THE SNP trade minister has been accused of a lack of transparency over a momentary deal that may have exposed Scots taxpayers to huge financial costs.
The Scottish Liberal Democrats criticised Ivan McKee after obtaining new documents about the sale of the Dalzell steel mills in 2016.
The LibDems claimed they helped prove “a cavalcade of Scottish Government deception”.
SNP ministers agreed to buy the plants from Tata Steel subsidiary Longs Steel UK for £1 then “immediately” sell them for £1 to metal tycoon Sanjeev Gupta’s Liberty Steel in a so-called “back to back agreement”.
But the plant in Motherwell, North Lanarkshire, has been under pressure as Mr Gupta’s company, Gupta Family Group (GFG) Alliance, is investigated for alleged fraud.
It means the Scottish Government could be liable for all of the clean-up costs if Liberty Steel collapses.
In December last year the Scottish Government admitted the deal had been “untested due to the novel approach of the transaction in the UK”.
Mr McKee admitted that when the deal was struck, the Scottish Government believed the arrangement complied with European state aid rules.
READ MORE: Taxpayers could face huge clean up cost for SNP steel deal lasting moments
However, it later revised that opinion, saying a clause in the deal that could leave taxpayers liable for tens of millions in clean-up costs broke state aid rules and so was “no longer valid”.
If the clause is indeed non-compliant, it cannot be enforced, and taxpayers are off the hook.
The Scottish Government’s change of heart followed the collapse of Greensill Capital - one of the key funders to the GFG Alliance.
However the files released by the LibDems today show Tata Steel correctly pointed out that “it is not within the Scottish Government’s competence to make a legally binding determination” on whether a clause is state aid compliant or not.
“Such a determination would, if necessary, be a question for determination by the courts (Or the European Commission) at the appropriate time.”
Despite Tata pointing this out the day before Mr McKee addressed MSPs, he failed to mention their concern or the correspondence in the Holyrood chamber.
READ MORE: SNP ministers under pressure over bungled steel plant deal
Instead, he merely said the Government had informed Tata Steel it would be making a statement and the company would “need time to reflect on and consider its position”.
LibDem economy spokesperson Willie Rennie said: "These documents confirm our long-held suspicion that in the event that Liberty Steel goes bust, and the assets don’t cover the clean-up costs, then it would be Tata’s intention to take the Scottish Government to court at that stage to force them to pay for the clean-up costs. We have seen at other industrial sites like Ravenscraig that this can run into the tens of millions.
"Moreover, Ivan McKee told parliament last December that Tata were taking time to consider the situation.
“What these documents also reveal is that he had already received their answer the previous day, including the threat of legal action, he just chose not to tell parliament about it.
"This is just the latest step in a cavalcade of Scottish Government deception.
“The minister should come to parliament to apologise for his parade of obstructionism and set out the potential cost to the public purse if Tata follow through on their threat of legal action."
A Scottish Government spokesperson said: “The Scottish Government acted at pace in 2016 to support a transaction involving Tata Steel and Liberty House to ensure steel communities in Scotland had a future.
“This saved the Dalzell and Clydebridge steel works, rescued more than 100 jobs and retained steel plate production in Scotland.
“Subsequently, ministers were advised that one specific part of the contract arrangement may not comply with state aid rules.
“This finding was reported promptly to the Scottish Parliament and means in the unlikely event of the indemnity ever being called upon, no money would legally have to be paid out by the Scottish Government.”
GFG Alliance and Liberty Steel declined to comment.
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