Taxpayers left facing huge bill for Gathering compensation claims

Published on Friday 25 June 2010 22:37

EDINBURGH'S taxpayers are facing a massive bill in the wake of the collapse of the Homecoming clan gathering, after it emerged the city council had paid out £6,000 to one company left out of pocket.

Businesses are set to take legal action against the local authority, after it emerged it had settled a case out of court against one of The Gathering's creditors.

The council paid out 6,000 in March, despite earlier pulling the plug on a deal to rescue the company behind the centrepiece event of the Year of Homecoming.

Creditors claim the move has "set a precedent" for compensating about 50 businesses left out of pocket 426,000 in total.

They claim it is "grossly unfair" for the council to single out one creditor for special treatment and that the local authority has a duty to fulfil its side of an agreement struck with the Scottish Government in the wake of The Gathering running into financial trouble.

The unnamed firm was paid, despite claims from councillors that they had no obligations to settle any of the debts of the clan gathering, which the local authority had earlier awarded a grant of 100,000.

The creditor in question wrote to The Gathering Ltd, the company set up by Conservative peer Jamie Sempill to run the event, the day after a rescue package was unveiled by the council and the Scottish Government, declaring that the city would be taking on the event's "private sector obligations".

A claim was raised against the council two months later, which it initially tried to resist. But, according to a report by Scotland's auditor general, Robert Black, the council reconsidered its position after pulling out of its deal to take over the company, and settled out of court in March of this year.

Council leader Jenny Dawe claims to have been left in the dark over the payment and has ordered an inquiry into the council's involvement with The Gathering.

One creditor, who asked not to be named, said: "It's incredible that this has only come out now, nine months after we were assured creditors would be paid.

"The council has clearly been given legal advice that it has to pay out to this creditor, and as far as we're concerned, that means any other company who has an outstanding claim will now be pursuing the council. This should have been settled long before now."

Stevie Olsson, director of Edinburgh Showtec Ltd, which helped to create the site infrastructure, said: "The council can't just compensate one company and not all over the others. The whole thing stinks."

Graham Birse, deputy chief executive of Edinburgh Chamber of Commerce, another creditor of The Gathering, said: "We've had no knowledge that anyone was paid by the council until now. We will certainly be seeking legal advice on this."

Sources at the local authority said the council had initially offered to underwrite the creditor's debt while negotiations were ongoing to secure the future of The Gathering.

The council insisted yesterday the payment was a "one-off" and was only made because the creditor had a letter from the local authority pledging to underwrite the debt from the event.

A spokesman said: "Had the creditor pressed for winding-up proceedings, this would have compromised the ongoing discussions to secure the future of The Gathering 2009 Ltd and, consequently, any prospects for all private sector creditors to receive payment."

Ms Dawe said: "I have asked the council's chief executive to report on the review to the council, to assess the implications of Audit Scotland's recommendations for Edinburgh and, in particular, to investigate why the council apparently met a claim from a creditor against The Gathering Ltd."

Now it's my turn for a pay-out

MARTIN Hunt's public relations consultancy is among the 50 businesses left out of pocket in the wake of the Gathering's collapse.

His company, Tartan Silk, based in Edinburgh's New Town, is still owed 7,929 for promoting the event and advising Lord Sempill's own PR team.

Mr Hunt, who has been campaigning on behalf of creditors, told The Scotsman: "It's absolutely appalling that the council has paid off a company in secret.

"It clearly has obligation to pay off the remaining creditors now, particularly as they all remained silent while negotiations were ongoing into the future of the Gathering.

"The council has clearly set a precedent by settling this case out of court, after it had decided to pull out of the deal with the government.

"If you look back, the council and the government clearly agreed to pay their share to try to rescue the company.

"The government has had to write off a loan of 180,000 and it's now time for the council to pay its share.

"We all accepted in good faith that all the creditors would be paid. It's only fair that the creditors are compensated properly for helping to run this event."