Finance & Constitution Committee: Correspondence - Loans & Equity Investments

Mr Paterson made this Rhyddid Gwybodaeth request to Scottish Parliament

This request has been closed to new correspondence from the public body. Contact us if you think it ought be re-opened.

Roedd y cais yn rhannol lwyddiannus.

Dear Scottish Parliament,

Please provide a copy of all correspondence between the Finance & Constitution Committee of the Scottish Parliament and the Cabinet Secretary for Finance & the Constitution of the Scottish Government during the period from 1 January 2016 to 14 September 2018 that relates to (A) loans or loan facilities or (B) equity investments - proposed or made by the Scottish Government to / in third party organisations (non public sector organisations).

Please acknowledge receipt of my request.

Yours faithfully,

Mr Paterson

Dear Scottish Parliament,

Reminder - Finance & Constitution Committee, Correspondence on loans & equity investments

This is a reminder that a response to my FOI request is due. Please note that the date of 19 October 2018 is the legal backstop.

Yours faithfully,

Mr Paterson

Foi-Officer,

Dear Mr Paterson,

Thank you for your email. We have already acknowledged your requests and that we will reply within the statutory deadline.

Kind regards

Claire Turnbull
Head of Information Governance
Information Management & Governance Team

Direct Dial Tel: 0131 348 6913

dangos adrannau a ddyfynnir

Dear Foi-Officer,

Thank you for your email. The purpose of my request was to act as a reminder. I know that my requests have been acknowledged. The Scottish Parliament has a duty to respond promptly to my requests. My two FOI requests should be treated separately. I believe that information relating to one of my two requests is relatively straightforward hence there should not be an unreasonable delay in responding.

Yours sincerely,

Mr Paterson

Turnbull CM (Claire),

2 Atodiad

Dear Mr Paterson,

 

I enclose a reply to your freedom of information request.

 

Kind regards

 

 

Claire Turnbull

Head of Information Governance

Information Management & Governance Team

 

Direct Dial Tel: 0131 348 6913

 

 

 

 

 

 

 

dangos adrannau a ddyfynnir

References

Visible links
1. http://www.parliament.scot/
2. http://facebook.com/scottishparliament
3. http://twitter.com/ScotParl

Dear Turnbull CM (Claire),

Request for internal review

I believe that the Scottish Parliament's disclosure of information that it believes falls within the scope of my request is incomplete. I make reference to a list of loans made to and equity investments in third parties by the Scottish Government since 1 January 2016. See Scottish Government's response to FOI/18/02239 Review. Link:

https://beta.gov.scot/publications/foi-1...

In addition to this list, the Scottish Government has granted a loan to Burntisland Fabrications Limited totalling £35 million which was subsequently converted in to shares and a further loan facility to Burntisland Fabrications Limited of £10 million.

I find it very difficult to believe that there is no correspondence on such an extensive list of loans between the Scottish Government's Cabinet Secretary for Finance and the Finance & Constitution Committee of the Scottish Parliament.

Please acknowledge receipt of my request for internal review.

Yours sincerely,

Mr Paterson

Turnbull CM (Claire),

 

Thanks for your email. Claire is out of the office until Monday 22
October.

In the meantime please contact [email address] or
[email address]

dangos adrannau a ddyfynnir

References

Visible links
1. http://www.parliament.scot/
2. http://facebook.com/scottishparliament
3. http://twitter.com/ScotParl

Turnbull CM (Claire),

Dear Mr Paterson,

We acknowledge your request for a review of your freedom of information request received today 18th October 2018.

Kind regards

Claire Turnbull
Head of Information Governance
Information Management & Governance Team

Direct Dial Tel: 0131 348 6913

dangos adrannau a ddyfynnir

Gadawodd Mr Paterson anodiad ()

"There are two letters which fall within your request for information. The Cabinet Secretary for Finance, Economy and Fair Work wrote to the Convener of the Scottish Parliament’s Finance Committee in confidence to inform the Committee of the loan facilities provided to Ferguson Marine on 24 April and 27 June this year. The correspondence was then circulated to all members of the Committee by the Committee clerks."

Dear Turnbull CM (Claire),

I am withdrawing my request for an internal review relating to this FOI application.

Please treat this FOI request as complete.

Yours sincerely,

Mr Paterson

Turnbull CM (Claire),

Dear Mr Paterson,

We note you are withdrawing this request for review.

Kind regards

Claire Turnbull
Head of Information Governance
Information Management & Governance Team

Direct Dial Tel: 0131 348 6913

dangos adrannau a ddyfynnir

Dear Turnbull CM (Claire),

Please ensure that the Scottish Parliament's response to my FOI request is published promptly on the disclosure log displayed on the Scottish Parliament's website. The Scottish Parliament's decision to withhold the information requested is a matter of public interest.

Yours sincerely,

Mr Paterson

Gadawodd Mav anodiad ()

Discussion took place on FMEL and BIFAB loans yesterday at PAPLSC, particularly questions from Mr Sarwar at about 9m30s in.
Please acknowledge, in some way, that you have noted this.

https://www.scottishparliament.tv/meetin...

Gadawodd Mr Paterson anodiad ()

Public Audit & Post-Leg Scrutiny Committee

November 2018:

https://www.whatdotheyknow.com/request/b...

Gadawodd Mav anodiad ()

Please note the recent FMEL and FMELHoldings filings at Companies House dated 17 December, including for example sections 30/31 relating to issue of warrants that arrests all interest on the £30m loan.

Gadawodd Mr Paterson anodiad ()

The media doesn't seem to have picked up on the warrants / shareholder arrangement as yet.

£17m of loan converted into £1.7m of warrants. A commercial loan indeed!

Gadawodd Mav anodiad ()

See thetimes article today

htTps://www.thetimes.co.uk/edition/scotl...

Gadawodd Mr Paterson anodiad ()

Still no mention of £17 million of loan being converted into £1.7 m of warrants. That's no typo, it really is just £1.7m !

Gadawodd Mav anodiad ()

In case you did not see this - or i missed it - hard to keep up!

https://www.gov.scot/publications/drawn-...

"On 27 June 2018 .... Between the date the loan was agreed and 4 March 2019, £25m of the £30m loan facility has been drawndown. As at 4 March 2019, Scottish Ministers had made no financial commitments to FMEL other than the loan facilities agreed in September 2017 and June 2018."

Gadawodd Mr Paterson anodiad ()

The recently released Bifab £10m loan agreement has a clause 5.2 "Interest payable persuant to this Agreement shall accrue daily but shall not be paid until the Final Repayment Date."

Comparable clauses in the FMEL £15m & £30m loan agreements remain redacted (for the moment).

Gadawodd Mr Paterson anodiad ()

The whole thing is a ridiculous farce!

Everybody still pretending £30m of the £45m is a 'loan' when it has been converted into interest-free worthless share warrants! If the SG did convert the share warrants into equity they would get a seat on the board of FMEL - big embarrassment factor with that though - so little incentive. Meanwhile, Jim McColl gets interest-free financing.

The press can't engage in a detail with the story.

Gadawodd Mav anodiad ()

If FMEL go to court - dirty washing - and ? FMEL mostly lose - and this will cause reputation damage to win future contracts from other than SG.

SG have increased difficulty providing more "commercial loans" (lol) in terms of state aid rules. More warrants and more questions about the value of them. Have engaged external consultants again so they have a body to rely on (blame) for any decision! Run out of road?

As at Dec 18 Clyde Blowers had not invested the £3m into FMELH required under "certain conditions" as kind of matched funding.based on the reduced value of the warrants. Nor the other £ 5.5m, both by 25/6/19. That £8.5m, if delivered, will require line by line SG/Holyrood scrutiny .

The letter from PW, such as "new programme and cost to complete" looks as if situation is grim++

The PAPLSC are open for taking evidence on FOI until 10 May.

Gadawodd Mr Paterson anodiad ()

There is no doubt there is coordinated, systematic and ongoing abuse of FOISA (nobody in their right mind, looking at the evidence, could conclude in any other way!).

Clearance from the EU **should** have been sought for both the FMEL and BiFab loans.

Gadawodd Mav anodiad ()

You have without doubt exposed graphically many aspects of how the SG are deliberately operating systemic contempt for FOI to avoid accountable government

Gadawodd Mav anodiad ()

https://www.scottishparliament.tv/meetin...

Worth a listen to this, the first bit from the point when the Committee begins. Minister seems to be stating the FMEL loans have no direct relationship (or indirect) to building and delivering the two ships! (Including the "working capital")

Also the question about if people are still working on the ships or not (sadly not followed up for precise numbers) was asked presumably because of earlier implied indications in the press that impasse had been reached, possibly now unjammed temporarily by the appointment of an independent ?arbiter, not clear on the status and remit of the independent person, or if it will be binding on each party. (Weak Committee questioning)

Gadawodd Mr Paterson anodiad ()

Very useful!

The second ‘loan’ arose because Derek Mackay wanted contingency options in the event CMAL and FMEL were unable to resolve the contract price dispute (they were unable to resolve it, hence the ‘loan’). The ‘diversification’ argument is largely a distraction cover story! The £15m initial loan wasn’t large enough to cover the cost overruns.

It is interesting to note that it was the SG’s Director of Economic Development seeking an update on the status of the vessels from FMEL – rather than CMAL who hold the contract (….and the Director of Economic Development gave a stalling response). It may be the case that relationship between CMAL and FMEL has broken down to such an extent that FMEL no longer corresponds with them.

FMEL are holding the partly-constructed vessels, £45 million of government funds and some contractual payments received under the vessels contract and so could be stalling ongoing construction forcing CMAL / SG to the negotiating table ….and increasing delays.

Gadawodd Mav anodiad ()

Snippet here from KH:
(Spring 19 or earlier)
hTtps://www.iod.com/Portals/0/PDFs/Regio...

"... ships are still under construction, with delivery dates now set for summer 2019 and March 2020. Cost over-runs on the £97m project have been reported in the press as being near £40m and the owner of Ferguson Marine, Jim McColl, is looking for more cash from CMAL and the Scottish Government to offset eye-watering losses Kevin is quick to dismiss certain media claims that CMAL is responsible for the delays. “We have not changed the tender specification. We built in a contingency for changes to the vessels design and build of three per cent of the entire £97m budget – it works out at around £2.9m. So far we’ve spent around half that amount on minor changes.

A significant change was required when Ferguson Marine’s model prototypes did not initially meet the specification requirements. The tank test in Vienna necessitated alterations to the design, though as Kevin points out, that was the design developed by the shipyard. “They knew the requirements and what we needed from the vessels, their speed, capacity, dimensions … none of those have changed.”

Commentary on FMEL 2016 Accounts filed Dec 18:
hTtps://www.insider.co.uk/news/ferguson-...

Gadawodd Mav anodiad ()

1 See SG response and attachments to this request from Mr Ware dated 12 June 2019, not posted yet on SG website. (Now being reviewd from 25 June 2019)

https://www.whatdotheyknow.com/request/c...

2 Given recent responses about pseudonym (also unreasonable with a built in 8 weeks delay for a fresh request) , I would be willing to submit identical to yours FOI requests, if it would help rather than hinder.

Gadawodd Mav anodiad ()

Apologies - It has been posted on the SG website
https://www.gov.scot/publications/foi-19...

Gadawodd Mr Paterson anodiad ()

Sure, make any FOI requests you wish, just be aware your personal data will get trawled through SpAds and Ministers.

I don't need any more info on the case logs (there is no doubt there is an abuse of personal data and there is SpAd intervention in FOI responses, despite them having no training!)

I've seen the response on Ferguson Marine and it appears they are also now in dispute with SG about the 'loan' - as a mechanism for forcing CMAL to the negotiating table on the price dispute!

Gadawodd Mav anodiad ()

Gadawodd Mr Paterson anodiad ()

Looking at the information from CMAL, they have paid £83.7 million or about 86% of the contract price. Last payment (at 31 March 2019) was back in June 2018 for about £1m.

Gadawodd Mav anodiad ()

https://www.bbc.co.uk/news/uk-scotland-4...

"Details of the loans to BiFab only go up to the end of March last year and the Scottish government declined a request from BBC Scotland to clarify the total amount invested in BiFab to date."

Re FME

I totted it up too and got to about £89.4m - 2015 £12.5m, 2016 £49.4m, 2017 £24.1m, and 2018 £3,4m. Some of that £89.4m is probably the contingency spend, ? circa £2m. I think contract from memory allowed for 3%. No doubt there are potential late delivery penalty payments that could be enforced, which will give the SG leverage in negotiations.

(I think this info is what Mr Ware requested, and was "released" only as redacted, ... even though already in the public domain!)

Gadawodd Mr Paterson anodiad ()

There are so many angles on both these stories !

Bifab: The BBC finally picked up on one of the FOI requests (8 months after publication). It is in the public domain that the investment is a 28% £35m shareholding – which is now probably worth close to zero. It is not yet in the public domain how much JV Drivers paid for their 72% shareholding but I bet it is a tiny fraction of the SG sum.

FMEL:
I got the payments from CMAL to FMEL out of CMAL’s annual reports:

October 2015: Contract signing
2015/16: £33.9m
2016/17: £27.2m
2017/18: £21.6m
Plus £1m paid in June 2018
Total: £83.7m (information up to March 2019

This is what CMAL told me about contract penalties:

“There are penalty clauses within the ship building contract. It is a BIMCO new build contract logically amended for the purchase of dual fuel Ferries. No penalties have been triggered as these matters are dealt with after sea trials and upon delivery.

The quantum of the penalty clauses relate to late delivery, deadweight deficiency, speed deficiency and excess fuel usage. The specifics of those clauses are being withheld under section 33(1)(b), commercial interests, as disclosure would be likely to prejudice substantially the commercial interests of both CMAL and Ferguson Marine Engineering Limited. The use of this exemption requires CMAL to consider the public interest and in this case, it has been decided that the balance of the public interest is in withholding the information.

There have been no penalty clauses enforced and will not be until the vessels are delivered.”

In another angle on this story, the Surety Bonds on the contract between CMAL and FMEL were reduced from £24.3m to £13.4m in February 2018. Nicola Sturgeon was directly involved in the review of the Surety Bonds although I don’t know if she was involved in the decision to reduce the amount. The reduction has increased SG / CMAL exposure to FMEL’s failure to deliver. Presumably, in the event of FMEL default, CMAL gets £13.4m not £24.3m.

It is no wonder MacKay wants to nationalise it and keep all the information in house / away from public attention.

Gadawodd Mav anodiad ()

I also noted that months! I give up! And the BBC have covered these issues better than the Scotland press!

I totted it up from the monthly declarations here. 15/16 seems to be a reason for the discrepancy. Which in 15/16 terms I have as £38.7m
https://www.cmassets.co.uk/about-us/info...

SG news release
https://news.gov.scot/news/ferguson-marine

Gadawodd Mav anodiad ()

The SG failure to publish at least 2 of their FOI FME releases, info forced out after your referral to the SIC, is yet another layer of secret government, not even complying with their own publication policy, and clearly these particular failures to publish info on FME into the public domain as required of them has been selectively orchestrated by the SG/Minister/SpAds to try to avoid and delay publication of sensitive info the SG refused to release voluntarily. Over 4 months delay in publication of one of them, Shocking, literally.

Gadawodd Mr Paterson anodiad ()

Monthly expenditure declarations:

Public Services Reform (Scotland) Act 2010
“Section 31 Public functions: duties to provide information on certain expenditure etc.

(3)As soon as is reasonably practicable after the end of each financial year each listed public body must publish a statement specifying the amount, date, payee and subject-matter of any payment made during that financial year which has a value in excess of £25,000.”

Scottish Ministers guidance:
“25. It is open to public bodies to publish statements of expenditure on a monthly or quarterly basis if they so wish, and to publish links to these statements as the basis of the annual statement which is published after the end of the financial year. The current practice, in respect of the core Scottish Government, is to publish a statement of payments above £25,000 on a MONTHLY basis.”

LOLZ!

The discrepancies in expenditure figures are probably due to MV Catriona being delivered in 2015/16. I can’t find the loans to Bifab in the monthly declarations!

Gadawodd Mr Paterson anodiad ()

The last SG expenditure declaration is here (for October 2019, published May 2019)

https://www.gov.scot/publications/govern...

Gadawodd Mr Paterson anodiad ()

£30 million loan payments to FMEL taken from SG monthly declarations:

26 June 2018 : £6 million
13 August 2018 : £5 million
27 September 2018 : £6 million
Monthly declarations currently stopped at October 2018
Full draw down by March / April 2019 of full £30 million

Gadawodd Mr Paterson anodiad ()

There is no only a backlog in publishing the transparency data but it is NOT complete - it is remarkable - and about time the media picked up on this. This is what the SG told me:

"You are correct that under the PSR Act we provide information about all payments above £25k, and that we have so far published reports up to October 2018. Our processes for publishing this information do include a review by business areas for any sensitive information which may in some circumstances be redacted. This may include commercial transactions, and the payments to BiFab were considered to be commercially sensitive at the time of publication and therefore full information was not included in the £25k report."

INFORMATION IS WITHHELD AT THEIR OWN DISCRETION!

Gadawodd Mr Paterson anodiad ()

THIS IS QUITE A SCANDAL

"The statutory duties to publish information imposed by sections 31 and 32 are strict in that they require the disclosure of certain specific information and are NOT subject to any exemptions in the Act. It should be noted that the exemptions to the general right of access to information in the Freedom of Information (Scotland) Act 2002 are NOT available in respect of the duties imposed by sections 31 and 32."

Gadawodd Mav anodiad ()

"KH stated that the Surety Bond has now been signed – dated 16th November 2018. We had been requested
to delay the signing to assist SG in the negotiations with FMEL/CBC. The expiry dates of the surety bond are
Glen Sannox 31/7/19 and Hull 802 30/4/20"

hTtps://www.cmassets.co.uk/wp-content/up...

Gadawodd Mr Paterson anodiad ()

The media are at least starting to pick up on the issues - thanks to Audit Scotland. Still much more to go though. I doubt they will get to the involvement of NS in the surety bond reduction as the SG won't disclose her involvement unless someone goes through a contested FOI process. It is also, in the scheme of things, less significant. The SG's failure to publish the financial transparency reports and particularly the unlawful deletions from prior reports is a scandal which the S Parliament is failing in its duty to prevent.

Gadawodd Mr Paterson anodiad ()

MISLEADING PARLIAMENT AGAIN

Scottish Government
Permanent Secretary, Leslie Evans
T: 0131-244 4026 E: perm.sec@gov.scot

Linda Fabiani MSP
Convener, Committee on the Scottish Government Handling of Harassment Complaints
The Scottish Parliament
Edinburgh, EH99 1SP

26 September 2019
by email: SGHHC@parliament.scot

Dear Ms Fabiani Thank you for your letter of 12 September.

You asked about the established procedures for agreeing the final settlement of expenses in litigation. | attach the detail of those procedures as an Annex< to this letter.
As mentioned in my letter of 4 September, and in the attached Annex, the Court awarded expenses in this case on an “agent and client” basis. While this is not the usual basis for an award, it was accepted by the Court as appropriate to the specific circumstances of the proceedings. Regardless of the basis on which the Court determines expenses are to be calculated, the ensuing process for considering the account is the same in any litigation where an award of expenses has been made. Once an account is received, it is carefully considered by law accountants to ensure that all fees rendered are reasonable and in accordance with the relevant Court of Session scale, and that outlays are properly vouched. | can therefore confirm that the steps taken in relation to the settlement of Mr Salmond’s expenses, as outlined in the attached Annex, were no different to those that have been taken in other litigation proceedings where an award of expenses (on whatever basis) had been made by the Court.
| can confirm that all relevant information relating to the account and settlement of Mr Salmond’s expenses have been preserved.

******* All Scottish Government individual payments over £25,000, not just those related to legal expenses, are routinely published on the Scottish Government website. Figures are published on a monthly basis in arrears. *********** There is an additional time lag between the dates of payment and publication on the website because of the need to review the data, ensure that relevant descriptions are accurate and, where relevant, ensure that any issues of confidentiality in relation to a payee are respected. The payment of Mr Salmond’s legal expenses has therefore not yet been published by the Scottish Government as part of this routine process.

Gadawodd Mav anodiad ()

hTtps://www.cmassets.co.uk/wp-content/up...

"KH then went on to talk about the surety bond, discussing recent correspondence, he noted if the bond is not extended the only option open to the Board to cancel the Contract for MV Glen Sannox (Bond Expiry being 31/07/19). We would request an extension once again and would keep the Board Informed as to whether there was a positive response"

Gadawodd Mav anodiad ()

COCKAYNE SYSTEMS LIMITED Company number SC640712

https://beta.companieshouse.gov.uk/compa...

Gadawodd Mr Paterson anodiad ()

I think "Macrocom" is a corruption of 'MacRoberts Companies' - MacRoberts being the commercial law firm heavily used by the SG. Macrocom 1067 / 1068 / 1069 and 1070 all are owned by Scottish Ministers. However, other companies will be initially named Macrocom and used by other MacRoberts private clients, such as 1071.

Gadawodd Mav anodiad ()

I thought there was a MacRoberts link

I see Martyn McLaughlin of the Scotsman has an FOI to GPAL
See his twitter account entry for his full FOI review request dated 21/10/19

Gadawodd Mr Paterson anodiad ()

Thanks for info on GPA. Seen FOI reply - looks like an SG trained response (stonewalling). Unlikely to get anything unless appeals to SIC. SIC is impartial but tediously slow.

Bifab story is interesting. SG going to extreme lengths to suppress info. JV Driver injected a total of £4 into Bifab to date - they acquired it for £1. Total investment £5 ! SG investment = £37.4m for minority shareholding!

Gadawodd Mav anodiad ()

Thanks for Bifab info - SG sharing the risk!
"3.22 In conjunction with both our legal and commercial advisors, we have undertaken extensive and arduous negotiations with JV Driver/DF Barnes, which have led to improved commercial terms for the Scottish Government on our shareholding within BiFab. Scottish Government has concluded that a normal market operator would have done the same and on that basis, the presence of an advantage can be excluded and the MEIP test taken as having been met"

The SIC has an outstanding appeal since circa Feb 2019 (and two others) regarding Internal communications held by the FOI Unit regarding the SIC Intervention that is categorised as ... information withheld!
Could be a release dispute

The FMEL 168 unsecured smaller creditors maybe getting 10p in the £1 on £6m owed were lambs to the slaughter with the SG giving out £45m of "commercial" loans as debt on the balance sheet that could never realistically be repaid or recovered

Gadawodd Mr Paterson anodiad ()

If the SG 32.4% stake is now worth £2 million, then JV Driver's 67.6% share must be worth > £4 million, not bad for a £5 initial investment!

Gadawodd Mr Paterson anodiad ()

I wonder how many people can get a "commercial loan" where they pay no interest until the end of the loan term and have a secret mechanism that switches off the interest!

The £30 million loan should have interest of about £4.8 million when FMEL entered administration ! The PAPLS committee struggling to engage.

Gadawodd Mr Paterson anodiad ()

CMAL payments to FMEL

October 2015: Contract signing
2015/16: £33.9m
2016/17: £27.2m
2017/18: £21.6m
2018/19: £1.0m

Total: £83.7m (information up to March 2019)

Figures from CMAL Annual Reports

2018/19 Annual Report:
https://beta.companieshouse.gov.uk/compa...

Gadawodd Mr Paterson anodiad ()

They haven't published all the documents - and it will be the ones they haven't published that will contain the most useful information.

Gadawodd Mav anodiad ()

Also given the above 18/12 SG release, vey hard not to conclude that CMAL also in their 18/12 reply, have wilfully and materially not released the latest information requested, and thus have failed to comply with your FOI request on estimated delivery dates, even after review.

Gadawodd Mr Paterson anodiad ()

Useful. I don't know which is worse - the flouting of EU state aid rules, the concealing of information under the pretense of "commercial confidentiality", the misleading of parliament or the hypocrisy of their pro-EU stance while abusing state aid laws !

There are two parliamentary committees in progress who could look at this - the Public Audit Committee and the Economy, Energy and Fair Work Committee - both currently well away from hitting the mark.

Gadawodd Mr Paterson anodiad ()

DRAFT VERSION 1

1. The £45 million in payments made by Scottish Ministers to FMEL were not and never were “commercial loans”.

The two loan agreements contained clauses that allowed interest payable by FMEL to be deferred. This is an uncommercial arrangement that would not be accepted in an arms-length transaction. FMEL paid no interest on the loans between when they were initially drawn down (starting from September 2017) until the company entered administration (in August 2019).

Interest on the £30 million ‘loan’ ceased to accrue when the loans was converted to share warrants. This is also an uncommercial arrangement not consistent with an arms-length transaction. This means that the interest accrued on the second loan when the company entered administration was reduced to just £0.6 million. Commercial interest on a £30 million loan over the same period would be about £4.6 million.

Link: FOI request: FMEL Loans - Interest due and Interest paid
https://www.gov.scot/publications/foi-20...

A loan can only be repaid if a company generates surplus cash from its operations (and therefore uses the cash to repay the loan). This was clearly not the case or likely to be the case for the foreseeable future at the point the loans were granted to FMEL.

2. Scottish Ministers entered into a Subscription and Shareholders Agreement with CBC / FMEL but did not inform the Scottish Parliament (specifically the Finance & Constitution Committee). The Subscription and Shareholders Agreement allowed for the fundamental changing of the terms & conditions and risk profile of the alleged £30 million ‘loan’ including the cessation of interest due and the conversion of the ‘loan’ to worthless share warrants.

Link: FOI request: FMEL Subscription and Shareholders Agreement
https://www.gov.scot/binaries/content/do...

Link: FOI request: FMEL Share Warrants
https://www.gov.scot/publications/foi-19...

3. The Cabinet Secretary, Finance and the Constitution, agreed with Jim McColl, director and controlling party of Ferguson Marine Engineering Limited, to limit the information flow about the loans to the Finance and Constitution Committee of the Scottish Parliament.

Link: FOI request: Meeting between Derek Mackay and Jim McColl
https://www.gov.scot/binaries/content/do...

See page 6 of 8: Email dated 24 April 2018 timed at 19:03: “DM then moved on to the cash flow position of the organisation and that he intended to send a short letter to the Finance Committee that explained, at a high level, the commercial loan that was provided to FMEL by SG. JM was content with the letter being sent as set out.”
Note that the letter is to be “short” and at a “high level” rather than long and at a detailed level thus reducing the Finance Committee’s ability to scrutinise the loan arrangements.

4. Scottish Ministers used layered confidentiality to maintain secrecy of the financial arrangements by submitting scant details of the loans to a compliant Parliamentary committee chaired by a representative of the same party. The committee were then required to keep the scant information secret.

Link: FOI Request: Correspondence with Finance Committee (part redacted)
https://www.gov.scot/publications/foi-18...

The second letter does not include any reference to the Subscription and Shareholder agreement (entered into at the same time as the date of the letter to the committee) which changed the risk profile and terms of the alleged £30 million loan.

The Scottish Information Commissioner investigated the withholding of these letters from the public domain but could not find any reasoning of why they were withheld. They were subsequently published in full:

Link: Scottish Information Commissioner Decision: 024/2019
http://www.itspublicknowledge.info/Appli...

5. Scottish Ministers engaged a third-party (PwC) to comment on whether the terms of the £30 million ‘loan’ were of a commercial level. However, this does not mean that the whole financial package was a commercial arrangement. This allows Ministers to claim that they sought independent advise on state-aid compliance. The reality is that they sought advice on certain aspects of the financial package.

Link: FOI request: PwC Loan Advice - MEIP
https://www.gov.scot/binaries/content/do...

PwC said: “In order to provide a loan, SG needs to consider whether such a loan meets with the European Union’s Market Economy Investor Principle (“MEIP”). As part of its MEIP considerations, SG wants to understand key factors to determine whether the loan can be made on commercial terms that would be acceptable to an independent private investor. This should take account of the financial factors that influence SG, but exclude factors such as economic development and employment.

Our comments are presented as a briefing paper to support discussions with Ministers. We understand that a conclusion on providing the loan is a matter for Ministers and that compliance with the MEIP is a broader legal question over and above the commerciality of the terms. We are not engaged to comment on these wider aspects.”

Gadawodd Mav anodiad ()

The first submission below might be of relevance. The second of interest.

https://www.parliament.scot/S5_Rural/Gen...

https://www.parliament.scot/S5_Rural/Gen...

Gadawodd Mav anodiad ()

Further submission from MrTrythall regarding potential corruption and vested interest bias

https://www.parliament.scot/S5_Rural/Gen...

Gadawodd Mr Paterson anodiad ()

Fascinating!
The link to the Contract Notice is particularly useful:
https://www.publiccontractsscotland.gov....

The timeline of early events:
28 August 2014 – Ferguson Marine Engineering was incorporated
15 October 2014 – Contract notice issued (just a few weeks after FMEL incorporated)
19 November 2014 – Time limit for requests to participate
04 December 2014 – Date of dispatch of invitation to participate to selected candidates

The Contract Notice includes:
111.2 Conditions for Participation
111.2.2 Economic and Financial Capacity
SEE (1) (3) and (4) – Ferguson Marine unlikely to have this info as newly incorporated.

There is a Prequalification Questionnaire which has less stringent financial requirements.
Prequalification questionnaire refers to “The CMAL Guideline on Financial Health” – I’ve been unable to find this document.

Gadawodd Mav anodiad ()

This is the only relevant page i can locate, but none of the links now work -"Assessment of Supplier Financial Health"

https://www.cmassets.co.uk/current-proje...