Audit Scotland Delivers Gathering Verdict
Last month Audit Scotland reported on the findings of its investigation into the handling of the Clan Gathering.
The report identified clear problems with the governance of the event and raises significant questions as to the role of Scottish Ministers.
The Gathering took place in July 2009 and was one of the signature events of the Homecoming celebrations. The event was the product of a private company, the Gathering 2009 Ltd, which developed, organised and delivered the event.
Despite benefiting from £490,500 in public money and only slightly exceeding its estimated budget, the event still managed to make a loss of £516,000.
Three of the organisations who originally agreed to invest, Event Scotland, Edinburgh Council and Scottish Enterprise Edinburgh and Lothian, formed a steering group but the Audit Scotland report was critical of the poor quality of financial information being provided to them.
The report makes clear that Ministers were aware of the cash flow problems being experienced by the Gathering Ltd as early as May 2009 yet they proceeded to hand out a £180,000 loan without proper consideration and investigation.
The report notes that the Scottish Government did not complete robust checks of the Gathering Ltd’s ability to repay that loan. If the Scottish Government had done its homework it would have discovered, as Audit Scotland have, that the quality of financial information was questionable.
The fact that the Government’s emergency loan was not discussed with the other public sector steering group members is also highly irregular.
Following the event the company revealed that a £516,000 loss had been made while the company also owed £675,000 to a variety of public and private sector organisations. While expenditure was in line with predictions, the amount of income generated by the event was lower than expected.
Rather than investigating why an event which was delivered on largely on budget had contrived to make a half million pound loss, the Scottish Government instead attempted to secure branding rights along with the Council.
As part of this process the public bodies that were owed money wrote off £292,000 while potential purchasers for the company, including the Royal Edinburgh Millitary Tattoo and ‘arms length’ Council organisation Destination Edinburgh Marketing Alliance (DEMA), were sought.
The report lays bare the fact that the Scottish Government and City of Edinburgh Council did not have a full understanding of the facts before pursuing this path. A press release was published stating that DEMA would take on all of the private sector debts, a proposal which had never been discussed with the organisation.
DEMA then issued its own press release stating that it would consider being involved in future Gathering events but only once the financial legacy of the previous event had been resolved.
When no buyer could be found for the Gathering Ltd, the company was forced to go into liquidation. The list of creditors compiled by the liquidator found that in addition to the written off public sector debts, £344,000 was owed to 103 private sector organisations.
There are many examples of small businesses which provided services to the Gathering in good faith and are now left counting the cost. In some instances people have lost their jobs as cut backs were made. I was interested last week to discover that the Environment Minister Roseanna Cunningham had also complained to the Finance Secretary about the poor treatment of a firm in her constituency.
Throughout this process I have been disappointed by the Scottish Government’s failure to apologise to the businesses involved. There has been a lack of transparency as to why the Scottish Government failed to make adequate checks before committing further public money to the event and how they and the Council approached the issue of finding a buyer for the stricken company.
Further scandals have emerged which murky the water even more including press reports that the Panalba website, set up to promote the Gathering and paid for with public money, is back up and running, helmed by one of the co-founders of the Gathering Ltd, Lord Sempill.
There is also controversy over the settling of a £6,000 debt owed to an unidentified creditor by the Council in an out of court settlement. This has led to concerns of a massive bill to the tax payer as other businesses pursue similar legal action.
The Audit Scotland report has justified my calls for an investigation in to the event. However, there are still questions which need to be asked and I will continue to press for transparency. I am concerned that the Scottish Government have exaggerated the impact of the Gathering economically and believe that before future events are commissioned we need proper evaluation. I welcome the decision by the Parliament’s Audit Committee to carry out further investigations of the debacle to ensure that lessons can be learned.