THE SNP must reveal how it plans to spend fundraised cash following a police probe into claims it diverted £600,000 of referendum funds elsewhere, a leaked report has revealed.

An internal governance report, obtained by the Herald on Sunday, has recommended the party improve its financial transparency and appoint a new scrutiny committee to “restore confidence” in SNP procedures.

It also reveals that the party’s complaints handling procedures are not fit for purpose, and have failed some who have raised concerns in the past.

The report, compiled by SNP deputy Keith Brown, comes after Police Scotland received seven complaints about fraud earlier this year, focussed on the use of £600,000 worth of donations which were supposed to be earmarked for a second referendum campaign.

The party raised the £600,000 in two fundraising drives in 2017 and 2019, however supporters were concerned when public accounts appeared to show the cash was no longer there, and complaints were then made to the police.

READ MORE: SNP sets aside £600,000 for 'referendum preparations' in 2021

Mr Brown’s report refers to “recent controversies concerning the party’s finances” and the resignation of former treasurer Douglas Chapman MP, adding: “These circumstances inevitably raise questions about the SNP’s financial governance, and highlight the need to restore confidence in our procedures”.

Mr Chapman quit as party treasurer at the end of May this year, citing a lack of information and support which prevented him from carrying out his fiduciary duties.

Several days later fellow MP Joanna Cherry quit the party’s ruling body - the National Executive Committee (NEC) –claiming she was prevented from improving “transparency” and “scrutiny” within the party.

The party’s deputy leader has recommended the creation of a new Finance, Audit and Risk sub-committee on the NEC to work alongside the Treasurer, and says the Treasurer role should be “strengthened”.

The report advises “some processes that have developed in an ad hoc way within the party be set on a more formal footing” and recommends the treasurer receive “a monthly written summary of income and expenditure, confirmed via the bank account”.

READ MORE: Douglas Chapman: SNP national treasurer resigns

Mr Brown also recommends strengthening financial scrutiny, that it would be “entirely appropriate” for the new committee to “provide constructive scrutiny of the SNP’s finances”, arguing this “encourages good financial practices, has the potential to pick up any irregularities, enables constructive challenge, and can help to instil confidence”.

Mr Brown has also recommended that the party be more transparent when it conducts fundraising drives.

His report recommends “that the party takes an approach similar to that of charities in terms of financial appeals, and set out what the funds will be allocated to and then update on how those funds were then spent.”

It suggests: “For example, for every £1 donated x pence will be spent on campaigns, x pence on staff and running costs, x pence on policy development, etc.”

Along with finances, Mr Brown also admits the party’s ability to handle complaints is not fit for purpose since its membership ballooned following the 2014 referendum.

READ MORE: Police Scotland launch 'fraud' probe into SNP fundraising for Indyref2

His report reveals the SNP has been “overwhelmed” by complaints from within its ranks and its failure to handle them has caused harm and suffering to members.

The governance review group led by Mr Brown included members Doug Daniel, Julie Hepburn and Jamie Szymkowiak, former MP Dr Eilidh Whiteford, Kaukab Stewart MSP and Moray councillor Shona Morrison. 

Patrick Grady, SNP MP and former chief whip, was part of the original member line-up when the review was announced last September, but appears to have been quietly ditched from the group and his name does not appear in the final report.

It follows a complaint of sexual harassment made against him by an SNP employee, and further claims he harassed party staffers at a Christmas party. One of the complaints is being assessed by Westminster officials.

The report finds that complaints had not always been handled properly by the party admitting: “The Governance Review Group was presented with clear evidence that current complaints-handling procedures have themselves resulted in a real dissatisfaction, lack of trust, increased frustration, including, leading to an injustice or increased harm for some.

“The SNP membership has grown extensively whilst internal policies and procedures have largely remained the same.”

READ MORE: Calls for independent probe into SNP transphobia as former member reveals extent of abuse

It explains: “Before the explosion of membership, so much of the party’s governance functioned well because we were a much smaller organisation…To a large extent, the party operated on goodwill, strong networks, peer support, shared knowledge and self-discipline.

“Immediately after the independence referendum, pre-2014 members with that experience were suddenly in the minority, and many of the old ways of doing things became obsolete in a mass membership organisation.”

A new complaints adviser was appointed by the party in light of the group’s findings and started work last month as part of a move towards having a “centralised complaints-handling unit that is fully resourced”, as suggested by Mr Brown.

Other recommendations include producing clear policies on what constitutes a formal complaint and bring in timescales for handling them.

Members found to have breached the rules could also be sanctioned differently, under the group’s recommendations.

Mr Brown’s report suggests “utilisation of a range of measures, beyond suspension and expulsion, in response to upheld complaints” for example not allowing members to attend meetings or act as a conference delegate for a period of time or introducing a bar on applying for candidate assessment for a period of time.

As previously reported by The Herald on Sunday, several transgender activists quit the party after they complained about incidences of abuse from within the SNP, but no action was taken.

The party later brought in a definition of transphobia which they said would be used as part of their process in handling complaints about the issue.

Asked about the report, an SNP spokesman said: “The group's report has been received, and the NEC agreed to consider implementation issues at its October meeting with any proposed concomitant constitutional changes taken to conference thereafter. A number of the group’s recommendations have however been overtaken by events.”

The SNP previously said it would cooperate fully with the police investigation into the £600,000 and would be making no further comment on the matter.