FIRST Minister Alex Salmond has been criticised after it emerged that one of his economic advisers is a tax exile based in Monaco. Engineering tycoon Jim McColl lives in the world's richest street in the Mediterranean statelet known for its no income tax policy.

Liberal Democrat MP Vince Cable said it was "completely unacceptable" for a tax avoider to be advising the SNP government.

McColl was appointed to Salmond's Council of Economic Advisers (CEA) in 2007. The First Minister described the group as "the most formidable intellectual firepower ever to have tackled Scottish economic underperformance".

Described as Scotland's richest man, McColl built up his £800 million fortune after buying a stake in boiler firm Clyde Blowers in 1992. His business success has been boosted by a number of acquisitions, including Weir Pumps and several companies from US giant Textron. He also chairs Glasgow's Welfare to Work Forum.

Salmond's judgement has been questioned after it was revealed that McColl is also a tax exile living in Monaco.

According to his firms' filings at Companies House, the multi-millionaire lives in a street described in the Dow Jones' Wealth Bulletin as the most prosperous in the world. Flats there change hands for up to £22m.

Businessmen flock to Monaco due to the absence of tax on income and capital gains. A UK tax loophole allows "non-residents" to spend 90 days in Britain every year, which includes the day of travel out and the day of travel back to Monaco.

McColl, whose Scottish companies pay British taxes, said of his living arrangements in 2004: "I like living in Monaco because it is a good quality of life. It has become my real home in the past three years, although there is always going to be an attachment to Scotland."

Other Monaco residents include actor Roger Moore, tycoon Sir Philip Green, and former Beatle Ringo Starr.

McColl has attended all five CEA meetings. But the Scottish Government is refusing to publish a breakdown of the travel expenses paid to each member to attend the sessions. Last February's meeting, attended by eight advisers including McColl, cost £12,865 in travel costs.

McColl is the second Scottish Government adviser to get caught up in a tax row recently. The hedge fund of Sir George Mathewson, who chairs the CEA, was revealed to have set up subsidiaries in the Cayman Islands, a tax haven in the Caribbean.

Cable, the LibDem Treasury spokesman, said: "There is growing intolerance of British companies and the super-rich who dodge taxes. Having an adviser who is also a tax exile is completely incompatible and totally unacceptable."

McColl said yesterday: "I am proud that Clyde Blowers is now both a global business and one which is employing more and more people in Scotland and the rest of the UK. We have 85 businesses in 27 countries around the world and I am currently based abroad. However, I remain passionate about working for a strong future for Scotland.

"It is sad to hear Mr Cable's comments, which seem to be a misguided soundbite, at a time when he and his party - indeed all parties - should be focused on the pressing issues affecting the economy."

A spokesperson for the First Minister said: "This is a disgraceful, ridiculous and small-minded attack on one of Scotland's most respected business leaders, with an outstanding record of public service.

"Among a range of public service posts in Scotland, he was appointed by the previous Labour/Liberal Scottish Executive as chairman of the Welfare to Work Forum, which has helped 15,000 Scots enter employment."