The head of Scotland’s public sector watchdog has said he is not sure if bonuses paid to bosses at Ferguson Marine can be recovered - and described the payments as “unacceptable”.
Auditor General Stephen Boyle publicised the £87,000 paid to six senior managers at the government-owned shipyard, without ministerial knowledge, in a report last month.
The yard, which was rescued from administration by the Scottish Government in 2019, has struggled to complete two lifeline ferries, with further delays also announced by the yard in March, pushing the delivery date for the Glen Sannox and as-yet-unnamed hull 802 to the end of this year and 2024, respectively; five and six years later than originally planned.
Appearing before Holyrood’s Public Audit Committee on Thursday, Boyle re-stated his opposition to the bonuses and said it was unclear why they were paid.
“We consider it unacceptable that £87,000 was paid in bonuses,” he said. “Not in an ideological perspective, but the payments were made without a clear framework that was designed to support the payment of bonuses.”
Such payments, the Auditor General told MSPs, were “relatively unusual” in the public sector, but where they are made “there needs to be clear KPI, clear governance arrangements and we draw attention in today’s report that these factors weren’t in existence when these amounts were paid”.
Asked by SNP MSP Willie Coffey - who claimed it “beggars belief” bonuses could be paid at the yard - if the money could be recovered, Boyle said: “I don’t know if those amounts are recoverable, that would have to be a judgment made by others in terms of the specifics of it, in terms of conditions that existed for those senior managers, what their contracts said.
“We draw attention to these amounts because the amounts were paid without effective governance by the remuneration committee being discharged before the amounts were paid.”
He added that it was a “matter of public interest” that bonuses were paid by the yard.
The bonuses were recommended by the yard’s former turnaround director Tim Hair, who was paid £1.8m during his time at the firm between August 2019 and February 2022.
Boyle told the committee the bonus was in two parts, 7.5% to be paid upon delivery of the hull of the Glen Sannox and “a further 10% discretionary element”.
He added: “The governance and decision making around that was based on a recommendation from the former turnaround director, chief executive, through the remuneration committee to make those payments.
“In our view that wasn’t sufficiently robust, it wasn’t clear whether the KPIs had been met and again speaks to real ambiguity around progress and process.”
First Minister Humza Yousaf responded by stating that there should be no bonuses paid in this financial year to bosses at Ferguson Marine.
On Thursday, Deputy First Minister Shona Robison wrote in a letter to Holyrood’s Net Zero, Energy and Transport Committee that further payments have been made so far this year for performance in 2022-23 with more to come in June.
It is unclear how much in total has been paid in bonuses for last year.
“While this progress is welcome, due to those legacy contractual commitments made in November 2022 by (Ferguson Marine Port Glasgow), without the prior knowledge of the Scottish Government, further bonuses are legally required to be made for the year 2022-23,“ she wrote.
“The first of two instalments of £23,609 each has already been processed.
“This first payment was made in FMPG’s April 2023 payroll with the second payment of £23,609 due in June, subject to ongoing discussions involving the chair.
“I know that the committee will share my disappointment, particularly at a time when the delivery of vessels MV Glen Sannox 801 and Hull 802 remain long overdue; that despite every effort being made to ensure that no bonuses were paid in 2022/23, the payment of bonuses for 2022/23 is contractually unavoidable.”
Almost simultaneously, Yousaf was being challenged about the payments in Holyrood.
Scottish Conservative leader Douglas Ross said: “The two ferries are not fit to sail, the costs continue to spiral out of control, and islanders continue to be left without vital, lifeline services – so First Minister, what on earth could these bonuses be for?”
Responding, Yousaf said: “I won’t disagree with Douglas Ross or the Auditor General… the former deputy first minister (John Swinney) made clear his anger, we share that anger, I share that anger at the fact that bonuses have been paid.
“The bonuses that have been paid relate to a decision made by the remuneration committee of Ferguson Marine without consultation with the government in November 2022.
“Those bonuses, I have asked if they can not be paid and the advice coming back is that they are a contractual obligation.
“For any future discussion or consideration of bonuses, I have made it clear there should not be bonuses paid in relation to vessels 801 and 802.”
The First Minister went on to say it was “his expectation” that bonuses should not be paid for the 2023-24 financial year.
Meanwhile, Alex Logan, who has worked at Ferguson for more than 40 years, said the workforce were not to blame for delays to the construction of the Glen Sannox and Hull 802 and it was deplorable for the reputation of a skilled workforce “to be continually dragged through the mud.”
Logan, GMB Scotland’s convener at the publicly-owned yard, said politicians of all parties should be working together to secure the award of direct contracts to Ferguson's and other yards as part of a new shipbuilding strategy.
“The continuing point-scoring of politicians does not create or protect a single job in Scotland or help build a single ship. Politicians of all parties should be outlining their plans for the future of Ferguson’s and the jobs there.”
He urged MSPs to help build an industrial strategy to replace CalMac's ageing fleet with ferries built in Scotland, using domestic supply chains to protect and create jobs at shipyards like Ferguson's.
“We have new contracts from BAE for work on the Royal Navy’s Type 26 frigates,“ he added. “If they have confidence in the workforce to deliver why can’t our MSPs.”
Don't miss the latest headlines with our twice-daily newsletter - sign up here for free.
