PUBLIC finance auditors have criticised "unacceptable" bonus payments made to executives at the nationalised ferry fiasco firm.

Audit Scotland have flagged concerns over  £87,000 of performance bonus payments being paid to senior Ferguson Marine managers during 2021/22.

It came as they raised doubts about the future of the firm and raised further questions over the costs of the ferry fiasco.

The concerns emerging from the Auditor General Stephen Boyle come a month after the Herald revealed that the Scottish Government bill for nationalised Ferguson Marine which is delivering two long-delayed lifeline ferries has soared to more than £450m.

The sum was more than £200m more than what public spending watchdogs were expecting would be spent to finally deliver the two ferries at the centre of the Ferguson Marine debacle last year during its inquiry into the rising costs.

Now Mr Boyle says that uncertainty remains over the final costs and completion dates of Glen Sannox and Hull 802. Concerns were also raised over the payment of performance bonuses to senior managers at Ferguson Marine Port Glasgow.

He indicated that Ferguson Marine needs £9.5m more to fund the vessels over and above the £60m needed for 2023/24 - which is going through due diligence.

Audit Scotland raised concerns over the bonus payments saying it is "not clear" how their performance was assessed, nor were appropriate frameworks and governance in place.

Mr Boyle said Ferguson Marine should have sought Scottish Government approval for the payments.

The senior management team employed in 2019, when Ferguson Marine came into public ownership, held employment contracts containing a clause entitling them to a performance related bonus of up to 20% of their base salary.

However, there was no performance management framework of key performance indicators (KPIs) which set out how performance would be assessed or measured. 

Payment was approved based on a paper prepared by the former turnaround director Tim Hair in February 2022.

This recommended that 7.5% should be paid on the delivery of milestones.

The remaining 10% paid was discretionary based on performance.

A letter from the turnaround director confirmed this performance related bonus was payable as a result of the structural completion of the hull on vessel 801.

"There was a lack of transparency and good governance around the assessment and approval of these payments," Mr Boyle said. "Ferguson Marine  was unable to evidence the evaluation over the discretionary element of this payment.

"The Scottish Government was not made aware of these bonus payments, and they were not subject to approval by the sponsor department.

" I would consider it as a matter of good practice and governance for Ferguson Marine to have sought advice and approval from the Scottish Government in this case."

There had previously been concern over the "severe mismanagement" of the shipyard partly due to the £2565-a-day being given to Mr Hair a Gloucester-based businessman, in a deal established by ex-finance secretary Derek Mackay.

Mr Hair, who had led the business since August 2019 and implemented a major transformation programme, departed in February last year following a short handover period.

Ferguson Marine had since appointed David Tydeman as its new chief executive officer to lead the business to "sustainable growth".

He said the current board of directors and the remuneration committee have "accepted the feedback from the Auditor General over performance incentives paid to senior managers for the financial year to end March 2022. 

The Port Glasgow shipyard went into administration in August, 2019 and was nationalised after its ferry-building endeavours were dogged by delays and overspends.

READ MORE: Ferguson Marine: Calls for public enquiry over £500m ferries bill

The public spending auditors say there is also doubt about the longer-term viability of the Ferguson Marine shipyard, despite sustained investment by the Scottish Government.

HeraldScotland: One of two Caledonian Macbrayne ferries being built in the Ferguson Marine shipyard in Port Glasgow, Inverclyde. While building two ferries on contract for CalMac, Scotland's public-owned ferry company, Ferguson Marine Engineering Ltd was put into


And he said he believed there was a strong future for the yard.

The Herald revealed three weeks ago that the taxpayer-supported nationalised shipyard firm has been sanctioned twice over its financial dealings before facing moves to be closed.

Ferguson Marine, which was taken over by the Scottish Government four years ago after its financial collapse under the control of tycoon businessman Jim McColl were due to deliver accounts on December 31 but are still due.

Companies House, the UK Government executive agency which oversees the incorporation of firms across the nation triggered a "strike off" process which could  have seen Ferguson Marine and three other allied companies that are trying to deliver two long-delayed lifeline ferries formally closed.

READ MORE: Transport minister gives no assurance over fiasco ferries delivery

Ferguson Marine confirmed the problems relate to audit issues that were beyond their control and Companies House has confirmed that the strike off process has been cancelled, while the firm pledged to lodge accounts by the end of this month.

The Auditor General says the Scottish Government has assured Ferguson Marine there will be financial support for at least another year, enabling delivery of vessels 801 and 802.

But the Herald revealed that the budget for next year has still to be approved and has been going through due diligence since September.

Audit Scotland said that further investment in the shipyard and workforce are also needed to help secure future contracts.

The Scottish Government has commissioned an independent review of future options for the Ferguson Marine shipyard which is due to report shortly.

Stephen Boyle, Auditor General for Scotland said: “It is deeply concerning that the costs to complete these ferries have continued to escalate, whilst the island communities these boats are meant to serve remain significantly impacted. “Despite substantial sums of public money being invested, there is still no certainty over how much the ferries will cost, when they will be ready or whether the shipyard has a viable future.

“It is unacceptable that performance bonuses were awarded to senior managers at the shipyard, without proper governance for such payments. The Scottish Government needs to make sure its rules over pay are followed by this public body.”

READ MORE: Fears new ferries may never sail as Ferguson Marine budget stalls

Glen Sannox and Hull 802 which were due online in the first half of 2018 when Ferguson Marine was under the control of Mr McColl, with one initially to serve Arran and the other to serve the Skye triangle routes to North Uist and Harris, but they are at least five years late. The last estimates suggested the costs of delivery has more than quadrupled compared to the original £97m cost.

HeraldScotland: Flags are waved at a launch ceremony for the liquefied natural gas passenger ferry MV Glen Sannox, the UK's first LNG ferry, at Ferguson Marine Engineering in Port Glasgow..

Ferguson Marine had already received financial sanctions amounting to at least £600 for failing to file details of financial affairs in good time three years ago before new leadership was brought in.

The firm is due to incur penalties of at least £1500 for late filing of four sets of accounts.

The compulsory strike off process began last month after the firm was sent at least two formal letters of warning while detailing the issues they have.

According to Companies House a complete failure to file accounts is a criminal offence and directors can be personally fined in criminal courts.

A failure to pay late filing penalties can result in enforcement proceedings through the courts.

The first strike off notices, that the four firms associated with Ferguson Marine had two months before they are struck off and cease to exist as an official company.

Ferguson Marine said they had assurances that the firm would not be removed from the companies register as long as they met the undertakings given that they will file the accounts by the end of March.

Mr Tydeman said: “We appreciate the points Mr Boyle is making regarding the completion of the ferries/funding gap, given that the shipyard is funded by public money.

"However, it is important to understand that the gap he identifies is largely to cover increased contingency expenditure – recommended by independent experts appointed by the Scottish Government, as well as funding for additional warranty spend that may arise in the 12 months after we hand over the vessels.

"I would stress that the construction costs to build both vessels are not a major contributing factor to this funding gap.  [Ferguson Marine] is largely holding to the agreed budget to complete construction.

“Looking ahead, post-delivery of the two LNG hulls, we believe there is a strong future for the yard based on two visible pipelines:  winning further shipbuilding contracts from CMAL as well as contracts for BAE to support its T26 frigate programme by building modules within the yard ready for assembly at its Govan shipyard.  We already have some FMPG staff seconded to Govan and the arrangement is working well.

“We intend to submit a strong bid for CMAL’s small vessel replacement programme (SVRP) and believe we are well placed to win this contract, given our experience of exactly this type of work in the past. Securing this business, alongside completion of the two dual fuel vessels, is now our primary focus and central to the future of the yard.

“The Small Vessel Replacement Programme (SVRP)  ferries will be an evolution of three electric hybrids - MV Lochinvar, MV Hallaig and MV Catriona - successfully built by the shipyard in 2012-2015.

"Drawing on this previous experience and capability means we avoid a steep ‘first-of-class’ learning.  Securing this programme of work would allow us to steadily increase efficiency, programme management, labour profiles and outputs, and place the yard in a competitive position for future larger and more complex ships, including those required by the offshore wind farm market over the next 15 years.”


Scottish Conservative shadow transport minister Graham Simpson MSP, said: “This is an utterly damning report which shows the costs of these two ferries – which are yet to set sail – are continuing to soar."

He said there was still a shortfall in funding and with no guarantees from the SNP transport minister that these ferries will be completed.

“Betrayed islanders will be wondering when this SNP ferry fiasco will ever end.

“The report also contains the remarkable revelation that the future of Ferguson Marine remains uncertain despite hundreds of millions of taxpayers money being poured into it on the SNP’s watch.

“The SNP-Green government need to urgently spell out what the future holds for the yard and if they are going to remain competitive in any future procurement processes.

“It is also deeply concerning that widespread failure has been so handsomely rewarded with management receiving near six-figure bonuses, even without SNP government approval.

“The SNP’s ferry scandal demands an independent inquiry to find out the whole truth of this appalling saga.”

A Scottish Government spokesman said: “The Scottish Government is committed to helping Ferguson Marine Port Glasgow (FMPG) secure a long term sustainable future for the yard.

“We expect the company to provide a strategic business plan to Ministers in due course for comment and agreement.

“It is a concern that Ferguson Marine did not inform or seek approval from the Scottish Government before bonus payments were paid to senior managers. This should be done as a matter of good governance.

“However, the new senior management team is committed to consulting with the Scottish Government as required on this issue in the future. Significant progress has been made by the chief executive and chairman of the Board on the governance structure at the shipyard over the last 12 months."


"We deeply regret that work on the two ferries is taking longer than it should. The Scottish Government remains focused on supporting our island communities that rely on this type of vessel.”