KPMG will look into how the row was handled by the council, which owns 91 per cent of Lothian Buses, ahead of a report being presented to the city’s governance committee in April.
The announcement comes as questions were raised over the lack of progress on the probe despite being ordered by councillors three weeks ago, prompting anger from opposition figures and company workforce.
Terms of reference for KPMG’s investigation have yet to be agreed, and critics have hit out at the lack of urgency in setting up the probe to get to the bottom of a dispute that has seen six Lothian Buses executives and board members resign or be put on notice.
Announcing the appointment, council leader Andrew Burns said: “The council has acted entirely in accordance with proper governance procedures throughout and we are pleased to have now appointed KPMG, whose report will lay out the facts around recent events at Lothian Buses clearly and conclusively.
“We look forward to receiving the report from KPMG in the coming weeks ahead of its referral to the GRBV [governance, risk and best value] committee. In the meantime, we welcome Tony Depledge’s continued work to restore stability and proper governance to Lothian Buses’ management.”
Rab Fraser, chairman of the Lothian Buses Joint Trade Union Committee, representing Unite members at the firm, said ahead of the announcement that staff were “very concerned” about the lack of progress in setting up the investigation.
He said: “The council can’t fudge this. We’re very worried about how thorough it will be and whether it will get to the bottom of things.”
Unions were to be informed of the appointment last night.
Mr Fraser and fellow union leaders appeared in person before a meeting of the full council in February to plead for an independent probe into how the dispute was managed, and won unanimous support from councillors.
The company’s leadership was plunged into chaos when three senior executives lodged a grievance against Mr Craig, claiming he froze them out of important decisions and undermined their authority.
An investigation conducted by a board member upheld five of the eight complaints made regarding the chief executive’s conduct, including that he hired and fired staff without proper consultation.
However, when then-chairwoman Ann Faulds recommended Mr Craig’s dismissal, the council refused to give its backing and Ms Faulds was allegedly forced to resign.
Last month, new chairman Tony Depledge announced that all four executives had been put on notice and would leave the company within two years.
The delay in getting the review off the ground was blasted by opposition Tory councillor Jason Rust, who originally lodged the motion calling for an independent probe.
He said: “If promised timescales are not met there will be a lack of confidence in the entire process, which is the last thing we need.”