A Holyrood committee has raised fears at a “lack of transparency” over public funding ploughed into struggling BiFab years before the company collapsed.
BiFab, which as years in Burntisland and Methill and another on the Isle of Lewis entered administration in December, two years after a deal in which Canadian firm DF Barnes acquired the business for just £4. The Scottish Government invested £37 million into the company and became a minority shareholder.
Bosses at DF Barnes have told MSPs that at the time of the deal, ministers had understood the company would not be investing significant amounts of cash in BiFab.
MSPs on Holyrood’s Economy, Energy and Fair Work Committee has warned that “greater accountability and transparency” is needed when ministers invest money into companies to try and prop them up.
In its report, the committee said that for reasons including financial viability and state aid rules, “neither DF Barnes nor the Scottish Government felt able to provide the finance required to secure the vital contracts BiFab needed to avoid administration”.
The report added: “The financial loss to the public purse of BiFab failing as a company demonstrates that greater accountability and transparency is needed.”
The MSPs said DF Barnes should have released its pre-acquisition plan for BiFab to them as part of their investigation.
The report said: “Almost £40 million of public money has been spent on supporting BiFab since 2017 and when public money is involved, there must be transparency in decision making.
“The committee strongly believes that DF Barnes should have released the pre-acquisition business plan to aid the committee’s scrutiny.”
The MSPs also asked the Scottish Government to clarify if it had a “strategic long-term plan for its investment in BiFab”.
BiFab struggled to compete for contacts to construct parts of turbines for offshore wind farms, and the committee said it was “concerned” by suggestions it heard that overseas companies “are able to undercut bids by Scottish companies due to lower wages for workers and less stringent health and safety practices”.
With Brexit meaning the UK is no longer bound by European Union state aid rules, the committee called on the Scottish Government to “clarify whether it now has the legal power to insist on Scottish content” in offshore wind developments.
Committee convener Gordon Lindhurst said the “failure” of BiFab had been a “huge blow for workers and communities in Burntisland, Methil and Arnish”.
He added: “It is also a concerning reflection of the ability of the Scottish supply chain to benefit from the growth of offshore wind. It is now vital that the administrators find a buyer to secure the future of the company.
“The committee is extremely concerned by the lack of transparency on the part of both DF Barnes and the Scottish Government over their decision making and use of public funds.
“Both cited the pre-acquisition business plan as corroboration of their position, but despite repeated requests neither shared this business plan with the inquiry.
“The evidence to our inquiry indicated that, for a number of reasons including financial viability and state aid rules, neither DF Barnes nor the Scottish Government felt able to provide the finance required to secure the vital contracts BiFab needed to avoid administration.
“The financial loss to the public purse of BiFab failing as a company demonstrates the need for greater accountability and transparency, and for the Government to set out its overarching policy on strategic investment in failing companies.”
After MSPs heard Scotland had “missed opportunities” to economically benefit from growth in the offshore wind sector, Mr Lindhurst said the committee “believes it is essential for the Scottish Government to prioritise areas where there will be job opportunities and economic benefits in the future”.
He added: “Both the UK and Scottish governments have set ambitious targets for the development of floating offshore wind. That ambition must be matched with a clear strategy on how targets will be met whilst maximising opportunity for Scottish content.”
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