A POLICE investigation has been launched into the “inappropriate use” of around £60,000 of funds of a struggling Scots theatre company which helped launch the careers of James McAvoy and Paolo Nutini.

Police Scotland confirmed they were in the early stages of an investigation after company chairman Donald Urquhart claimed the company had been subject "this year and in previous years to many instances of the inappropriate use of company funds".

It was confirmed in September, that acting coach David Wallace, who was also the founder of PACE Theatre Company in Paisley was dismissed after an internal investigation into the group’s financial affairs took place.

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HeraldScotland:

David Wallace at the Paisley Arts Centre, where he loved to play the dame

David Wallace, 55, had been with PACE for all of its 29 years, had been executive director and had helped the careers of Paolo Nutini and James McAvoy.

He was a member of the Paisley 2021 executive bid team, the campaign for Paisley to be awarded UK City of Culture in 2021.

Then the company chairman Donald Urquhart said it related to allegations of "irregular transactions with the organisation's budget accounts".

Mr Wallace's wife, Mhairi was also quizzed over finances at the charity and was suspended on full pay while inquiries were being carried out. The Herald understands that she had left the theatre company voluntarily and had parted amicably.

HeraldScotland:

In a message to supporters, company chairman Donald Urquhart, said: "As it is the subject of a current police investigation I am unable to elaborate at this time.

"I would however say that this has been a shock to everyone at PACE but has resulted in significant changes to the staff structure, the appointment of a new chief executive as well as a realistic business plan which will help us deal with outstanding financial issues."

PACE, based at the Spire Studios which has a youth theatre with 2000 members is running at a deficit and relies on external funding to keep its day-to-day operations running.

Its latest financial report for the year to March 31, 2017 shows a struggle to balance the books.

In the latest year, its liabilities exceeded the value of its assets to the tune of £220,661 and it had agreed an extended credit period from Tenon Group, the landlords of its Paisley studios.

HeraldScotland:

Details of the police involvement came as Mr Urquhart in a financial statement supporting the annual report, said that 2016/17 was a "particularly challenging year" and that while youth theatre membership remained high, trading in other areas of the business had become "more difficult each year".

He said that sources of public funding for project was becoming "less each year" and warned: "It is clear that we need to plan and budget for public funds only being available in relatively few circumstances and perhaps disappearing altogether." Its net spend had exceeded income to the tune of £67,762, compared to £8,152 the previous year.

But Mr Urquhart said on Friday that he was hopeful that PACE still had a "bright future" after a restructure which has seen the appointment of a new chief executive, Grant Mason.

Mr Urquhart who could not discuss the police probe, said: "The company is now healthy and we are heading this year what towards what we think is the first surplus we have had for a number of years.

"We do have outstanding debts, and we are very grateful to our creditors for being very understanding. They have been absolutely terrific.

"We have good arrangements with them to clear off any debts.

"The pantomime has just finished, and that is one of our biggest ventures of the year and is very important to us artistically as well as financially and I am glad to say that ticket sales and profits were in line with previous years.

"For the first time in many years we have a clear picture of where the company is going. Financially and artistically I've got absolutely no doubt that it is going to go from strength to strength, which is important for Paisley and for Renfrewshire generally.

He said people like Mr McAvoy had been "incredibly supportive" and happy to continue to be associated with the company "which was one of our slight worries when you get a bit of bad news". He added: "In reality it has brought people back to us with people asking what they can do to help."

Police Scotland said: "Police have received a complaint and inquiries are ongoing."

The Herald has approached Mr Wallace for comment.