Ministers have been accused of “throwing public money around with gay abandon” by lending cash to a firm that folded after putting on last summer’s The Gathering in Edinburgh the centrepiece of the Scottish Government’s Homecoming programme.
The auditor general for Scotland Robert Black told Holyrood’s public audit committee that staging it cost £2.4 million but it earned just £1.9 million.
He said organisers, The Gathering 2009 Ltd, received around £782,000 of public funding, including a £180,000 interest-free Scottish Government loan that was written off.
The firm went bust with losses of £516,000 and owing creditors £675,000.
Ticket sales were 19% lower than predicted, with 40,000 sold.
Committee convener, Labour MSP Hugh Henry, attacked the way the public money was used, accusing ministers of a “shocking dereliction of duty.”
“The Scottish Government did not complete robust checks of the firm’s ability to repay the loan, or seek information from other steering group members and the event’s status,” he said.
“It’s a shocking dereliction of duty. They’re throwing public money around with gay abandon as if it mattered not a jot.”
“It’s disgraceful that we can have this kind of money being dished out without due diligence, proper checks and scrutiny and I just wonder, was there pressure put by ministers on officials to bail this organisation out because ministers were concerned about the political ramifications if it didn’t go ahead?”
Mr Henry also questioned the actions of the top civil servant, Permanent Secretary Sir John Elvidge, who retired this week, for writing off a £180,000 loan.
The MSP said he was “astonished but maybe not surprised” at Sir John’s “extremely generous gesture with our money.”
“It’s a scandal that public agencies at a time of scarce financial resources such as the Scottish Ambulance Service and the police are left out of pocket by frankly what looks like a catalogue of mismanagement and incompetence,” he said.
MSPs heard that among the firm’s unpaid creditors were the Scottish Ambulance Service, which wrote off £11,738, and Lothian and Borders Police, which wrote off £27,204.
In his report Mr Black said, “There are important lessons to be learned from this about using the private sector to help deliver public sector objectives, and in particular how best to protect the public investment involved.Clarity”There needs to be clear understanding of the relationship between all parties: this includes clarity about the roles and remits of each partner and the expectations about reporting and financial monitoring.
“All of this needs to be underpinned by clear and regular communication.”
A government spokesman said, “The Scottish Government engaged constructively with Audit Scotland and will consider the report’s recommendations.
“It is regrettable the company delivering the event went into liquidation, owing money to creditors, but… The Gathering 2009 Ltd was a private company that was neither established nor contracted by government.
“The Gathering generated £10.4 million for Scotland’s economy, £8.8m in Edinburgh, with 47,000 visits made by people from across the world.
“Given its important economic value, the Scottish Government worked hard to protect the concept of The Gathering and secure future economic benefits of the event.”
North East Fife MSP Iain Smith said, “Serious questions need to be answered by ministers as to why a £180,000 loan was made to the Gathering without robust checks of the company’s ability to repay, or seeking information from steering group members.
“Ministers must explain why they did not seek professional advice on the loan’s legality.
“Many small firms in Edinburgh were left out of pocket by the Gathering and will be concerned that ministers threw public money at this company without conducting due diligence.”
Photos used under Creative Commons licence courtesy Flickr user Jon Mountjoy.