THE Confederation of British Industry (CBI) is in meltdown after three more high-profile members quit over the business group's decision to campaign for a No vote in the referendum, with others almost certain to follow.
Jobs quango Scottish Enterprise, tourist group VisitScotland and broadcaster STV resigned from the CBI yesterday as the organisation's move conflicted with their own requirements to be politically neutral. Highlands and Islands Enterprise is also believed to be on the verge of quitting.
The Scottish Government said it was now "inappropriate" for public agencies to be CBI members and said others should "resign with immediate effect".
It emerged on Friday that the UK-wide CBI had registered with the Electoral Commission to campaign for a No vote in September.
The controversial decision will allow the CBI to spend up to £150,000 during the regulated period, a move that triggered two immediate resignations from the business lobby: wave energy firm Aquamarine Power, and Balhousie Care Group, the latter of which has independence supporter Tony Banks as its chairman.
And the CBI - which does not just represent private-sector businesses - lost more members yesterday.
STV, which will play a pivotal role in covering the referendum, quit over fears its membership would contravene its obligations for political neutrality.
A spokesperson said: "STV is a public service broadcaster with a duty of impartiality and as such we have no corporate or editorial position on the independence referendum in September.
"In light of the CBI's decision to register with the Electoral Commission we have no choice but to resign our membership of CBI Scotland forthwith."
Other members of the CBI include taxpayer-funded bodies under the control of the Scottish Government, such as Scottish Enterprise.
A spokesperson for SE said: "In light of CBI Scotland's decision to register with the Electoral Commission and take a political stance, Scottish Enterprise have had no choice but to immediately resign from the organisation."
SE board member John McGlynn said: "CBI should have remained impartial and merely asked pertinent questions of both sides."
A VisitScotland spokesperson said: "In the light of the decision of CBI to register with the Electoral Commission, VisitScotland has decided it is appropriate to withdraw from the organisation."
Other public bodies are expected to follow suit and quit.
Various universities, including Glasgow and Glasgow Caledonian, are also members. As charities, universities are bound by rules on political activity.
According to official guidance by the Office of the Scottish Charity Regulator, charities can take part in the referendum process, so long as they do not advance a political party.
A spokesman for Glasgow University said: "The university is a member of CBI Scotland. As an institution we remain strictly neutral on the issue of Scottish independence."
Asked about the CBI's decision, a spokesman for Glasgow Caledonian University said: "This type of inquiry will have to be referred to the university's executive board, which is not due to meet again until after the Easter break."
The business group is also facing questions about the process that led it to taking an overtly political stance during the referendum campaign.
When the Sunday Herald contacted CBI Scotland director Iain McMillan, he directed all enquiries on the matter to the UK press office.
Asked if the decision to register with the Electoral Commission was made after discussions with Scottish or UK members, a CBI spokesman said: "We have talked to members regularly in Scotland and across the UK at CBI events and via our system of committees and councils."
He added that the "final position" was signed off by CBI Scotland's council - its membership decision-making body.
Paul Foley, a director of Kynesis Consulting, which is also a CBI member, said his firm was "unaware of any formal consultation process to assess the views of CBI's Scottish members".
He added: "I find it very disappointing and quite irritating. There's a difference between the CBI asking legitimate questions of the Yes and No sides, and the CBI registering as a supporter of one side."
Select, a trade association for electrical workers in Scotland, also called for the CBI to review its decision.
However, a spokesperson for the pro-independence Business for Scotland campaign group said: "It comes as no surprise that others have followed our lead.
"For some months now, we have repeatedly raised the question of the CBI's stance both publicly and in our discussions with the Electoral Commission.
"It is important to be aware that CBI members are leaving for corporate and not political reasons. There are obvious fiduciary and perhaps even legal issues here for companies, public-sector organisations and frankly the No campaign including the CBI."
A Scottish Government spokesperson said: "The CBI has registered as a campaign organisation for a No Vote in the referendum.
"In these circumstances, it is clearly inappropriate for Government agencies to remain in membership of CBI.
"We would expect any other member to follow Scottish Enterprise and resign with immediate effect."
A CBI spokesperson said: "Any member deciding to leave is a cause for regret."
THE Sunday Herald asked the CBI for an article to state its case, alongside the article above by Business for Scotland. It declined the offer but gave us the following statement:
"The CBI took the decision to register with the Electoral Commission independently and in our own right. We have a clearly stated position that Scotland and the rest of the UK are stronger together on economic grounds as part of the union and this reflects the views of the vast majority of our members.
"Given that we regularly hold a number of events in Scotland, including our annual dinner and lunch, and since these will fall within the campaign period, registering with the Commission is a question of good governance and ensures we comply with the law during the referendum period."