Public Audit Committee, 09 Sep 2009

Meeting date: Wednesday, September 9, 2009

Official Report 135KB pdf

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Public Audit Committee Report (Responses)

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“The 2007/2008 audit of VisitScotland”

The next item is a formal response from the accountable officers to a report on the 2007-08 audit of VisitScotland.

We have an interesting situation here. We have a letter from Mr Philip Riddle, in which he complains that the statement that eTourism was technically insolvent "is not true." However, in his evidence to the committee, Mr Riddle stated:

"In accounting terms, eTourism was, strictly speaking, insolvent".—[Official Report, Public Audit Committee, 11 March 2009; c 971.]

It is bizarre—indeed, the tone of the whole letter is strange—that he said one thing to the committee and is now saying something completely different in writing. Either one statement or the other is untrue; I am not quite sure which it is.

The committee needs to decide whether it is worth our time to get into an exchange of correspondence with the man. Do we want to respond to any of the issues that he has raised?

I read with some concern the letter of 15 May from Peter Lederer to you, convener, and I read with more concern the letter of 1 June from Peter Lederer to Paul Grice. The tone of that letter is surprising and disappointing, and it makes very serious allegations about the committee's conduct. The final sentence of the letter of 1 June to Paul Grice questions not only the professionalism but the ethics of the committee's operation. It seems verging on the outrageous—I choose my words carefully—for a public official to make those accusations about a parliamentary committee. That requires a robust response from the committee.

We need to consider the specific points that Mr Lederer raises in his letter to the committee. With regard to his first point about technical insolvency, I practised law for 15 years before being elected to Parliament and I think I know a little bit—and probably more than Mr Lederer—about the law of Scotland.

It is a fairly elementary piece of legal knowledge, as any law student in the first year at a Scottish university could tell you, that a company is technically insolvent when its liabilities exceed its assets. To find that a public agency is seeking to question that simplistic piece of knowledge, which any law textbook would tell you, is frankly bizarre. The committee needs to make a robust response.

Okay. Are there any other thoughts on that?

Murdo Fraser has outlined a perfectly reasonable approach, because the letter calls into question the committee's operation without giving any depth of argument. It is actually technically wrong in its argument, so we have to respond strongly.

How do we respond?

We would need to write back to Mr Lederer on some of the issues that Murdo Fraser has raised. However, I do not want to engage in a lengthy piece of tit-for-tat correspondence when we have other issues to address in the coming months. I share Murdo Fraser's sentiments, and I think there are inconsistencies in what VisitScotland has said to us, so I think that we should reply in robust terms. As far as I am concerned, that will be an end to it: I do not intend to engage in an exchange beyond that.

It is fair to make the point about how senior managers of such organisations deal with the committee; something has to be done on that level. I agree with the convener that we should point out to Mr Lederer the factual information that the committee used in compiling its report, and, where appropriate, refer him to the Official Report. If Mr Lederer felt that he did not utter those words, he should have challenged the Official Report at a much earlier date.

We need to make a distinction. It was Mr Lederer who wrote the letter in June, but it was Philip Riddle who gave us the formal response, which includes the assertion that the statement about technical insolvency was not true. Mr Riddle was the one who gave evidence and told the committee that eTourism was technically insolvent.

I remind the committee of our desire to see the future business plan associated with the business and our concern about how that would stack up. We did not get any details on that. Given the previous history of the business, we were concerned and wanted to see some details. We have an opportunity to gather the issues together and perhaps have another session or meeting of some kind.

We could also draw the minister's attention to the inconsistencies in what has been said to us.

I presume that at some point we will get a report on further expenditure by VisitScotland, not on eTourism, but in relation to its other activities. There will be further examination of VisitScotland.

After Mr Riddle gave evidence, I remember that I did not agree with some members that his performance had been impressive; I did not find it impressive at all. I wonder whether something is going on between Mr Lederer and Mr Riddle. My inclination is either to invite Mr Lederer to give evidence or just to ignore the whole thing. If we write back, VisitScotland will write back and we will be tempted to write back again. We should face up to him, invite him along and challenge him or just say, "Forget about it," and get on with other things.

I would certainly not be in favour of inviting Mr Lederer to appear before us. We have other issues to move on to. Murdo Fraser has made a number of points that we should just put on record. As far as I am concerned, that is an end to it.

I think that that is the right approach.

The letter from Paul Grice to Mr Lederer, which is attached to paper PA/S3/09/13/3, suggested that we would respond to his comments two months after the report had been issued. Has that been done already?

That is what we are doing now.

I beg your pardon. On that basis, we must reply and point out the difference in the arguments of Mr Riddle and Mr Lederer. We need to highlight the inconsistencies, because the operation of the committee has been called into question in an unreasonable way.

Apart from drawing the minister's attention to those inconsistencies, we could ask that the issues that have been raised be included in the next Scottish Government progress report, which is due in 2010.

I very much agree with the approach that the convener has suggested.

I believe that whether the company was technically insolvent is a straightforward matter of fact rather than a question of opinion, and we could surely get Audit Scotland or a professional chartered accountant to confirm that position. I do not think that there is any doubt whatever on the issue, as Murdo Fraser correctly pointed out, but it might be helpful to have a professional view. By confirming the position absolutely, we could avoid a tit for tat.

To be honest, I do not want us to waste any public money by asking accountants for a further opinion. I think that we should merely point to Mr Riddle's own words. We can also point to the Auditor General's evidence and to the advice that we have been given by the Scottish Parliament information centre. We should just leave it at that; I do not think that we should indulge the organisation or the individual concerned any further.

I agree. If we refer to the view of Audit Scotland and SPICe, that provides some independent confirmation. My concern was that the only reference would be to the view of Mr Riddle.

No. Our briefing shows that there is a range of back-up there. We will reply.

Willie Coffey raised the issue of the business plan. Is there any mechanism to examine that before the progress report from the Government in 2010? I seek Robert Black's advice on whether it is best left until that stage.

It is not something that we would audit at this stage, but if the committee is interested, it would be perfectly appropriate to ask for sight of the business plan when it is produced. I wonder whether the team can help by providing any up-to-date information about how the creation of the new business plan is proceeding.

I do not think that we have any detailed information on that yet, but the auditor will of course be monitoring developments. I can tell him about the committee's interest and we can see where we get with that. However, I do not think that the full audit will have been started or completed yet.

I do not anticipate that the auditor will comment on the business plan per se. That would be outwith the scope of the audit. However, it would be perfectly possible for the committee to ask to have sight of it.

If we do not receive any more information on that, we can ask the Government to ensure that it is included in its progress report in 2010.

Could we also refer the matter to our colleagues in the Economy, Energy and Tourism Committee or the Finance Committee, with a particular emphasis on the business plan?

Okay. We will remind them of that.