Scotland

Concern over hospitality received by ferry firm director

Lorna Spencer
Image caption Lorna Spencer is CMAL's director of harbours

A director of the public body in charge of Scotland's ferries accepted several offers of hospitality from a firm bidding for lucrative public contracts.

Caledonian Maritime Assets Ltd (CMAL) has strict rules on hospitality.

But concerns have been raised after a BBC Scotland investigation revealed a CMAL director, Lorna Spencer, accepted hospitality from a prominent company during live tender processes.

CMAL said it had investigated and found no breaches of its hospitality policy.

CMAL is a public corporation which owns Scotland's ferry infrastructure on behalf of the Scottish government. It awards major contracts worth tens of millions of pounds of taxpayers' cash to upgrade its ferry fleet and harbours.

The quango's hospitality register is not publicly available, but has been obtained by BBC Disclosure under Freedom of Information legislation, along with its gifts and hospitality policy.

Image caption One of the contracts was for work at Lochaline harbour

CMAL's rules forbid staff from accepting hospitality worth more than £150, unless there are compelling business reasons to do so. The rules also state that staff involved in active procurement are not permitted to accept hospitality from bidding companies.

The hospitality register reveals that on at least four occasions, director of harbours Mrs Spencer has accepted hospitality totalling hundreds of pounds from Glasgow firm George Leslie Ltd while it was bidding for CMAL contracts.

In July 2018, Mrs Spencer, for the third year in a row, attended a major golf event as a guest of George Leslie.

The trip to the British Open in Carnoustie comprised a one-day ticket to the event, minibus travel from Glasgow, breakfast, lunch, refreshments and an evening meal. She also took a family member as a personal guest.

The ticket alone for this event was £80, and including the cost for her guest, the hospitality was worth at least several hundred pounds. On CMAL's hospitality register, Mrs Spencer entered only £100.

Image copyright David Cannon
Image caption CMAL awards contracts for Scotland's ferry infrastructure

In the previous two years, George Leslie had been awarded about £26m of contracts within the Harbours remit of CMAL, including redevelopment work at Brodick Pier.

At the time of the golf event, George Leslie was involved in five live tenders worth about £20m, including:

  • Harbour upgrade at Lochaline in the Highlands - £3m
  • Decommissioning work at Brodick, Arran - £248,000
  • Linkspan refurbishment in Skye, Tiree and Coll - £2.7m
  • Kerrera island breakwater repairs - £594,000

George Leslie has since won all four of those contracts.

A decision has yet to be taken on a fifth contract, worth about £13m, for work to be carried out on the Uig, Lochmaddy and Tarbet triangle.

As director of harbours, Mrs Spencer is one of eight people who sits on the CMAL board. The board oversees procurement, is given regular updates on who is bidding for which job, and signs off on the awarding of contracts.

CMAL insists Mrs Spencer is not involved in the tender assessment process, and so has not broken any rules.

It also said verbal permission had been sought by Mrs Spencer and agreed by CMAL's chief executive officer.

'Very clear' policy

BBC Disclosure asked global anti-corruption campaign group Transparency International to look at CMAL's hospitality policy and our evidence.

Duncan Hames, head of policy, said CMAL's policy was "very clear".

He said: "The suggestion that what's happened is totally in line with the policy just doesn't stack up.

Image caption Duncan Hames said CMAL's policy was clear

"This is an organisation of a few dozen people. The board of directors is tasked with approving these tenders. These tenders cannot go ahead without the approval of the board of directors. Clearly the directors are involved in this tenders process and to suggest otherwise is fanciful.

"It's one thing for there to be instances of breaches in a policy - it quite another for those charged with the governance of an organisation to be unconcerned about those breaches and I imagine the ministerial team… would reflect on that when considering whether they can have confidence in the governance of this organisation."

Mr Hames said he could not think of any business justification for the CMAL director, who is paid between £90,000 and 100,000 per annum, to accept the hospitality.

Hospitality register

And he added: "It's not just my opinion that matters here. In the policy that's meant to be enforced in this organisation, it explicitly states that sort of gift and hospitality is unacceptable.

"So the organisation itself knows this hospitality should have been declined."

The hospitality register shows that CMAL staff have declared more than £15,000 in hospitality since 2015. Hospitality from George Leslie makes up about £1,100 of the total, £445 of which was declared by Mrs Spencer.

Image copyright Getty Images
Image caption Mrs Spencer attended the Open at Carnoustie last year

This is not the first time that concerns about Mrs Spencer's hospitality with George Leslie have been raised.

The BBC has seen an email from a member of CMAL's procurement team sent to a senior director, shortly after Mrs Spencer's trip to Carnoustie last year.

It read: "We just cannot… have people going to sporting events with companies that have tenders in for work…

"We should cancel the contracts won by [George Leslie] in the last two months and ban them from all current tenders that are active...

"This is front page of the Daily Record stuff."

'No breach of policy'

CMAL told the BBC that concerns about hospitality were "periodically" raised by the procurement manager. It said these were "duly investigated" and that no breach of the hospitality policy had been found.

It said attending social events was "a necessary part of our business".

CMAL said the golf trip amounts "were not excessive… even if they may have inadvertently been understated in retrospect".

It said that Mrs Spencer was not part of the tender assessment panel and so "not ultimately responsible for live bidding processes".

It said the board "act collectively to approve the tender evaluation."

George Leslie Ltd told the BBC that it "conducts its business in an honourable way with integrity" and that "proportionate hospitality" was "an integral part" of maintaining business relationships.

'Robust and appropriate'

Mr Hames told the BBC that the "gravity" of the issue meant that CMAL had left itself open to legal challenge.

He said: "If the unsuccessful bidders to these tenders in light of all this were to challenge the award of these contracts that would be very significant both financially and operationally to the activities of this public body and I think ultimately that is the gravity of this situation."

Image caption A contract was tendered for work at Brodick on Arran

CMAL is fully owned by the Scottish government and a government-appointed sponsor sits on the board.

A Scottish government spokesman said: "It's important to stress that CMAL is solely responsible for the operation of its policies and the conduct of its staff is a matter for the company, not ministers.

"We regularly meet CMAL management to discuss tendering and procurement issues and will be engaging with CMAL as part of our continued sponsorship function to seek assurances that their processes and procedures are robust and appropriate."

CMAL has also been involved in a row over a contract to build two new CalMac vessels.

Ferguson Marine has claimed it will lose £40m on the delayed deal, blaming "interference" by CMAL. But the government-owned firm said only about £1.45m in extra costs had been incurred.

Last week, Transport Secretary Michael Matheson said the ferries may not be ready until 2020, and warned it could be even later.

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