Sir Fred Goodwin's new firm insists finances 'healthy' despite cash flow trouble

THE Edinburgh-based global architecture firm behind the Scottish Parliament has admitted cash flow problems resulted in wages being paid late over the past year amid an exodus of senior staff.

A spokesman for RMJM refused to confirm whether the payment problems were linked to changes in the way the company collected fees, which were made after the appointment of former RBS chief Sir Fred Goodwin as an adviser. The spokesman said yesterday the firm remained in "healthy financial shape".

The Scotsman understands that a financial restructuring has been put in place by Sir Fred at the company - which has offices all over the world - prompting concern among senior staff.

It was revealed yesterday that Dubai government officials have visited the firm's office in the oil-rich emirate over delayed wage payments during the past year, while police have questioned staff there because it is illegal in the gulf state to issue bounced cheques. The Scotsman can also reveal that the firm's English operations have been reorganised, with projects relocated from an office in Cambridge to its main London HQ.

The firm has seen 80 staff quit its Hong Kong office in recent weeks. Barry Shapiro, RMJM director for Asia, is also understood to have stepped down.

Several senior staff in the US, where RMJM has offices in Princeton and New York, have also gone, including Ronald Weston, a managing principal for RMJM in America, and international design principal Jo Palma.

However, a spokesman for the firm yesterday insisted that, despite claims he is to blame for the crisis, Sir Fred remains no more than an "adviser to the company".

The RMJM spokesman admitted to The Scotsman that the company was experiencing difficulties in some areas.

The spokesman said: "Like other architectural companies, cash management is a vital component. There is a significant sum of money owed and we are currently trying to get this sorted out."

He added: "As a result of cash flow pressures, a significant client is behind on its payment schedule and we are in negotiations to have that brought up to date. That in turn has caused cash flow issues, putting us in a similar position to many of our competitors in the region."

The spokesman refused to comment on claims that the firm's difficulties were a result of a new centralised financial regime implemented by Sir Fred covering the company's many offices around the world.

He said: "We wouldn't want to go into that level of detail. Sir Fred is an adviser to the company. Our figures speak for themselves and remain healthy."

On changes to RMJM's English operations, the spokesman said: "The London market in particular is tough for everyone.It was partly in response to local market conditions that we announced several months ago that we'd be moving an element of our activities from the Cambridge office - which remains open - into London."

In September The Scotsman revealed RMJM had lost four of its senior executives since Sir Fred was appointed.

The company has transformed itself from a medium-sized Scottish practice based at Edinburgh's Bells Brae into a massive global concern in recent years under the leadership of chief executive Peter Morrison.

Questions have been raised about the speed of the firm's expansion - particularly in the US. There are also concerns about the increasing influence of Sir Fred, who was hired as a consultant on a six-figure salary.

A source said: "The recent changes have resulted in a much harsher regime."