Lochaber smelter auditors resign due to 'lack of information' as Scottish ministers refuse to answer questions

Ministers continue to claim they believe the Lochaber smelter is performing profitably despite the company’s auditors resigning after they were blocked from stating there was not enough information or evidence to complete their work.

The resignation of King & King Chartered Accountants, who themselves are under a Financial Reporting Council investigation for an earlier audit of the smelter’s company, Alvance British Aluminium Ltd, was announced last week.

It follows the same move at several other GFG Alliance companies audited by the firm, including the Dalzell steelworks, backed by a £7 million Scottish Enterprise loan.

In their resignation letter, the auditors cite a lack of information and evidence around the ongoing Serious Fraud Office investigation into the GFG Alliance group, the ability of the company to fund its operations for the coming year, and the recoverability of inter-company loans and payments.

In 2016 the Scottish Government agreed to guarantee 25 years of the Lochaber smelter’s power purchases from the associated hydropower plant, initially worth £586m, in return for a fee and security over the smelter, hypro-plant and land.

The collapse of Greensill Capital, GFG Alliance’s main funder, has sparked concern around the future of the group.

Ministers claim the assets are worth more than the outstanding potential debt should the smelter fold, but refuse to release an independent valuation of the site.

Employees working at the Lochaber smelter, near Fort William.

The Scottish Government was asked when it became aware of the auditor’s resignation, what it believes the risk of GFG Alliance collapsing is, what assurances it has been provided with to ensure the accounts are accurate, and whether they believe they have seen more information than the auditors around key information regarding the smelter.

None of the questions were answered.

Ivan McKee, the business minister, said: “The appointment of auditors is a matter for GFG Alliance as a private business.

“The Lochaber smelter is performing well and GFG has increased direct employment at the site since our intervention in 2016. The 200 direct jobs in Fort William and the valuable supply chain that relies on the smelter underlines just how important our intervention was.

“There has been no call on the Lochaber Guarantee and all fee payments due to the Scottish Government are up to date.”

All episodes of the brand new limited series podcast, How to be an independent country: Scotland’s Choices, are out now.

It is available wherever you get your podcasts, including Apple Podcasts and Spotify.