Exclusive:Investigation into 'rigged' ferry contract not examining whether procurement rules were broken

CMAL hired Barry Smith KC after the BBC documentary the Great Ferries Scandal aired in September last year.

A lawyer hired to investigate the conduct of Scotland’s ferry infrastructure body when it awarded the contract for two controversial vessels will “exclude examination” of allegations it “rigged” the process.

The Scotsman revealed in February that Barry Smith KC was hired by CMAL to lead an independent probe into allegations made in a BBC documentary that the public body unfairly favoured the Ferguson Marine shipyard, breaching procurement rules.

Instead, Mr Smith’s remit has been restricted to look solely at whether the crime of fraud has taken place, an allegation not made by the BBC.

Glen Sannox at the Ferguson Marine shipyard on June 23 2023. Picture: The Scotsman

This has sparked critics to accuse the investigation itself of being “rigged” and destined to clear CMAL of wrongdoing without examining the central allegations of the documentary.

The then deputy first minister, John Swinney, said the findings of the documentary were serious and pledged they would be investigated further, while Audit Scotland said it raised “serious questions” about the use of public money.

CMAL said it was unable to comment while the investigation was ongoing, but when the documentary was aired said the allegations needed to be “carefully investigated”.

The two ferries at the centre of the scandal being built at Ferguson Marine, the Glen Sannox and hull 802, are more than five years late and set to cost more than £300m, three times their original anticipated cost and are central to an ongoing political scandal.

11/04/2023. Ferguson Marine yard in Port Glasgow.

The Scotsman can also reveal the BBC has pulled out of cooperating with the probe, with the broadcaster stating "the inquiry’s remit seems completely to exclude investigating whether or not the contract was procured fairly”.

It is understood Mr Smith met with the BBC earlier this week to discuss ongoing cooperation following behind-the-scenes discussions about the probe’s scope.

However, the meeting led to the broadcaster withdrawing from the process, citing a lack of transparency and an extremely narrow remit.

In September last year, BBC Disclosure released ‘The Great Ferries Scandal’, alleging a wide number of irregularities including the central allegation that Ferguson Marine were favoured during the tender process, breaching procurement rules.

It also detailed how Ferguson Marine obtained a detailed technical design document, parts of which were cut and pasted for its bid.

A BBC spokesperson said BBC Scotland had “hoped to cooperate” with Mr Smith's investigation despite concerns about transparency around the report, but that it had become clear that the report would not examine “whether or not the contract was procured fairly.”

They said: “BBC Scotland had hoped to co-operate with the inquiry, despite our previously expressed concerns that the terms of reference were not being shared, nor was there a commitment to publish the final report in full.

“However it became clear from the meeting that the task given to Mr Smith by CMAL’s lawyers is to establish simply whether the crime of fraud has taken place. Specifically, the inquiry’s remit seems completely to exclude investigating whether or not the contract was procured fairly.”

They added: "The central allegation made by the BBC was that FMEL was given preferential treatment in breach of procurement rules. We were told at the meeting that this is not a matter Mr Smith is investigating.

"We are concerned that the remit has been drawn so narrowly that it will exclude examination of the important allegations the BBC made. As a result, we do not see how we can assist further than with what we have already published in our journalism, which we fully stand behind.”

Richard Leonard, convenor of Holyrood’s Public Audit Committee which has been investigating Ferguson Marine and the construction of the two ferries, was scathing about the investigation’s narrow remit.

He said: “The Public Audit Committee called for the procurement process to be thoroughly and urgently investigated following the broadcast by the BBC.

"This development suggests neither. We think the whole procurement process requires a thorough and transparent audit.”

Scottish Conservative transport spokesperson, Graham Simpson, said the narrow remit was “scandalous” and labelled the investigation a “farce”, highlighting the fact CMAL are also refusing to state how much the probe will cost.

He said: “This is scandalous. Nobody said that there was fraud, criminal or not. The suggestion was that the procurement process was rigged. That's what the KC should be looking at.

“Now it looks as though the investigation following allegations of rigging is rigged itself to give the answer the government wants. And we don't even know what the cost of this farce is.

“Vast amounts of public money have been spent on these two ferries, which aren't even ready yet, and we need to know what led up to the awarding of that disastrous contract.”

Willie Rennie, the Scottish Liberal Democrat economy spokesperson, echoed Mr Simpson’s language and criticism.

He said: “By setting the bar for guilt so high it looks like the investigation is rigged, just like the procurement process itself.

"It’s just not good enough for so much money to be wasted on an investigation which seems destined to clear them of any wrong doing without investigating the central allegation about the flawed procurement process.”

Since the decision to grant the contract to Ferguson Marine, then owned by pro-independence tycoon Jim McColl, the yard failed to complete the ferries before collapsing into administration and being nationalised by the Scottish Government in 2019.

In May, economy secretary Neil Gray committed another £72m in public money to complete hull 802 despite being told it would be cheaper to re-tender the contract.

It can also be revealed that ministers were warned Ferguson Marine could “run out of cash” in November last year. This led to an additional £21m being sent to the yard while ministers considered whether to continue supporting the yard with the additional £72m in requested funding.

Ministerial submissions from civil servants also detail that a new expert, Woodbank Marine Ltd, was brought in by the government to assess the state of the ferry construction at the yard.

It concluded that while plans were “reasonable and could be achievable”, there remained “significant areas of risk”, though specifics were redacted.

They also detail that as recently as September last year, the final design for hull 802 had yet to be finalised, despite it being due for delivery in early 2024.

Ministers said they were confident lessons had been learned from the Glen Sannox experience and would be applied to 802, adding the £21m in additional funding followed government due diligence.

It added that it continued to engage with Ferguson’s to understand why issues continue to emerge at a late stage and is “urgently engaging with Ferguson Marine to avoid any additional hold ups.”

On the narrow scope of the KC investigation, a Transport Scotland spokesperson said: “The Scottish Public Finance Manual places an obligation on CMAL to investigate allegations of the nature indicated (by the BBC).

"Transport Scotland 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, Transport Scotland 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.”

A spokesperson for CMAL said “ We are not at liberty to comment on the KC investigation while it is ongoing.”

A spokesperson for Ferguson Marine (Port Glasgow) said: “We are working to an agreed design on Hull 802, however as is always the case on major projects, minor adjustments may be required as work progresses.

“We will know more on the timetable for delivery of both vessels when we have digested the Maritime and Coastguard Agency’s feedback with regard to Glen Sannox, and created a work plan based on their requirements.”