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Financial Integrity, Moral Integrity, Tax

Aftermath of The Scottish Coal (Deep Mine) Company Limited liquidation

Wilson & Lawwell

Celtic chief executive Peter Lawwell and Brian Wilson arrive back from Udinese. Copyright: Willie Vass

Scottish taxpayers paid Liquidation tab for private company

In 2002, as well being the recipient of £41 million in Labour government subsidies over the previous 2 years, it was discovered by the Scottish opposition, the SNP, in Holyrood that The Scottish Coal (Deep Mine) Co. Ltd had been given a secret blank cheque by the UK Labour govt when the bill came through for their £4.5million liquidation and it was paid by the Scottish Executive i.e. Scottish taxpayers. This guarantee was agreed in 1999, when Peter Lawwell was the company’s Group Finance Director and Brian Wilson was Labour UK Energy Minister and responsible for coalmining. Now of course Mr Lawwell is CEO of Celtic PLC and Mr Wilson is a Celtic PLC Director.

How was a secret overdraft given that bound the Scottish taxpayers, without due diligence, to bail out a Private company? Where was the due diligence, parliamentary oversight & risk controls? How open ended was the agreement? Does this deserve a Royal Commission to investigate corruption or fraud? This could only have been done with the board of The Scottish Coal (Deep Mine) Co. Ltd. with heavy involvement of Peter Lawwell who was the Group Finance Director at the time and the agreement of following Labour Party heavyweights:

Brian Wilson, UK Energy Minister with responsibility for coalmining

Gordon Brown, UK Chancellor

Surprise, surprise, Gordon Brown was also the local MP in Fife where the mine was located. Without Labour parties being in power on both sides of the border, there is no way this could have been done and covered up. Still it is an amazingly brazen act to rope the Scottish taxpayer in to pick up the bill of a Private company without any Parliamentary oversight. Who was looking after the Scottish public’s right to know what potential liabilities they were up for, should the company’s collapse?

SNP Discover the Secret Scottish Taxpayers Guarantee

On 14th May 2002, the BBC reported that:

‘The closure of Scotland’s last deep coal mine has cost the taxpayer millions of pounds, it has emerged.

The Scottish National Party has demanded to know why a publicly-funded body had to pay £4.5m to the Royal Bank of Scotland when the Longannet coal mine in Fife was closed.

Scottish Coal (Deep Mine), which operated the pit, went into liquidation in March after a massive flood at the mine.

It left a huge overdraft which has been paid off by Scottish Enterprise, a government-funded agency which had acted as guarantor for the mining company.

In a written parliamentary answer, Enterprise Minister Iain Gray’s confirmed that the arrangement was approved by the Scottish Executive.

Tricia Marwick, an SNP regional MSP for Mid Scotland and Fife, demanded to know why Scottish Enterprise had cleared the firm’s overdraft with the Royal Bank of Scotland.

She said that energy policy is reserved to Westminster and therefore the pay off should have been the responsibility of the Department of Trade and Industry (DTI).

She said the UK government had been dealing with the Longannet shutdown and they should have footed the bill.

Acted as guarantor

“I have been trying to get answers for months from the Scottish Executive about Longannet,” she said.

Energy policy is reserved to Westminster and Scottish Executive ministers are unwilling to answer questions about it.

“If that is the case then the Scottish Executive must explain why Scottish Enterprise acted as guarantor and not the Department of Trade and Industry.

“I also want to know if the directors of Scottish Coal were required as part of the agreement to give a personal guarantee to the financial institutions or whether they have walked away unscathed and the public purse in Scotland has taken the hit.”

But a spokesman for the Scottish Executive insisted that the agreement had been entered into in June 1999.’

http://news.bbc.co.uk/2/hi/uk_news/scotland/1987978.stm

And who was Group Finance Director of The Scottish Coal (Deep Mine) Co. Ltd. in June 1999 when the agreement was made? Mr Peter Lawwell. Why would each director have a personal guarantee in place when the Scottish taxpayers guarantee was in place? It appears the board of directors got away ‘scot-mine-free’. The Scottish taxpayers picked up the £4.5 million tab as well as UK taxpayers, including the Scots again, forking out the government subsidies over the previous two years of £41 million. Great to have free access to the public purse. This was a precursor of the bank bailouts where if profits were made the directors/shareholders of the company lined their pockets but if it failed then the taxpaying public was there to pick up the tab. Running this alleged Private company was riskless for the directors since they knew they had a backstop: us, the taxpayers.

Conclusion

Human impact: 500 miners lost their jobs in this liquidation, 200 more than the Monktonhall Colliery closure.

Financial impact: No enquiry was ever held on behalf of the Scottish taxpayers to find out how the secret guarantee was engineered. With the Labour party in power on both sides of the border the possibility of an enquiry was smothered. We still don’t know who in the Labour parties, Scotland & London, committed Scottish taxpayers to an open ended guarantee for a Private company. All we do know is the £41 million direct subsidies were lost and Scottish Enterprise [taxpayer] paid the £4.5 million liquidation bill to the Royal Bank of Scotland.

On the 25th October 2003, John Reid, former UK Labour Home Secretary/Senior Cabinet Minister and Celtic chairman welcomed Peter Lawwell as Executive Director, Head of Operations of Celtic Plc. Mr Lawwell had resigned his Clydeport directorships the day before. Brian Wilson became a Celtic director on 1st June 2005.

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