STAFF at a manufacturing plant in Livingston were allowed to carry on working in the run up to Christmas despite bosses knowing they would not be paid, it has been claimed.
More than 300 employees of tech firm Kaiam were told on Christmas Eve they would be made redundant due to trading losses and a lack of orders.
Workers were initially due to be paid on December 21, but three days later they were laid off as the company folded.
Administrators KPMG – appointed two days earlier – confirmed they would not receive payment and would have to make a claim through the insolvency service.
The revelation came as Scotland’s national jobs quango was quizzed by MSPs over its decision to hand £850,000 of public money to Kaiam despite its history of losses and filing accounts late.
Scottish Enterprise agreed the funding in 2014, and has insisted it helped keep the plant open.
But giving evidence at Holyrood’s Economy Committee, the quango was criticised for its role in the run up to Kaiam's collapse.
Scottish Labour MSP Jackie Baillie said: "You (Scottish Enterprise) were told on December 21 there may be a delay of a week in paying salaries.
"Then you were told the following day, the salaries wouldn't be paid at all.
"Did you tell the company to tell its workforce or its contractors? Because people worked on."
Jane Pollock, global accounts team leader for Scottish Enterprise, said it had “asked the question in terms of what the plans would be”.
She added: "They said they would just manage through, but the intention was to be able to meet their obligations."
Ms Baillie responded: "I suppose knowing that they weren't going to pay people I would have expected you not to ask but demand that they share that information with workers who were going in or contractors who were engaging in contracts in good faith, knowing that they wouldn't be paid."
Kaiam’s collapse came four years after it was given a £850,000 taxpayer-funded grant from Scottish Enterprise to secure jobs that might otherwise have gone to China.
MSPs have now raised concerns over due diligence after it emerged the firm had not made a profit since 2012, with accounts showing a pre-tax loss of £20 million in 2016.
Michael Cannon, head of innovation and enterprise services at Scottish Enterprise, said the plant would have closed without the funding agreed in 2014.
He said: “The opportunity for a company to acquire Kaiam and safeguard 65 jobs – and not only safeguard 65 but to add a further 103 – was of interest to us, and I’m sure to the constituents in West Lothian.”
He said Scottish Enterprise undertook “due financial diligence” before handing over money, and argued Kaiam had boosted the surrounding area by around £42m a year.
Based on tax and national insurance returns, this represented a return for the taxpayer of around £4 for every £1 put in, Mr Cannon said.
Kaiam was handed its last £100,000 instalment of the taxpayer-funded grant in March 2018 – just eight months before it entered severe financial difficulties.
In addition to the £850,000 grant, the firm was given £9,500 for efficiency projects through the Scottish Manufacturing Advisory Service.
Scottish Enterprise said it would now attempt to claw back money from the company.
If Kaiam cannot repay the cash owed, the quango said it will seek to recoup funds from its parent company.
However, Scottish Enterprise was unable to tell MSPs whether it has managed to reclaim any money from companies which have breached their conditions in the last year.
Ministers were briefed for the first time on Kaiam’s difficulties on November 22.
On December 7, they were told the company had only seven days’ worth of cash flow left.
Around £22,648 was raised through a Crowfunding campaign last month in a bid to support the workers who were made redundant.
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