Ferries scandal Scotland: Scottish Government officials sought to restrict publication of KC report into 'rigged' contract

Barry Smith KC was appointed to investigate claims of fraud made in a BBC documentary

Senior officials within Transport Scotland sought to restrict the publication of an independent, lawyer-led, investigation into whether the contract for two ferries to be built at the embattled shipyard Ferguson Marine was “rigged”.

Documents obtained by The Scotsman show extensive discussion between the government and the ferry procurement body CMAL about the nature and scope of the investigation, with Transport Scotland lobbying to ensure there was no commitment to publishing the report from the KC.

This is despite the economy secretary, Neil Gray, who has responsibility for Ferguson Marine, claiming it would be CMAL alone who will “consider its findings and what can be shared with Parliament”.

The contract for the two ferries being built at Ferguson Marine is under scrutiny. Picture: John Devlin

Humza Yousaf, answering questions from Scottish Labour MSP Richard Leonard during a meeting of the Scottish Parliament’s conveners group, said he would “take advice” about whether or not the report could be published and committed to being as transparent as possible.

Transport Scotland civil servants disagree, however, lobbying CMAL to ensure there was no commitment to publishing the report from the KC.

This follows concerns that CMAL will be privately marking their own homework despite demands from MSPs for the report to be published.

CMAL said no restrictions had been set on who Barry Smith KC, the lawyer leading the inquiry, can interview, but did not answer questions about Transport Scotland’s involvement.

The emails, disclosed under freedom of information rules, also provide an insight into what Mr Smith will be considering during his investigation.

In an email from CMAL chair, Morag McNeill, she states the work of the lawyer is “likely to include” interviews a maximum of six people from within CMAL, but initially no contact with the BBC.

However, it can be revealed the BBC has been contacted by Mr Smith as part of the probe, raising questions about whether the scope of inquiries has widened.

The BBC said it was minded to co-operate, but raised concerns about a lack of transparency and the failure to share Mr Smith’s terms of reference.

A BBC Scotland spokesperson said: ‘We can confirm the programme makers have been contacted by Barry Smith KC.

"We are keen to cooperate, but are concerned that the terms of reference for this inquiry have not been shared with us, nor does there appear to be a guarantee this report will be published in full.

"We have raised these issues of transparency with Mr Smith and our discussions are continuing.’

The work intended to include consideration of background materials and a “briefing consultation” with the KC, the emails state.

Interviews would also be undertaken with the three former executive directors of CMAL, likely to refer to former chief executive Tom Docherty, vessel director Andrew Duncan, and Gillian Bruton, finance director, who were at the body at the time the alleged “rigging” was taking place.

The note also notes a planned interview of a current CMAL employee with a “key awareness of, and who was an eyewitness to, many of the events in question” and “potential” interviews with two former CMAL procurement managers at the time.

No-one from FMEL, Transport Scotland, CalMac, or any of the contracted consultants such as Houlders appear to be part of the report.

The emails also stated that CMAL would wait until after the point unsuccessful bidders could legally challenge the procurement of the vessels following the BBC documentary’s publication before instructing a lawyer.

This draft scope was then shared with Transport Scotland and Audit Scotland on Halloween.

In November, Frances Pacitti, the then director of aviation, maritime, freight at Transport Scotland (a role she vacated in May 2023 according to her LinkedIn profile) moved to ensure publication of the report was not assumed.

In a lengthy email including “a few reflections” of the planned scope, Ms Pacitti said it was important to “manage expectations” about the “ability of a CMAL appointed KC to review actions of third parties”.

She added: “This paper indicates that the KC report will be published. But we have discussed that publication may be subject to legal privilege, GDPR and broader commercial sensitivities.

"It might be worth making that explicit at this stage, to allow the appointed KC to take that into account when considering how to structure their report.”

The senior official added that it was important the review answered whether there was “fraudulent intent” in allowing FMEL to pass the early procurement stage and whether that was “material” to the contract award.

She also pointedly remarked that there was “no allegation of fraud in relation to any of TS [Transport Scotland], CFL [CalMac], or FMPGL [Scottish Government-owned Ferguson Marine]”, and that any management of the contract “post contract award” should be excluded.

The emails also reveal Mr Smith KC was instructed in December, with that only being made public knowledge when it was revealed by The Scotsman in February.

During a Holyrood debate on ferries, Scottish Labour’s transport spokesperson Neil Bibby said the findings of the lawyer’s report must be shared with MSPs in full “no ifs, no buts”, with no redactions.

He said: “I say to the cabinet secretary that it is not for CMAL to tell us what it will and will not share with the Government. That report must be shared in full – no ifs, no buts.”

Neil Gray, the economy secretary, said the decision would be for CMAL.

He said: “Once the investigation is completed, CMAL will carefully consider its findings and what can be shared with Parliament and the committee. Although our view is that there is a need for transparency and openness on that serious matter, I stress that it is for CMAL and the procuring authority to consider next steps as a result of the investigation.

A CMAL spokesperson did not answer questions on Transport Scotland’s involvement, nor the scope of the inquiry.

They said: “CMAL will await the findings of the investigations by the King’s Counsel, after which it is the responsibility of the CMAL Board to consider the findings.

"In terms of witnesses, it entirely up to the King’s Counsel to decide who he wishes to invite to speak to him on this matter. No restrictions in this regard have been set.”

Transport Scotland said the permanent secretary had been copied into a ministerial submission about the report, and did not comment on whether it should be made public.

A spokesperson said: “The Scottish Public Finance Manual places an obligation on CMAL to investigate allegations of the nature indicated by the BBC. We engaged with CMAL on the scope of the work to ensure that various parties with an interest were clear on roles and responsibilities and there was no duplication of effort. As shareholder, we sought confidence that the investigation would be focused and robust.

“Any report that is received by CMAL from the appointed King’s Counsel will be considered by the CMAL Board.”