Dick Mungin
The Gathering fiasco

I have written before in SR about the Year of Homecoming and its Brigadoonish centrepiece event The Gathering. It took place over the weekend of 25-26 July 2009 and has proved highly controversial. The news, a few days ago, that the company behind The Gathering had gone into receivership came as a staggering blow to around 50 small business creditors. The receivers say they are owed at least £430,000.
     Hope for payment had been kept alive by the trade creditors clinging to a public statement made in October 2009 by Steve Cardownie, a senior Edinburgh councillor and the city's 'festivals and events champion', that the city and its marketing body (DEMA) would step in, buy the company and settle the trade debts. Within a few weeks the chairman of DEMA, a respected Edinburgh hotelier, resigned his position. He had not been consulted and in any case DEMA had no funds to complete the transaction. It soon emerged that Jenny Dawe, the leader of Edinburgh City Council, knew nothing of the proposal or where the money was to come from. Whoops!
     On the same day that Steve Cardownie made his statement, the Scottish Government announced a write off of £316,000 due by The Gathering. This included an emergency loan package of £180,000, agreed in June 2009, and debts to various public agencies.
     A perusal of written questions to ministers on the subject throws up some interesting facts. They, in turn, raise political and financial issues which need to be addressed. The offer of the loan from the Scottish Government to The Gathering was made on 1 June 2009. This was seven weeks before the event, planned since 2007, was due to take place. The loan covered a cash flow problem. Income was due from the payments agency, World Pay, which processed the payment of ticket sales for the event. The terms stated were: 'repay the loan in full within 14 days of the company receiving payment from World Pay…..and no later than 31 August 2009'. This arrangement was not made public at the time.
     The Scottish Government and various public agencies had already openly invested almost £500,000 in grants to the company. Can we assume that the civil servants and quangocrats at EventScotland saw a business plan at that time? Did it make sense? We do know that normal public procurement procedures were not used and the event contract was not advertised.
     By late May 2009 ministers and officials were in a difficult situation. The event, only weeks away, was to be opened by Prince Charles. Thousands of tickets were already sold around the world. Receptions and satellite events were already in the First Minister's diary. Political humiliation would have followed the cancellation of the widely proclaimed centrepiece of the Year of Homecoming. Hence the decision to hand over of £180,000 of public money.
     I enjoy a friendship with a retired bank manager. This guy was around before the computer ruled. He's the real deal. He knows the hard questions. If the directors of The Gathering had gone to their bankers looking for a loan of this magnitude the following would have been requested. A statement from World Pay of the sums due to The Gathering and a schedule of payment. A set of management accounts for the trading year to date. A cash flow, indicating income and expenditure up to and beyond the date of the event, including expected final surplus/deficit. A statement of the assets of the company, including any share capital paid up by the directors. Finally, if the information requested raised any doubts, a personal guarantee from the directors for the sum to be loaned. I wonder if the quangocrats at EventScotland who managed Homecoming, the civil servants or any minister asked any of these questions? If they did it would have shown up a huge financial black hole in the company.
     On 16 September the directors of the company had access to the top level of the Scottish Government. They met with the First Minister and the then Culture Minister to discuss the parlous financial situation. The loan of £180,000 had not been repaid. This was a clear breach of the terms of agreement. A written answer by Fiona Hyslop, the new Culture Minister, published by Parliament on 18 December 2009, baldly states of the September meeting that 'officials were asked to examine The Gathering's financial position and as a result of that analysis it was considered that the repayment of the loan was not possible'. The words horse and stable door spring to mind.
     The Scottish taxpayer and the trade creditors are entitled to know if due diligence was carried out by anyone within the Scottish Government before the loan was agreed. If due diligence was done in May 2009 and it was clear that the company was in dire financial straits why were steps not taken to bring this to the attention of other interested parties? The Scottish Government could have appointed a business turnaround professional as a condition of the loan. This might have saved the trade creditors from their horrible fate. It might have saved the taxpayer £316,000. Alternatively the Scottish Government could have taken control of the whole shebang. If due diligence was not done, until after the horse had bolted in September 2009, we must ask if anyone is going to be held to account.
     Immediately after The Gathering took place, the Culture Minister and others trumpeted an outstanding success for Scotland. Within months the usual consultant's report was claiming financial benefits to Edinburgh and Scotland of over £18m. That's an awful lot of money. There's a strong moral case in favour of the Scottish Government using some of it to pay at least a percentage of the debt to trade creditors.