Ministers accused of 'abuse of power' by ex-Ferguson Marine chiefs deny corruption

They allege that ministers have a "vested interest" in Caledonian Maritime Assets Ltd – the taxpayer-funded company which buys and leases publicly-owned CalMac ships on behalf of the Scottish Government and have been "shielding their serious failures".

It came as ministers responded to corruption claims made to a Scottish Parliament inquiry into the construction and procurement of ferry vessels, by transport expert Roy Pedersen.

First Minister Nicola Sturgeon during a past visit to Ferguson Marine

CMAL awarded Ferguson’s, then owned by tycoon Jim McColl’s Clyde Blowers Capital, the £97m contract to build two lifeline ferries in 2015.

But the ferry-building process was blighted by delays, a doubling of costs and a breakdown in relations between CMAL and shipyard bosses.

READ MORE: Revealed: Court action plunges controversial state takeover of Ferguson Marine into chaos

Officially further delays to the building of lifeline island ferries MV Glen Sannox and Hull 802 mean that their delivery, after being due online in the first half of 2018, will be between four and five years late.

In evidence Mr Pedersen explored why the £97 million contract to build two ferries to serve Scotland’s islands was awarded to FMEL which was the highest bidder amongst the seven.

He said that "three things spring to mind", adding: "One is incompetence, another is vested interest and the final one is corruption."

In a Ferguson Marine analysis by ministers, they said that they "refute any allegation of incompetence, vested interest or corruption in the procurement process".

They added: "The explicit allegations made by Mr Pederson to the inquiry to that effect are grave in nature, and made by Mr Pedersen without the benefit of any knowledge of or insight into the procurement process applied. The Scottish Ministers also refute the inference made to the inquiry that there had been political interference in the procurement process."

The Herald on Sunday revealed in August that ministers ensured there was a “right to buy” FMEL when it provided a £30m loan two years ago knowing it was creating a path to controversial state ownership.

Confidential documents revealed that the Scottish Government knew FMEL was in danger of financial collapse two years before it undertook a state takeover in December 2019 after the major shipbuilder finally fell into insolvency.

Former management of FMEL have responded to ministers' corruption defence stating: "The definition of corruption is ‘dishonest conduct by those in power’.

"A reasonable justification for Mr Pedersen’s questions could be the apparent refusal of the Scottish Government and Transport Scotland, throughout the dispute process, to be seen to hold CMAL to account following serious concerns about their competence being raised by highly reputable experts in reports which were submitted to the Scottish Government.

"They clearly have a vested interest in CMAL and if they have been abusing their power to shield serious failures in CMAL, that would indeed be dishonest conduct."

Five months before FMEL was taken over by the Scottish Government when it went into administration, ministers were urging high-profile industrialist and then Ferguson chief Jim McColl and CMAL to thrash out a compromise to their increasingly bitter dispute over the ferries contract.

READ MORE: Revealed - Ministers' secret path to the controversial state takeover of Ferguson Marine

CMAL at the time had dismissed a claim from Ferguson to compensate the yard for cost over-runs on the project.

A previously confidential FMEL report from December, 2019, highlighted an number of reasons for "significant delays throughout the life of the contract".

They included "lack of project management, project planning and control systems, lack of integrated working, out-of-sequence activities and lack of useful management information".

Other issues included "weak" engineering processes and confusion over specification causing "significant" redesign work.

In an analysis, Mr Pedersen, a member of the Scottish Government's Ferry Industry Advisory Group, said: "These are extremely serious shortcomings of management that have led to an increase in the cost of the ships."

He suggested adoption of simpler vessel designs for the future with assembly split between Asia and Scotland, coupled with scrapping of one or both of the delayed vessels as a potential "viable way forward for a more efficiently managed FEML, the Scottish ferry fleet, our island communities".

He said: "Mistakes have been made, and a good deal of public money has been sunk in a misconceived and badly managed project, but in such circumstances, the solution is to learn from the mistakes made, know when to cut losses and pursue a more productive path in the future."

Still to be completed Glen Sannox was 'launched' at Ferguson Marine in November, 2017. Nicola Sturgeon said: It's a very emotional occasion as all ship launches are, but this is emotional in particular because of the very special place that this shipyard has in the heart of this community and Scotland."

Ministers have said they believe they were acting in the public interest in taking control of FMEL in August 2019, saving it from closure, rescuing more than 300 jobs, and ensuring that the two vessels under construction will be completed.

A report by MSPs into the procurement and delivery of the two vessels for the CalMac network slammed the process as a “catastrophic failure” last month.

In their 129-page report, MSPs called for a “root-and-branch overhaul” of the ferry procurement process, declaring that established procedures are “no longer fit for purpose”.

A secret deal to take over FMEL was hatched by the Scottish Government as company executives lodged complaints just before the firm went under, saying ministers were not serious about keeping it afloat and were keeping them out of vital discussions.

Documents show that even two weeks before FMEL went into administration, directors thought ministers were still trying to pursue what they called “the solvent solution” involving keeping it intact as a private business while behind the scenes ministers had created a pathway to nationalisation.

After falling into administration in August last year, former FMEL managers subsequently accused the Scottish Government of having no serious intention of leaving it in private ownership while being warned nationalisation would be subject to EU state aid laws.

They accused ministers of forcing it into insolvency by rejecting a plan that would avoid any state aid claim, save the taxpayer at least £120m, and prevent the costs of building two key lifeline ferries soaring to over £230m.

A CMAL spokesman said there was no factual basis whatsoever for the comments made by Mr Pedersen “It is worth remembering that the £66 million claim made by FMEL in December 2018 was refuted by CMAL in its entirety and, while we invited FMEL to pursue its claim through the courts, FMEL did not carry through," the spokesman said.

"We can only assume that FMEL had been advised that the claim had very little chance of success as it pivoted on a legal argument of 'implied term'.

“Our position has always been that the problems with the dual fuel ferry project were driven by supplier failure."

A Scottish Government spokesperson said: "Scottish ministers refute any allegation of incompetence, vested interest or corruption in the procurement process.

“The Scottish Government stands firm on its commitment to the vessels, the workforce and the yard.

“The delivery of the vessels is critical to supporting the lifeline ferry network by adding two new badly needed vessels to the Calmac fleet.”