Salmond held secret talks to save Gathering behind Gathering

Published on Wednesday 23 June 2010 20:48

ALEX Salmond asked organisers of the Edinburgh Military Tattoo to rescue the stricken company which organised the centrepiece event of Scotland's Year of Homecoming, it has emerged.

The First Minister wanted officials behind the annual Edinburgh Castle spectacular to buy out the firm running The Gathering, despite it making a huge financial loss and leaving a trail of debts, according to a damning report by a public spending watchdog.

Tattoo executives found that the company set up by Tory peer Jamie Sempill was insolvent. It could not afford to repay a loan agreed by the Scottish Government at the 11th hour to ensure it went ahead as planned.

Despite The Gathering Ltd making a loss of 516,000 and leaving behind debts in the region of 675,000, a rescue package for the firm was agreed by the city council. The local authority later pulled out of the deal, sending the firm into liquidation.

Mr Salmond had asked both the Tattoo and Scottish Enterprise to consider a takeover of the stricken company. However, the council said its new tourism promotion agency – Destination Edinburgh Marketing Alliance – would take on the company, even though this had not been approved by DEMA's board of directors. The council later insisted it expected the government to settle any debts.

Audit Scotland's report – which criticised a host of public bodies that pumped cash into the event for their lack of control – accused the government and the council of issuing a "misleading" announcement, claiming the future of the company had been secured, which raised "false expectations" creditors would be paid.

The report revealed that a special task force, set up by public bodies to keep track of the event, was told by organisers that a loss of just 55,000 was likely, based on projections last spring. However, EventScotland, Scottish Enterprise and Edinburgh City Council were kept in the dark over an emergency loan of 180,000 from the government.

EventScotland later agreed an additional grant of 80,000 to help with marketing efforts for the event, for which eventually 40,800 tickets were sold – far fewer than anticipated.

The government, which insists the event generated more than 10 million for the economy, was accused of a "shocking dereliction of duty" for failing to carry out proper checks on The Gathering Ltd. Labour MSP Hugh Henry, a member of Holyrood's audit committee, said: "It's absolutely disgraceful that we can have this kind of money being dished out to people without due diligence, proper checks or scrutiny."

Auditor General Robert Black's report said the firm had failed to update backers on income and spending. He told the audit committee: "It's fair to say, the Scottish Government could have completed a more thorough assessment of the company's ability to repay the loan."

A government spokesman said: "Given its important economic value, the Scottish Government worked hard to protect the concept of The Gathering and secure the future economic benefits of the event."