Ministers have come under scrutiny for allowing the Scots water industry financial watchdog at the centre of a public spending scandal to give its shamed chief executive a golden goodbye of over £90,000.
Chief executive of the Water Industry Commission for Scotland (WICS) Alan Sutherland, one of the highest paid public sector workers, was forced from his role with immediate effect in December after Audit Scotland found "unacceptable use" of public funds by senior officials at the water industry watchdog.
It has been confirmed that the disgraced £182,500-a-year executive was given six months salary in lieu of notice which the watchdog says "he was legally due".
WICS say that its board agreed to pay the money as long as Mr Sutherland left at the end of December and say they took "extensive legal advice and gained approval from the [Scottish Government] sponsor team for that approach".
The alternative would have been him continue to work as chief executive until June this year.
READ MORE: Scots financial watchdog chief spent £400 on dinner for two
The Scottish Parliament's public audit committee is requesting that WICS provide a copy of the approval for Mr Sutherland's payment received by the Scottish Government.
Mr Sutherland left his role after Audit Scotland said that WICS needed retrospective approval from the Scottish Government for around £80,000 of spending including £77,350 for the chief operating officer, Michelle Ashford to attend a training course at Harvard Business School in Boston, USA.
Also condemned was a spend of £2,600 on £100 Christmas gift vouchers for each member of staff.
The auditor identified "widespread issues" with expense claims being submitted and approved without supporting itemised receipts.
The expenses claims exceeding set rates were found to have been submitted and approved without itemised receipts, including by the chief executive Alan Sutherland. One claim was for a dinner where the cost per head exceeded £200 per person. This, and other claims, included the purchase of alcohol, the audit said.
The watchdog ignored Scotland and concentrated on the US when sending Ms Ashford on two £5000 Transatlantic flights for training.
It later emerged that a Scottish Government official signed off on what a public spending auditor has found was "unacceptable use" of public funds by running up bills dating back to 2018/19 over perks given to staff including leaving lunches and birthday and Christmas gifts.
The official was "content with the appropriateness of the nature of the spend" and that he was "content to agree retrospectively the procurement approach".
WICS went to the Scottish Government for retrospective approval for spending on November 2, after it was highlighted by Audit Scotland and was described as an "oversight".
READ MORE: Scots watchdog using public funds to settle 1000s in unpaid staff tax
Audit Scotland has said that the the financial management and governance issues found at the commission, which is the economic regulator of Scottish Water, fell "far short of what is expected of a public body".
In approving the expense, a Scottish Government official said approval was "essentially based on the fact that the money had been spent, so there was no material benefit, at that point in challenging it".
Jon Rathjen, the Scottish Government's deputy director of water policy said: "On the Christmas gifts, I accept this was an oversight and do not think it is proportionate to try and recover the balance but would highlight that any such gift going forward must be contained within [an] agreed threshold."
The email to then chief executive Alan Sutherland, seen by the Herald, went on: "On the training costs, I rather agreed that this is a unique training offering and can see why a single tender approach and as such despite board being aware it would have been appropriate to inform the Scottish Government.
"As I imply, had I been informed, I would have agreed with the approach as I think this is not something where open tender would have returned better value given the very specific nature of courses in this field.
"Due diligence had been carried out and the most suitable product selected and as such, given the board was content with the appropriateness of the nature of the spend, I am content to agree retrospectively to the procurement approach."
The public audit committee has asked Audit Scotland what consequences, if any, there may have been on its opinion on WICS's financial statements had the Scottish Government refused to provide retrospective approval for the spending.
One of the latest concerns surrounded Mr Sutherland entertaining a representative of the New Zealand water industry at the award-winning Champany Inn in Linlithgow in October, 2022. Auditors say there was no submitted receipt for the spending so there was no way of knowing what the split was between food and drink.
The former chief executive had 47 expense claims totalling nearly £4,500 from April 2022, to October 2023 that were not supported by itemised receipts.
And according to Audit Scotland one in eight expenses claims submitted by the senior management team did not have itemised receipts - totalling £9,660 - and it largely surrounded the entertaining of foreign visitors.
Audit Scotland has said there was "very significant concern" over the lack of receipts saying that they "do not see this type of activity in our audits".
Most of the expenditure related to what was termed "business entertaining costs" and was connected to food and drinks with international delegations.
They say that there were multiple foreign trips, particularly to New Zealand as part of the Hydro Nation strategy and the provision of services to the water industry there as it was going through its evolution.
That work started with a project for two of the country’s water and sewerage companies - Wellington Water and Watercare, the largest water and sewerage provider in the country.
Hydro Nation is a Scottish Government initiative aimed at building international partnerships, sharing knowledge and undertaking joint research.
And WICS has previously said that they found that water sectors the world over were facing many of the challenges face in Scotland, such as planning for climate change and ensuring that the industry’s infrastructure will be fit for the future.
The Scots water industry financial watchdog is expected to use public funds to settle the personal tax issues as a result of the spending.
Earlier this year it emerged that Mr Sutherland was given a £14,000 payment for some of the annual leave he did not use.
Scottish Water operates under an annual borrowing limit set by the Scottish Government. The annual borrowing limit controls the amount by which Scottish Water can increase externally sourced finance.
As at March 31, 2023, government loans totalled £4.5 billion.
Net new borrowing by Scottish Water from the Scottish Government was planned to be to the tune of £196m in 2023/24 to carry out its activities.
The commission, which employs 26 staff, received income of £5.288 million during the year, including levy income of £2.279 million from Scottish Water, £1.718 million from licensed providers, and £1.185 million from international work related to the Scottish Government’s Hydro Nation strategy.
The WICS is responsible for determining the level of revenue Scottish Water needs to collect through customer charges in order to deliver the objectives set for it by Scottish Ministers.
It has a duty to determine the ‘lowest reasonable overall cost’ that Scottish Water will have to incur to meet ministers’ environmental, quality and service objectives for the industry.
The post of Water Industry Commissioner for Scotland was created in 1999 and Mr Sutherland was appointed to the role.
His remit was to advise the then Scottish Executive on the charges that the water authorities could and should set for their customers.
After the Water Industry (Scotland) Act (2002) the Commissioner continued in this advisory role, though this time it was the newly formed Scottish Water that he would advise.
A Scottish Government spokesman said: “The departure of the CEO and payment was a matter for the WICS Board to decide.”
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