'No merit' in keeping secret review into future cost of keeping Ferguson Marine afloat- Auditor General

There is “no merit” in keeping secret a key review into the future of the Ferguson Marine shipyard which could outline millions in additional taxpayer-funded investment, the Auditor General has said.

Ferguson Marine shipyard in Port Glasgow

This is despite the existence of a gagging clause between the Port Glasgow shipyard and a consultancy firm, First Marine International, which was hired by the Scottish Government to undertake a report into how to make the yard competitive for the future.

Ministers were unaware of the non-disclosure agreement between FMPG and FMI until it was reported in The Scotsman yesterday. The gagging clause covers “anything before or after signing of the NDA”, the shipyard said.

Stephen Boyle said any “wider review” into the yard’s competitiveness and its future that includes any potential “financial implications” must be made public.

It is believed the FMI report is this “wider review”, however the NDA blocking its publication was agreed with Ferguson Marine following a request from the consultancy firm. There are also concerns around commercial sensitivity.

Mr Boyle said he was unsure if the FMI report is the same report the government will use to “determine its whole financial liability”.

He said: “We understand, and as I mentioned earlier, that it is the two reviews. One has been the due diligence of the costs and then this wider review, which it is my understanding this was a Scottish Government led review as opposed to FMPG. Government could confirm exactly how those two reviews interact.

"That needs to be transparent, quite clearly. There is no merit for that report to sit and be internal only.

"It has to be clear publicly what the government's intention is, not just for the workforce but there are very clear financial implications, commitments, as Joanne [Brown] mentioned about the change in scale from the delivery of 801 and 802 to future provision, but how all those reviews work together is a matter really for the government and FMPG.

"From our perspective though it has to be clear publicly what the intent is at the completion of them."

A Scottish Government spokesperson said it was for the Auditor General to clarify what he meant when he referred to a “Scottish Government led review”.

They added: “The Scottish Government is continuing to conduct the necessary and proper financial due diligence on the delivery of 801 and 802. This work is due to complete in the near future.”

MSPs also raised the issue of bonus payments worth £87,000 which were paid to six senior management staff members at the shipyard without the knowledge of the Scottish Government.

Asked by SNP MSP Willie Coffey, who claimed it “beggars belief” bonuses could be paid at the yard – if the money could be recovered, Mr Boyle said: “I don’t know if those amounts are recoverable, that would have to be a judgment made by others in terms of the specifics of it, in terms of conditions that existed for those senior managers, what their contracts said.

“We draw attention to these amounts because the amounts were paid without effective governance by the remuneration committee being discharged before the amounts were paid.”

He added that it was a “matter of public interest” that bonuses were paid by the yard.

The bonuses were recommended by the yard’s former turnaround director Tim Hair, who was paid £1.8 million during his time at the firm bet ween August 2019 and February 2022.

Mr Boyle told the committee the bonus was in two parts, 7.5 per cent to be paid upon delivery of the hull of the Glen Sannox and “a further 10 per cent discretionary element”.

“The governance and decision making around that was based on a recommendation from the former turnaround director, chief executive, through the remuneration committee to make those payments,” Mr Boyle added.

“In our view that wasn’t sufficiently robust, it wasn’t clear whether the KPIs had been met and again speaks to real ambiguity around progress and process.”