Scottish Government's controversial China deal with '˜could still be on track'

One of the key figures involved in setting up discussions between the Scottish Government and potential Chinese investors believes that the opportunity for business remains alive, despite criticism over alleged links to human rights abuses and corruption.

SinoFortone MD Zhang Yu and Sir Richard Heygate flank the First Minister as she signs the memo at Bute House in March

The Scottish Government has come under fire over a memorandum of understanding (MoU) signed in March this year with China Railway Company No3 (CR3) and after allegations were raised about its parent company, China Railway Group (CRG).

Amnesty International cited “human rights abuses” by one of the CRG’s other subsidiaries, as well as Norwegian government concerns about “gross corruption”. Opposition parties have urged First Minister Nicola Sturgeon to cut ties with the company.

Deputy First Minister John Swinney stated last week that the allegations do not refer to CR3, and it was confirmed that discussion about the MoU continued on 30 June and as recently as 29 July.

It was reported in a minute from the July meeting of Scottish Government officials and the chair of Asia Scotland Institute, Roddy Gow, that “despite the media coverage he (Gow) was still of the view that the MoU could deliver benefits for Scotland”.Contacted yesterday by Scotland On Sunday, Gow said he stands by that belief, and stressed that all talks had taken place “in absolute good faith”.

“What I said remains precisely my position,” said Gow. “A memorandum of understanding is just that: it isn’t a contract.

“I introduced these people in all good faith. The specific allegations do not involve this company, and I am quite sure that the government of Scotland would not do business with any company about which there were serious doubts.”

Gow believes that despite the controversy, business links can still be established between Scotland and China.

“I hope so,” he said. “It will be a tragedy if these opportunities were not pursued. The other party involved (CR3) is already successfully investing enormous amounts in other parts of the world.

“The Asia Scotland Institute exists to build bridges between Scotland and Asia, for us to be better connected with Asia.

“It is important to have these links, because this is the future. This sort of approach is how major Scottish infrastructure projects can be funded. It makes total sense to me, providing that the right partner is found.”

Last night the Scottish Conservative MSP Alex Johnstone expressed concern about the Scottish Government’s links to CR3.

He said: “The handling of this situation has been appalling.

“We all want to see greater investment and more job opportunities, but this cannot be at any cost.

“This deal has been mired in controversy from the start, and many people are quite rightly uneasy at the allegations of corruption and human rights abuses that quickly appeared after the Memorandum of Understanding was signed.

“There must be absolute transparency in situations like this, and the Scottish Government should learn a lesson from this shambles, go back to the drawing board and seek fresh investment with due diligence. It is frankly astonishing that this saga continues to limp on.”

A Scottish Government spokeswoman said: “The memorandum of understanding is about developing a working relationship to explore possible investment in Scotland. There is no deal or agreement and no commitment of public funds.

“The Scottish Government works with many potential investors to bring jobs and benefits to Scotland.”