SNP ministers have been accused of a “scandalous dereliction of duty” over the operation of Scotland’s state-owned £2billion investment bank.

Under the Holyrood law which created the bank, ministers “must establish and maintain” a group to advise them on the bank’s “conduct and performance”. 

However, more than three years since the Scottish National Investment Bank (SNIB) opened in November 2020, ministers have still not created the “vital” body.

Last week, SNP Wellbeing Economy Secretary Neil Gray told a Holyrood committee it was “still being worked on” with an update “in due course”.

Despite the lack of a board, the Bank has already committed more than £508million in spending and been allocated another £176m in funding for 2024/25. 

The Bank has also been buffeted by controversies, including its first £235,000-a-year CEO Eilidh Mactaggart quitting after just 15 months and getting £98,000 in lieu of notice, and the Bank losing £9m after investing in the Scottish Government’s failed deposit return scheme. 

Ironically, three of the Bank’s own board, including Chairman Willie Watt, sit on the advisory groups of other institutions.

After the Herald on Sunday asked the Government for comment, officials mistakenly copied us into their emails, revealing work on the advisory group may not begin “actively” until next month.

One wrote: “We’re going to put advice to ministers on the Advisory Group asap next week, recommending that commencing in February officials will actively take forward work to establish the group.” 

Announced by then First Minister Nicola Sturgeon in 2017, the SNIB's is intended to provide “patient capital” for companies which might otherwise struggle to find it.

Its three-part mission is to help achieve a just transition towards Net Zero by investing in the green economy, investing in run-down places to spur regeneration, and supporting innovation in industry. 

Ministers have pledged £2bn of funding for the Bank over 10 years.

The original Scottish Government Bill to set it up did not include an advisory board.

However then SNP finance secretary Derek Mackay agreed to its inclusion after it was proposed by Labour MSP Dame Jackie Baillie, telling MSPs he was “happy to support” it. 

Section 29 of the Scottish National Investment Bank Act now states: “The Scottish Ministers must establish and maintain an advisory group to provide them with advice on the Bank’s objects, conduct and performance.” 

The group must be given "sufficient resources by the Scottish Ministers to carry out its functions” and include “at least one member appointed to represent the interests of trade unions”.

Although the advisory group appears in the Bank’s governance chart, which shows it feeding advice directly to ministers, it has yet to materialise in real life.

The Herald:

Tory MSP Douglas Lumsden, who has queried ministers at Holyrood on whether the bank is "operating illegally", repeatedly asked for updates using written questions last year.

In July, Economy Secretary Neil Gray said work was “underway to create the advisory group” and the Government was “considering options for remit and membership”.

In August, he said officials were “finalising decisions” on membership and how often it would meet.

But in November, another answer from Mr Gray suggested progress had stalled.

“Details such as membership, recruitment and appointment processes, remuneration and meeting frequency remain under consideration,” he said. 

He promised an update sometime in 2024, but did not offer even an approximate date.

Last week, when Mr Lumsden asked him about the issue in committee, Mr Gray said: “The advisory board is still being worked on, and there will be an update in due course.”

Pressed on what “due course” meant, Mr Gray said: “The advisory board is a commitment that we hold, and we will stick to it. SNIB is in a period of transition from its establishment only a short period ago to becoming, we hope, self-sustaining.  During that period, there are points that we need to establish, including on the advisory board.”

Mr Lumsden said the delay was a “scandalous dereliction of duty”.

He told The Herald on Sunday: "It is clear that there needs to be greater transparency around the Scottish National Investment Bank. 

“Huge amounts of taxpayers’ money is being invested without the legally required advisory board in place.  

“Questions have been asked around conflicts of interest on lending decisions and ministerial involvement. 

“The Scottish Government must act to have the proper governance structures in place as soon as possible."

Dame Jackie added: “It’s incredibly disappointing that the Scottish Government have dragged their heels for so long establishing an advisory group which would help with progress at the Scottish National Investment Bank.

“It was always anticipated that the group would have experts in the field and representatives of trade unions on it, yet ministers have moved at a snail’s pace to do anything about it.”

In its official statement, the Government said: “It was entirely appropriate that time was given for the Scottish National Investment Bank to become fully established before work to create an advisory group got under way.

“The Wellbeing Economy Secretary has made it clear that work is now underway to establish the advisory group, with details to be announced in due course.”