'Enron accountancy rules' scupper plans to bring research jobs to Scotland

Published on Saturday 21 June 2008 15:19

PLANS to bring key medical research jobs to Scotland have collapsed after Scottish Enterprise insisted the US firm create jobs as a condition of getting financial support.

Inverness Medical Innovations, based in Massachusetts, wanted to move operations from the US and Germany to its Scottish offshoot but has been forced to turn down a 14.5m funding package from the agency.

It said it cannot accept the aid because of tough US accounting rules brought in after the Enron scandal.

Scotland on Sunday has learned that the firm approached Scottish Enterprise with plans to relocate key development work on its home testing kits for heart patients to its subsidiary, Stirling Medical Innovations.

The agency wanted job guarantees to ensure a decent return on its investment.

The collapse of the deal has raised questions about whether SE was attempting to cover itself after investing what was seen as an exceptional exposure in the first round of funding in 2005. SE provided 25m in first-round funding towards the 70m joint venture with IMI. Further public funds brought the taxpayers' commitment to 35m.

Critics at the time said it was taking a big gamble on an unproven project. A source last week told Scotland on Sunday that progress at Stirling had been slow, with suspicions that work on developing the home testing kits for heart patients would transfer to San Diego.

When it launched, there was talk of it employing up to 500 staff and becoming a global business.

But there have been two rounds of barely publicised job cuts, 18 in April and a further 19 last month, bringing the workforce down to 50, or half its peak of just a few months ago.

The company said yesterday there were no plans to relocate work out of Stirling and that it hoped to get its product to clinical trials by early next year.

A company spokesman said the redundancies were part of a restructuring of the business around its product development and essential skills were being retained. "It is not being wound down, it is being refocused and keeping its overheads down," said the spokesman. "There is no way work is leaving Stirling to go elsewhere."

In a statement, Scottish Enterprise said: "We have been working closely with both SMI and its parent company IMI to identify potential opportunities to increase activity at its Stirling facility, but unfortunately this has not been successful in the short term.

"There is still a very high calibre expert team at the facility and we will continue to liaise with the company and offer support where we can to help maximise the potential of the Stirling site."