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Auditors examine SIC/Judane settlement

LOCAL government watchdog Audit Scotland will be reporting on the financial settlement between Shetland Islands Council and local knitwear firm Judane (Shetland) Ltd later this year.

On Monday the auditors confirmed that the Judane settlement, in which the council agreed to waive £411,000 of debt to Shetland Development Trust, has been the subject of specific focus in their annual analysis of the SIC’s accounts.

The settlement has been a source of great controversy and concern in the isles since it was agreed last December. Councillors were told that it was the best deal they could expect as most of the unpaid sum represented compound penalty interest, which they could not enforce.

In return the company agreed not pursue a claim against the council after their plans to sell the Judane factory in 2005 were scuppered by a planning decision that was overturned following a public hearing in 2007.

On Monday an Audit Scotland spokeswoman said that they were looking at the settlement as part of their annual audit of the SIC, which will be published in October.

“The annual audit looks at the council over the year, but sometimes they decide to look slightly more closely at certain issues and this is one of the issues they will look at a little more closely,” she said.

SIC head of legal and administration Jan Riise said that he and head of economic development Neil Grant had already met with the auditors and spent around two hours discussing the settlement.

Mr Riise said: “They have not come back to us with any feedback or more questions, which suggests to me they have not found any concerns with how things progressed. They have certainly not come back with any issues.”

Last week the council cleared councillor Gary Robinson of breaching the councillor’s code of conduct over comments he made concerning Judane in an article in Shetland News last December.

Their report published last week says of the legal settlement:  “The details of the loans, the repayment terms, and fiscal decisions which led to the eventual settlement lay outwith the scope of the Code and are currently under consideration by Audit Scotland.”

The public version of the Standards Commission report can be found at: http://www.standardscommissionscotland.org.uk/investigations/shetland_island/la_si_932_933.html

The Accounts Commission have still not given a date for their public hearing into Shetland Islands Council, though it is expected to take place before the end of June to avoid the summer holiday period.