Not credible, not acceptable - Edinburgh's leaders are damned over clans debacle

A DAMNING report has accused Edinburgh city council leaders of "unacceptable" behaviour and of giving evidence that was not "credible" over their role in a loss-making clans event.

The Scotsman has obtained a copy of the Scottish Parliament's public audit committee report into the Gathering, which was staged as part of the 2009 Homecoming tourism drive.

Edinburgh council is heavily criticised in the report, being officially published today, for issuing a misleading statement claiming its "arms length" tourism body would cover the debts of The Gathering Ltd, which collapsed owing 516,000.

The report also says that the Scottish Government did not make "robust checks" when it made a secret 180,000 loan from the public purse to bail out the event, which was later written-off.

One of the key recommendations of the report calls on the Scottish Government to review its "due diligence" procedure in lending taxpayers' cash to private companies.

However, the harshest criticism in the report is directed at Lib Dem Edinburgh city council leader Jenny Dawe and her deputy, the SNP's Steve Cardownie, over evidence they gave to a hearing of the public audit committee into the Gathering.

Both councillors had told the committee that a council press release drafted by the Scottish Government, claiming that Destination Edinburgh Marketing Alliance (Dema) would take over responsibility for debts owed by the company which had organised the event, had been issued without their knowledge.

A key line in today's report said: "The committee has serious concerns regarding the quality of the oral evidence from the council witnesses and does not consider their evidence to be credible."

The report went on to say that "the committee also considers the council handling of the clearing of the press release to be unacceptable."

Committee convener Labour MSP Hugh Henry said it "would have led many creditors to mistakenly believe their outstanding invoices would have be paid by the arm's length council company Dema".

Edinburgh city council, which has previously been asked by creditors to cover the outstanding debts, was also ordered to "undertake an investigation leading to the contradictory evidence it provided".

The Scottish Government was also criticised over a lack of transparency in making the 180,000 loan to The Gathering Ltd, with the report saying that ministers should have "proactively provided that information" to the other organisations involved in the event steering group.

Another key recommendation in the report called on the Scottish Government to overhaul its auditing procedures for "high-risk" loans for projects".The report said: "The Scottish Government did not complete robust checks of the company's ability to repay the loan and regrets that such checks were not undertaken in this case.

"The committee therefore recommends that the Scottish Government should review its procedures for undertaking due diligence work should it consider providing loans to limited liability companies again."

Meanwhile, Mr Henry, in the official press release with today's report, claimed: "We believe that poor communication throughout the planning, delivery and aftermath of the Gathering 2009 event meant that sometime decisions were taken without access to all the available information.

"The Scottish Government should have told the steering groups of the 180,000 loan to the private sector company delivering the event. We also recommend that it reconsider its approach to joining any such steering groups in future.

"In considering the attempts to save the Gathering event after it made a loss, we were seriously concerned at the inconsistent and contradictory evidence we received.

"In particular, council witnesses' evidence on its discussions of the content and timing of the press release was contradictory.

"This press release would have led many creditors to mistakenly believe their outstanding invoices would have be paid by the arm's length council company Dema."