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Snub the SNIB

Does the Scottish National Investment Bank pass the smell test?

Artillery Row

Team-building exercises at Edinburgh Zoo. Yoga lessons. Domino’s pizzas. Hoovers. Nail polish. Wellington boots. Pregnancy tests. These are just some of the things that the Scottish Government thought appropriate to expense to you and me.

Thanks to the work of Scottish Labour, which recently obtained records of transactions made on Scottish Government credit cards, we now know the taxpayer has forked out over £14 million on such expenditures in the last three years alone. The contempt for taxpayers, along with the greed and profligacy on display, means this really should be a scandal as great as that of 2009. Is anybody now surprised, though, whenever we hear of the latest dodgy financial scheme going on in Edinburgh?

Scotland provides taxpayers with the worst value for money possible

Even aside from the high-profile police investigations into claims the SNP misused £660,000 in funding from donors for a second referendum fund, which have embroiled Nicola Sturgeon and her husband, news of questionable financial activity and how appropriately the SNP uses other people’s money go further. At times it seems that the government operation in Scotland has been designed to provide taxpayers with the worst value for money possible. Nowhere is this better embodied than in the disastrous Scottish National Investment Bank (SNIB).

The SNIB was established in November 2020. It describes itself as a “development investment bank for Scotland, delivering patient, mission impact investment to the Scottish economy”. Despite its name, the SNIB isn’t a bank at all. Therefore it isn’t overseen by any of the relevant banking regulators, although it is currently applying for a licence with the Financial Conduct Authority (FCA).

In the industry jargon, the SNIB is a “development finance company”, but it can more accurately be described as a wannabe sovereign wealth fund. The organisation defines its purpose as investing in Scottish companies that deliver not only commercial profits, but also “environmental, social, and financial returns for the people of Scotland”. The very idea seems parasitical — taking British (read: predominantly English) taxpayers’ money to invest solely on Scotland’s behalf, presumably with the longer-term vision of making the idea of an independent Scotland seem more economically viable.

In any case, the SNIB has hardly achieved dizzying success. In its first full financial year, the SNIB made a loss of £3.4 million. It is now facing a loss of up to £9 million on an investment made in Circularity Scotland. The company was supposed to be running Scotland’s deposit return scheme — an initiative which would have forced shoppers in Scotland to pay a 20p deposit when buying a canned or bottled drink and be refunded only when depositing the empty drink at a recycling centre.

It was clear to many legal observers from the start that this would contravene the UK’s Internal Market Act by creating trade barriers between Scotland and the rest of the country — but the UK government’s move to block the scheme for this reason apparently came as a shock to the SNIB. Private banks such as the Bank of Scotland, on the other hand, deliberately waited for the legal position to be clarified before committing any capital. The SNIB denied there was any political pressure to invest in the company, but we now know Nicola Sturgeon personally intervened in the process.

Conflicts of interest are far from uncommon at the SNIB. I’ve dug into its portfolio and found that the organisation has committed a total of £16.5 million worth of investments in three companies run by figures with close links to the Scottish Government. On another occasion, the SNIB gave £7.5 million to a firm owned by an employee’s brother.

Whilst the SNIB insists that all the relevant due diligence procedures were followed in all these cases, as do the companies involved, it’s hard to escape the perception that well-connected individuals could be at an unfair advantage in accessing public money. I was told that the SNIB maintains a “Conflicts of Interest Register” to help manage such cases, but when I asked to see this register, I was informed that it isn’t a public document.

There are growing question marks over the operations of the SNIB

Senior SNIB figures have also displayed a lack of transparency when it comes to their personal financial dealings. I found the case of Carolyn Jameson, a non-executive director at the SNIB, perhaps the hardest to swallow. Jameson was appointed a director of the Edinburgh IT firm Forrit in June 2020, and she joined the SNIB in November that year. She resigned from her position at Forrit in February 2023 — and a few weeks later the company received a £5 million investment from the SNIB.

What’s more is that Jameson retained a personal financial interest in Forrit, owning shares worth £272,000. However, she registered her interests in both companies at Companies House under different names. She used her married name “Hay” to register her directorship at the SNIB and her maiden name “Jameson” for Forrit (she appears to still go by this name in daily life). The SNIB said this was not an attempt to obfuscate her interests and that Jameson/Hay recused herself from the investment process involving Forrit.

There are growing question marks over the operations of the SNIB — with Tory MSP Douglas Lumsden even questioning its legality in Holyrood. More important than any legal specifics is, perhaps, whether the SNIB passes the “smell test”. Kate Forbes said recently that the Second Coming of Jesus could be upon us before a second independence referendum. Given everything that’s gone on, it may take a similarly long period of time before the Scottish Government can regain the confidence of taxpayers.

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