on a grand scale".

Mr McKee, meanwhile, has continued to repeat the Scottish Government line that they have been "absolutely transparent" about the decision making process and the information which informed those decisions.

Audit Scotland have said new parliamentary reviews are required to fully learn the lessons over what went wrong as the Jim McColl-fronted Ferguson Marine went into administration in August, 2019 with the ferries undelivered.

Audit Scotland representatives have also suggested there should also be a new MSPs probe over the reasons why ministers decided to proceed with awarding the controversial £97m order to Ferguson Marine without mandatory refund guarantees from the shipbuilder.

READ MORE: Auditors call for new reviews over Scotland's ferry fiasco after transparency 'failure'

Two ferries languishing in the now nationalised Ferguson Marine shipyard remain at least five years late with costs escalating to over a quarter of a million pounds while doubts have previously surfaced over whether they will ever see service as faults continue to be uncovered.

In the Scottish Parliament, Mr McKee batted away claims of corruption as concerns escalate over 'missing' documents related to why  ministers sanctioned going ahead with the calamitous ferry contract despite concerns raised by the government’s ferry procurement body, Caledonian Maritime Assets Limited (CMAL) over the lack of financial guarantees that placed them at risk.

The auditors' examination of the issues said there was no documented evidence to confirm why Scottish ministers were willing to accept the risks of awarding the contract despite the concerns.

It has been suggested that the transparency failure was a breach of the Public Finance and Accountability Act.

Auditor General Stephen Boyle has said there should be a further examination over what went wrong with the project to ensure lessons are learnt while expressing "frustration" that they were not provided with all the relevant evidence relating to the deal.

The Herald on Sunday revealed that taxpayers lost over £80m after ministers provided a £106m special incentive to ensure that the contract could go through without the normal financial safeguards from the shipbuilder.

The deal was set up to ensure the CalMac ferries contract was given to Ferguson Marine in October, 2015, to reassure CMAL who had "severe misgivings" over the yard's inability to provide builder's refund guarantees were not out of pocket if anything went wrong.

The new transparency row surfaced as Scottish Labour's shadow transport secretary Daniel Johnson questioned Mr McKee about whether there was due diligence over the 'lost documentation' related to the Ferguson Marine ferry contract. 

Mr McKee said: "There is a clear audit trail of key decisions and the basis on which they were taken," he said.

"And in relation to the documents mentioned in the Audit Scotland report, a thorough search has been conducted and no ministerial response...has been located. As outlined in the Audit Scotland report we have committed to a formal review on the completion of the vessels."

Mr Johnson responded: "I don't quite know how to respond to that because on Thursday, the Auditor General expressed frustration at the lack of records of ministerial decisions regarding the waving of refund guarantees that would normally be expected in such a contract set for the ferries. Written authority from ministers should be required for this yet no record could be obtained by Audit Scotland.

"The Auditor General describes this as for frustrating. He is being charitable. It is at best negligent and incompetent. At worst, it could be unlawful, breaching the [Public Finance and Accountability (Scotland) Act] and or the Freedom of Information Act.

"So will the minister commission an investigation into this matter to establish the facts and critically whether or not the law has been broken?"

Mr McKee said that the Scottish Government, its agency Transport Scotland, CMAL and state-owned Ferguson Marine (Port Glasgow) have all "co-operated fully" with Audit Scotland and the rural economy and connectivity committee inquiries and "this included provision of documentation, provision of a detailed written statement, as well as interviews with key personnel and attendance by both our officials and Scottish ministers. We've also committed to undertake a review, as I said earlier, on completion of the two vessels".

Mr Johnson responded: "The problem is for transparency the documents need to be there and they are not and the law requires it. And sadly, this is not an isolated incident neither in the context of the sorry saga of the two ferries nor other Scottish government interventions.

"You could call this many things, negligent, incompetent, deficient, but when these decisions have all been willful and deliberate, the word I would use is corrupt, perhaps not for individual gain, but a corruption of the process for party political games, contrary to public interest. So if that's not the word the minister would use, what word would he use?"

The business minister revisited his earlier answers saying: "As I've already indicated, a thorough search was taking for those documents and no ministerial response to that submission has been located.

"But what is important to recognise.. is that Ferguson seven years after those events is still employing hundreds and hundreds of people, still contributing to the local economy... and it's keeping commercial shipbuilding on the Clyde alive.

"That's why it's important. Supporting Scottish industry."

Mr Simpson interjected: "This is institutional corruption on a grand scale. Ivan McKee is showing breathtaking arrogance if he thinks there's been any, any transparency over this. This is the SNP's secret Scotland at its worst. Now, let me quote you another law. The Public Records (Scotland) Act 2011 , which requires the Scottish Government to have a record management plan. And the Act requires the plan to identify the individual responsible for the management of the department's public records. So who was the person in this case? I want the name. And why didn't they ensure that there was a record of the decision making process?"

Mr McKee again sought to repeat his earlier statement saying: "We've been transparent. We have published the documents that are available. We have complied with the inquiries that have taken place. We've committed to undertaking a review and completion of the vessels. "So we are being transparent we are being open.

"What is at the core of this is a Scottish Government's absolute commitment to supporting Scottish and Scottish jobs, and then making sure that we continue to do so. Whereas the parties opposite clearly, are not concerned at all about the people that work in these sites and supporting their employment."

Mr Simpson added: "What is the point of members coming to this chamber asking straight questions, when the minister completely ignores the question and Answers something else? What is the point?"

The First Minister said last month that ministers would "learn lessons" from the delays and overspends of two ferries at the now state-owned shipyard.

Ministers have previously rejected the "catastrophic failure" conclusion of a previous MSPs inquiry into the procurement of the ferries.

The 129-page rural economy and connectivity committee report two year ago, called for a “root-and-branch overhaul” of the ferry procurement process, declaring that established procedures are “no longer fit for purpose”.

The two ferries, Glen Sannox and an unnamed vessel known as Hull 802 will be delayed until at least next year – five years later than planned.

The first ship was meant to enter service on the Arran route in the summer of 2018 but is not expected to be ready until next year at the earliest - five years late. Hull 802, destined for an Outer Hebrides route, has gone the same way. The latest estimated cost for both ships is at least £250m off an original fixed contract price of £97m.

Ministers approved a £106m public money loan with special provisos to CMAL to protect them and would normally have been expected to pay off the loan over 25 years using revenue it generates from the fees they get from the lease of vessels like CalMac's ferry fleet and harbour access charges.

But the £82.5m that had been drawn down from the loan became a taxpayer loss as CMAL says it was "eliminated" after Ferguson Marine went into insolvency.