THE head of nationalised shipyard firm Ferguson Marine is being asked to account for how £128.25m of public money meant to be used to build two lifeline ferries was actually spent.

The firm has come under fire for admitting that they cannot trace where the money had gone as the cost of the ferries has soared to £340m while delays into their completion are running to over five years.

Inquiries with the company into the ferry building scandal by Scotland's Auditor General Stephen Boyle failed to uncover what happened to the money. He has said existing records relating to transactions were "not organised or categorised".

Public spending watchdogs Audit Scotland have also admitted that it was unable to trace how a Scottish Government £30m loan to shipbuilding firm Ferguson Marine Engineering Limited (FMEL) was spent.

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David Tydeman, chief executive of the now nationalised Ferguson Marine (Port Glasgow) had stated they have not sought to evaulate old files because they "do not add value to the planning or budgeting work still needed to complete the vessels".

At the centre of the continuing row is the awarding of the contract to tycoon Jim McColl's FMEL in October, 2015, four years before it fell into administration after a dispute with state-controlled ferries owner Caledonian Maritime Assets Ltd (CMAL) over the construction of the ferries under the fixed price contract.

The Scottish Government pushed ahead to take full control of of the shipyard company as Mr McColl blamed repeated design changes by CMAL for the issues in building the vessels.

Now Mr Tydeman has been asked to come up with answers over what happened to the money.

Richard Leonard, convener of the Public Audit Committee, which is is investigating the ferry debacle, has written to him asking for him to account for the £240m that has been spent on the two ferries.

Of this, £128.25m was paid to FMEL.

The Auditor General has said that a further £110.3m to £114.3m is required by the nationalised Ferguson Marine (Port Glasgow) to compete the vessels.

The Herald:

"Despite our efforts, it has proved difficult to identify how the vast sums of public money have been spent to deliver vessels 801 and 802, from the inception of the project in 2015 up to present day," he said.

"The committee appreciates that you were not involved in the operation of the yarduntil February 2022. However, it is recognised that, in addition to your insights from being in post for almost a year at the yard, your wealth of experience in the construction and marine manufacturing industries, may enable you to offer a perspective on how this money could be accounted for."

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When Mr McColl's FMEL entered administration in August 2019, it had received £83.25m in milestone payments from CMAL and £45 million in loan payments from the Scottish Government - yet the vessels were largely incomplete.

MSPs on the Public Audit Committee launched an inquiry after a damning report from Audit Scotland about the process of awarding of the ferries contract and the subsequent arrangements for delivery.

Its probe found that ministers went ahead with the contract despite the concerns raised by CMAL over the lack of financial guarantees that placed them at risk.

The Herald: Jim McColl

The auditors' examination of the issues said there was no documented evidence to confirm why Scottish ministers were willing to accept the risks of awarding the contract despite the concerns.

The Auditor General made inquiries as MSPs sought to establish where FMEL spent the £128.25 million of public money but got no joy from the state-controlled shipyard company.

Mr Boyle said FMEL spending had been outwith the scope of his previous examination as it did not include private sector organisations.

He then explored his "rights of access" to the records now the shipyard firm was nationalised.

He said: "Ferguson Marine Port Glasgow (FMPG) has advised us that it holds FMEL’s records, as required by the Sale and Purchase Agreement between the two bodies.

"FMPG advise that these records exist in both digital and hard copy forms, but they are not organised or categorised. The Sale and Purchase Agreement does not require FMPG to review these records and FMPG has informed us that it has no plans to do so."

It has emerged he has told MSPs: "FMPG is therefore not aware of what information exists and indeed whether this information will explain how FMEL spent the £128.25 million."

Audit Scotland in its inquiries had looked into what happened to a £30m loan provided by the Scottish Government to FMEL.

But the watchdog said that while consultants PricewaterhouseCoopers was providing the Scottish Government with reports on FMEL spending, they did not go into detail on where the money went, so were "unable" to trace exactly how that money was spent and what progress was made on the vessels as a result.

Watchdog officials say that without a builder's refund guarantee in place there was no link between the payments that CMAL was making and the quality of the build.

Mr Boyle has previously said that the lack of a link between milestone payments and quality or progress was the industry norm for shipbuilding contracts but was said to be at odds with other large public sector infrastructure contracts.

In response, Mr Tydeman said he understood that the files and other information that related to the stage payments paid to FMEL for the construction of the two vessels rested with CMAL.

"We have not sought to evaluate the old FMEL files, because they do not add value to the planning or budgeting work still needed to complete the vessels, which is where we are directing our efforts for earliest completion," he said.