A German businessman who had grand plans set up his company in a Scottish castle with thousands in grants from public funds, ended up bust working from the bedroom of a Highland cottage and owing his workers thousands of pounds.

Now an industrial tribunal has ordered 45-year-old Karl Hummel to pay single mother Jan McCracken, 31, and the Bavarian's former secretary, 28-year-old Kathryn McGregor, a total of more than #5000 wages due them.

The tribunal in Inverness heard the two women tell of bounced pay cheques, broken promises, excuses, and a trail of debt from Mr Hummel, who transferred his company organising business conferences and seminars to Scotland two years ago.

When the father-of-three set up his headquarters in Castle Grant, on the outskirts of Grantown-on-Spey, the local enterprise company hailed it as a #270,000 development expected to create 13 jobs.

Moray, Badenoch, and Strathspey Enterprise announced it was providing #50,000 towards start-up costs.

However, by last March, Mrs McCracken was not being paid in the new premises in the village of Nethybridge. She told the tribunal: ''He would avoid the subject of paying us. He would either not come into the office or go away to Germany.''

The women hung on working for many weeks for Alba Bavaria, hoping they would eventually be paid.

Mr Hummel, who lives with his wife Barbara and family in a house at Dulnain Bridge, said he owed the women wages - but only a few hundred pounds.

He said: ''I blame my failure on the Highlands and Islands Enterprise and the local enterprise company pulling the rug from under me financially and, when they did, the bank did as well.''

The tribunal ordered him to pay Mrs McCracken #3730 and Miss McGregor #1600.

Karl Hummel claimed that the enterprise company let him down Pictures: PETER JOLLY