SNP ministers are facing an onslaught at Holyrood over how they may have become liable for the vast clean-up costs of two steel works they owned for only a few moments.
The Scottish Liberal Democrats vowed to get to the truth about the possible bill for taxpayers after a “novel” deal to save the Clydebridge and Dalzell sites in Lanarkshire.
The Scottish Government agreed in March 2016 to act as an intermediary in the sale of the rolling mills to help save 140 jobs, buying the plants for £1 from the Tata Steel subsidiary Longs Steel, then immediately selling them for £1 to Liberty House.
The so-called back to back agreement was “untested due to the novel approach of the transaction in the UK” and in theory should have been a fleeting technical exercise.
However last month SNP trade minister Ivan McKee told MSPs that if Liberty collapsed, taxpayers could potentially be left with the environmental remediation costs of the sites.
He said the Government had rechecked the deal after the collapse of Greensill Capital, a key funder of the GFG Alliance that ultimately owns the steelworks.
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He also said that, despite previously saying the deal was lawful, the Government now thought it might breach EU state aid rules, which would invalidate the clean-up clause.
The Scottish Government has now asked the UK Government to refer the issue to the European Commission for a definitive ruling.
At the time, Mr McKee insisted there was no “current” cost to taxpayers, but dodged a series of questions about possible future costs in a worst case scenario.
Cleaning up the huge Ravenscraig site cost £70million around 20 years ago.
Scottish LibDem economy spokesperson Willie Rennie said he was determined to uncover the truth, and had tabled more than 20 written parliamentary questions about the deal.
The LibDems have previously accused the Government of secrecy after it redacted key information from its business purchase agreement in 2016.
Mr Rennie is demanding to know when the Government became aware it may have broken state aid rules and its potential exposure to remediation costs.
He said: “Hot on the heels of the scandals at BiFab and the Lochaber aluminium smelter, this is another industrial failure from the Scottish Government.
“First they drew up a contract that breached state aid rules and then they claimed there is no risk to taxpayers’ money but refused to release key documents in full.
“Why would the Scottish government go to the trouble of redacting information which they claim does not exist?
“Major investors will be questioning whether the Government is a reliable and competent partner, which in turn has major implications for jobs here in Scotland. If this government was a private sector operator they would have crashed and burned years ago.
“The Scottish Government’s business dealings need to be dragged out into the light.”
READ MORE: Taxpayers could face huge clean up cost for SNP steel deal lasting moments
A Government spokesperson said: “As part of the rescue deal facilitated by the Scottish Government in 2016 which prevented closure of the Dalzell and Clydebridge steel works, saved more than 100 jobs and retained steel plate production in Scotland, Ministers agreed to indemnify the former owner Tata Steel against any future claims relating to the sites.
“It is now considered that the arrangement may not comply with state aid rules and would therefore be unenforceable. This means that in the unlikely event of the indemnity ever being called upon, no money would be paid out by the Scottish Government.
“The issue was identified during contingency planning undertaken in response to the administration of Greensill Capital UK. We proactively informed the Scottish Parliament and all other interested parties as quickly as possible after advice had been sought, prepared and considered.
“There is no impact on the ongoing operation of the steel plants by Liberty Steel or any cost to the Scottish Government as a result of this matter.”
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