24.02.2011
The report into the circumstances which led to the liquidation of the Gathering 2009 Ltd with debts of £726,000, was published today by the Public Audit Committee.
In its Report: The Gathering 2009, the committee identifies key lessons it says must be learned by the Scottish Government and public sector bodies, if public money is to be used effectively in the delivery of events of national significance.
The committee has recommended that the Scottish Government undertake a review of its procedures for awarding grants and the governance arrangements surrounding support for major events, sharing any lessons learned with other public sector bodies. The committee is also concerned that no internal audit of the Gathering 2009 has been undertaken and therefore also recommends the Scottish Government reviews its processes for initiating and undertaking internal audits of projects which experience financial difficulties, are high risk or high value.
Committee Convener Hugh Henry MSP said:
“We believe that poor communication at key points throughout the planning, delivery and aftermath of The Gathering 2009 event meant that sometimes decisions were taken without access to all of the available information. The Scottish Government should have told the steering group of the £180,000 loan to the private sector company delivering the event. We also recommend that it reconsider its approach to joining any such steering groups in future.
“In considering the attempts to save the Gathering event after it made a loss, we were seriously concerned at the inconsistent and contradictory evidence we received. In particular, Council witnesses’ evidence on its discussions of the content and timing of its press release was contradictory. This press release would have led many creditors of the Gathering company to mistakenly believe their outstanding invoices would be paid by the arm’s length Council company DEMA (Destination Edinburgh Marketing Alliance Ltd). We have invited the Council to clarify its lines of accountability and its procedures for clearing press releases and communicating with DEMA.”
“We were also unable to reconcile the inconsistent evidence we received on the meeting between the Permanent Secretary and a Council official where it was proposed that DEMA may take on the Gathering event. No minutes were taken of this meeting. In order to avoid such misunderstandings in future, we recommend the Scottish Government urgently improves its procedures for minuting decisions and actions agreed at meetings.”
Although acknowledging the time constraints faced by the Scottish Government, the committee is unclear whether all of the possible alternatives to further public sector funding were fully explored before the Scottish Government concluded that additional public sector funding remained the only option.
The committee also made other recommendations for the Scottish Government including:
- It should review its due diligence procedures and in particular seek relevant financial information from its public sector partners before it considers providing such loans to limited liability companies.
- It should provide best practice guidance on the governance arrangements, including the level and detail of financial information provided to, steering groups charged with overseeing the delivery of projects and events.
- The Permanent Secretary should review the tests by which he may be notified of novel or contentious transactions.
Background
The Gathering 2009 was a signature event of Homecoming Scotland 2009. The Gathering 2009 was developed, organised and delivered by a private company, The Gathering 2009 Ltd. The company received public sector grants of £490,000 as well as a short term loan of £180,000 from the Scottish Government. EventScotland, Scottish Enterprise Edinburgh and Lothians, and City of Edinburgh Council formed a steering group with the directors of the Gathering 2009 Ltd. The Scottish Government did not join the steering group.
The Gathering 2009 took place on 25 and 26 July and comprised a clan gathering, Highland Games and pageant. After the event the company made a loss of £516,000 which, on 27 January 2010, resulted in the company going into liquidation with £382,000 owed to six public sector bodies and £344,000 owed to 103 private sector organisations.