LEGAL problems are preventing public spending auditors from carrying out a full forensic analysis of the soaring costs of Scotland's ferry fiasco, it has emerged.
Failed attempts have been made to establish where pre-nationalisation Ferguson Marine Engineering Limited (FMEL) spent over £128.25m in public money in relation to the building of two long-delayed lifeline ferries before it was nationalised.
Two lifeline ferries for Scottish Government-owned CalMac were ordered in 2015 when Ferguson Marine was owned by Jim McColl, a then pro-independence businessman who rescued the Inverclyde shipyard firm from administration a year earlier.
Delivery is now over five years later with costs expected to quadruple compared to the original £97m contract costs.
Included in the scrutiny is the £83.25m of the £97m contract that was paid to Ferguson Marine by the government-owned ferry owning and procurement agency CMAL as milestone payments for the completion of the project - despite the fact they were largely incomplete.
Audit Scotland is to carry out a new wave of monitoring over the ferry fiasco - and is to carry out a full costing of the project if and when the vessels have been completed.
It has been confirmed that the public spending watchdog will also examine the reasons behind going ahead with the completion of one of the ferries, Hull 802, after a Scottish Government due diligence examination found that it failed a value for money test, saying it was cheaper to build it again from scratch.
READ MORE: Over £5.5m in public money given to consultants over future of ferries
So far the Scottish Government has not divulged the numbers surrounding its decision to plough ahead with the project - despite calls for better transparency over the affair.
But the spending auditors have admitted that there are legal issues around their bid to carry out a detailed analysis of the financial records of FMEL, the shipyard firm at the centre of the fiasco, before it went into administration in August, 2019.
When the build ran into trouble, the shipyard firm fell into insolvency and was nationalised with Mr McColl and the government-owned ferry owning and procurement agency CMAL blaming each other for the fiasco.
Scotland's Auditor General Stephen Boyle has been seeking to uncover what happened to the public money that was provided to support both the shipyard firm and the beleaguered project before nationalisation.
But the public spending watchdogs say there have been a "number of complex legal and practical challenges that may inhibit" their ability to undertake the analysis.
Included in the review is how two loans worth £45m that was given to the yard was spent.
READ MORE: Day trippers advised not to travel to one Scots island in ferries row
The Herald has previously revealed that when in 2018, the finance secretary Derek Mackay was telling the public a £30m loan was to "further diversify their business", internal documents stated that the real reason was that Ferguson's was in financial trouble and at risk of falling into administration risking delays to the ferries project.
The loan agreement came with a "right to buy" providing a pathway to nationalisation.
The public spending watchdog said that while consultants PricewaterhouseCoopers was providing the Scottish Government with reports on FMEL spending, they did not go into detail on where the money went, so were "unable" to trace exactly how that money was spent and what progress was made on the vessels as a result.
Audit Scotland previously found that ministers went ahead with the contract despite the concerns raised by CMAL over the lack of financial guarantees that placed them at risk.
The auditors' examination of the issues said there was no documented evidence to confirm why Scottish ministers were willing to accept the risks of awarding the contract without a builder's refund guarantee in place despite the concerns.
Officials say that without a builder's refund guarantee in place, there was no link between the payments that CMAL was making and the quality of the build.
Mr Boyle had previously advised that the spending during Mr McColl's tenure at the shipyard firm had been outside his remit because it does not include private companies.
But the nationalised firm has now received FMEL's financial records.
And Audit Scotland has said that existing records relating to transactions were "not organised or categorised".
David Tydeman, chief executive of the now nationalised Ferguson Marine had been asked for help in tracing what happened to the £128m which was ploughed into the firm before it was nationalised.
He previously said they had not sought to evaulate old files because they "do not add value to the planning or budgeting work still needed to complete the vessels".
He previously told MSPs he did not have details of the £45m taxpayer-funded loan and had been focussing on the the £83.25m paid by CMAL.
Mr Boyle said: "I have received legal advice on what statutory powers I have to forensically examine and report on FMEL’s financial records in these circumstances. However, there are a number of critical issues which remain unresolved for which I am currently seeking clarification on from our lawyers. This is designed to ensure that I have explored all potential statutory examination and reporting routes for me to take further action."
He is expected to update MSPs on his progress in due course.
Wellbeing economy secretary Neil Gray rubber stamped a call to give £61m of taxpayers money for nationalised Ferguson Marine in this financial year after eight months of due diligence, which raised question marks over the future of the two lifeline vessels.
He issued a rarely-used ministerial direction to overrule the value for money financial test saying completing the vessel at the nationalised yard was the fastest way of delivering more ferry capacity.
Analysis of the money trail based on the Scottish Government's own accounting and audits revealed that with the extra £61m, the cost to the taxpayer of supporting Ferguson Marine both before and after it forced its nationalisation has soared to more than £450m.
It has been confirmed that if Ferguson Marine needed more money going forward, that that situation would be reviewed, although Mr Gray has insisted there is "no blank cheque".
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