Jim McColl: Scot Gov 'squandered' £200m to nationalise Ferguson Marine

The proposal was resisted because ministers felt it was unlawful state aid.

The Ferguson Marine plan came amidst a row over the soaring costs and delays of over five years over the building of two lifeline ferries which remain languishing at the Inverclyde shipyard.

Mr McColl, one of Scotland’s richest men, who had acquired Ferguson Marine out of insolvency in 2014, said that he received senior counsel's opinion that that the proposal that avoided nationalisation was perfectly legal.

And he said that the failure to act, which included not sanctioning an independent resolution of the issues, "resulted in public money being squandered on a reckless and foolish scale".

Two weeks before Ferguson Marine Engineering Limited (FMEL) went into administration in August, 2019, the Jim McColl-led board thought ministers were still trying to pursue what they called 'the solvent solution' involving a restructure keeping it intact as a private business. But behind the scenes ministers had created a pathway to nationalisation.

After falling into administration,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.

Mr McColl spoke out after the First Minister said that the Ferguson Marine proposal was "rigorously assessed and considered by the Government and that, for a range of state aid, procurement and legal issues, we could not accept the proposal".

He said that the plan which would have capped the Government's costs at £50m.

Ms Sturgeon said that had the Scottish Government not nationalised she believed the last civilian shipyard on the Clyde would have closed and the vessels would never have been completed.

But Mr McColl in a response to the First Minister's evidence MSPs said: "The Government have incurred over £200 million of costs since nationalising the yard and they are not finished yet. This need not have happened..."

He said that it did not appear that the government had rigorously assessed the proposal.

"Given senior counsel’s unequivocal opinion that the offer was legal I would have expected the government to take their own QC’s opinion. There is no evidence that they did," he said.

"If the Government had received an independent opinion confirming it was legal, and accepted the proposal it would have saved at least £200 million of taxpayers money.

"The claim by the FM that the proposal was “rigorously assessed needs to be probed and evidenced."

Tycoon Jim McColl-led FMEL went into administration in August, 2019 following a dispute with Caledonian Maritime Assets Ltd (CMAL) - the taxpayer-funded company which buys and leases publicly owned CalMac's ships on behalf of the Scottish government - over the construction of the much-delayed ferries under a £97m contract.

The Scottish Government then pushed ahead to take full control of of the shipyard company as it went under with blame attached to soaring costs of the ferry contract - which have now soared to around £340m.

Mr McColl blamed repeated design changes by CMAL for the fiasco.

The Herald on Sunday has previously revealed that ministers ensured there was a "right to buy" of the shipyard when it provided a the first of £45m in loans four years ago, knowing it was creating a path to a controversial state ownership.

While Derek Mackay, the finance secretary of the time, was telling the public a £30m loan in June, 2018 was “to further diversify their business", the real reason was that Ferguson Marine was in financial trouble and at risk of falling into administration.

Mr McColl says that an independent expert determination was the "appropriate way" to resolve the dispute to ensure that the Government discharged its wider responsibility to "ensure that public money was spent efficiently and effectively and to keep the yard open and operational, to protect employment and to get the vessels finished".

But Ms Sturgeon said it was CMAL’s view "I think rightly" that an expert determination was not appropriate.

"Apart from anything else, that was because of the scale of the claim that (Ferguson Marine) was making outside the contract, which ultimately became £66 million. The right way to resolve it was therefore for (Ferguson Marine) to go through the court process, which — as was its right - it never chose to do.

Mr McColl said that said the defence was a "nonsense" adding that it was "spoken words that have no meaning or make no sense. There is no restriction on the scale of a claim in an Expert Determination process".

He said: "Before bringing a commercial case before the court of session, both parties are expected to have exhausted all other means of resolving the dispute."

At an all-parties meeting held that Victoria Quay in Edinburgh on April 10, 2018,Transport Scotland proposed an Expert Determination process, he said.

This was opposed by the chairman of CMAL, who said that his board had taken the "staggering" decision not to allow an independent expert, said Mr McColl who said the ferry procurement agency would not agree to the proposed scope for the mediation.

"The Scottish Government’s decision to reject Transport Scotland’s proposal in early April 2018, and repeated requests from Ferguson Marine, for an Expert Determination process, unthinkingly defending CMAL, has resulted in public money being squandered on a reckless and foolish scale.

"It also forced Ferguson Marine into administration, a business that was well invested, with a healthy pipeline of work diversifying the business away from a dependence on Scottish Government ferry work," said Mr McColl.

Ministers were being warned about the perilous state of Ferguson Marine around August, 2017.

Scottish Conservative shadow transport minister Graham Simpson MSP said: “Jim McColl’s claims that the SNP government wasted £200 million and misled parliament about whether there was a fixed price contract were "damning indictments of a government with its eye off the ball".

He added: "It’s now up to the SNP to explain why they did not think an independent expert opinion was worth exploring.

“We already knew SNP mismanagement has needlessly cost the public hundreds of millions with no delivery, but these staggering revelations make it clear just how negligent they have been.

"Mr McColl says that the First Minister can have been in no doubt about the urgency of the situation when he approached her. We should immediately see the minutes of that meeting, to clear up this murky business.

“This also underlines yet again the need for a full independent public inquiry into the ferries scandal so that betrayed island communities and Scottish taxpayers get the answers they deserve.”

A Scottish Government spokesman said: “The First Minister stands by the evidence, and the follow-up information requested by the committee will be provided in due course.

"The Scottish Government’s priorities have always been the completion of the two ferries, securing a future for the yard and its workforce, and supporting our island communities that rely on this type of vessel on a daily basis.”

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