Holyrood May Have To Repay One Plus Millions

The Scottish Government could be forced to pay back millions of pounds as part of the probe into the fiasco surrounding the collapse of child care provider One Plus.

Estimates put the amount of European money missing after the charity went into liquidation last year at between £10m and £30m and Brussels is now attempting to reclaim its funds which remain unaccounted for.

The European Commission is in dialogue with the Scottish Government, which distributes structural funds on behalf of Brussels, over re-establishing an audit trail for the missing money – described as “an irregularity”.

advertisementIf the Scottish Government cannot account for the money, it can make a case to the commission to share the losses. The EC said it was “technically possible” the Scottish Government would have to pay back all the missing money although a decision on this would depend on the report it received from Scotland.

SNP sources claim a repayment even at the bottom end of the scale would have a detrimental impact on the government’s budget and commitments. One Plus, which also provided training and support for lone parents and had a turnover of £11m, was one of Scotland’s highest-profile charities and had the support of a number of former Scottish Executive ministers.

However, the Glasgow-based charity, the largest organisation of its kind in Europe, went bust in January 2007 with the loss of 800 jobs after the recently appointed chief executive discovered HM Revenue and Customs was demanding more than £2.3m in unpaid PAYE and National Insurance contributions.

A subsequent report by the Office of the Scottish Charities Regulator laid the blame at the feet of the trustees and former management, claiming they relied on overdrafts and money owed to creditors to pay staff and overheads. The EC has acknowledged a full audit trail is almost impossible, claiming “the central issue relates to the fact that the One Plus files were gathered together in haste by departing staff at the time of the liquidation”.

Former staff described it as being “like the last days of Saigon” and claimed 20 years of documents relating to £30m of European money may have gone.

Brussels also claims the fact that there is no audit trail is in itself an irregularity and its regulations stipulate that where a member state cannot totally recover or expect to recover losses, it is legally required to inform the commission of the amount in a special report and to state the reasons why the missing monies should be borne by the EU or by the member state.

Katharina von Schnurbein, commission spokeswoman for employment, social affairs and equal opportunities, said: “The Scottish authorities will have to report to the commission on the issue in the legally required format.

“The Scottish side also might want to demonstrate that they have seriously endeavoured to recover the funding and then request formally to the commission to share the potential losses.”

She added that the Scottish Government also claimed One Plus had a positive track record and ran, until liquidation, “excellent projects for the disadvantaged” but said it had no opinion since commission auditors had not verified the schemes.

Yesterday a Scottish Government spokesman said: “These are historic issues relating to a total of £10.5m in European Structural Funds One Plus received between 2000-2006. The Scottish Government has made great efforts to ensure that the full audit trail was secured and all relevant documents have been stored by the liquidator.

“We will be taking steps to make sure lessons are learned and that auditors and funding sources are now ensuring that much higher standards of accounting and accountability are adhered to.

“Discussions with the commission are continuing aimed at securing a satisfactory conclusion.”