Trustee criticises Slap over £8 million hangar investment

By NEIL RIDDELL

The new aircraft hangar at Scatsta Airport should be completed by the spring after delays in the project, which is being funded by the controversial lending of £8 million in public money to the oil industry consortium in charge of the airport’s affairs.

There is continued criticism of the manner of the initial investment decision by board members of Shetland Charitable Trust’s prop­erty-leasing arm Slap.

In a report to trustees last week, the trust’s financial controller Jeff Goddard said it was hoped the hangar would be ready to open in April or May this year and that he believed Slap had achieved “a good result” financially, while improvements to the terminal buildings should take place over the next 12 months.

Mr Goddard’s report, which was debated in private by trustees at a meeting last Thursday, stated: “The IAC [integrated aviation consortium] is paying Slap a considerably higher rent than before, and I am confident that Slap has a com­mercial deal. The industry is still at Scatsta and hopefully the rents will be received for many years to come.”

Until the hangar at Scatsta is completed, Bristow Helicopters has to base some of its six Sikorsky S-92 helicopters at Sumburgh and fly them up and down empty – which entails considerable extra fuel costs and reduced offshore flying time.

The IAC threatened to leave Scatsta shortly before the May 2007 elections until Slap agreed to step in with the £8 million loan to build a new aircraft hangar and modernise the terminal building. The investment was a commercial one intended to make money for the company by paying for and leasing the buildings back to the consortium at a rent in the region of £1.6 million a year.

Councillor-trustee Gussie Angus was one of those who initially raised concern at the way the investment had been made. He asked at the first meeting of the trust following the last election for a report to be brought forward, which has taken almost two years to be forthcoming in the form of a two-page chronology of Slap’s involvement in the deal.

During last week’s debate, Mr Angus again protested, but said he didn’t think many of his fellow trustees had “any sympathy what­soever” for his case. “I was raising questions on the propriety of it, the timing of it, the question of whether after an election has been called – despite what was said to be the urgency of the situation – ex-coun­cillors were still regarded as trustees and felt they should be taking decisions of that magnitude,” he said.

There was a view among some that the decision had been rushed through to safeguard around 80 jobs with only weeks to go before the election, dashing the hopes of Sumburgh Airport that it would be able to take on the lucrative oil business, while former south Main­land councillor Gordon Mitchell – who lost his seat in the election – said the decision and its timing raised the “perception of mal­admin­istration”.

Mr Angus told The Shetland Times this week that he wasn’t necessarily against the investment in Scatsta because – due to con­fidentiality – all the information on it is not available. But he feels that a better system of checks and balan­ces for monitoring the activ­ities of Slap, particularly when it comes to investments of such a large scale, needs to be put in place and that lessons do not appear to have been learned, with councillor-trustees still being kept in the dark over its activities. “We try to monitor Slap better than we did, but I don’t think we really are – they report to us what they’ve done, there’s no business plan,” he added.

Following the failure of multi­million pound investments in SSG by Shetland Development Trust, which had four councillors on its board, a £250,000 limit was placed on the amount that could be in­vested without prior approval by councillors.

There are seven councillor-trustees on the board of Slap: Sandy Cluness, Allison Duncan, Iris Hawkins, Jim Henry, Bill Manson, Caroline Miller and Allan Wishart.

Mr Angus said: “The argument they put forward was that time was of the essence, I just think they were wrong. I think it should have been properly discussed and the decision taken on the merits, but we never had the opportunity. Put it like this: trustees acting in this capacity as councillors [were able to limit] the development trust to the sums they could invest, I don’t see why Slap shouldn’t have similar obligations.”

He was backed by councillor-trustee Rick Nickerson, who was also critical at the time and said there had been a perception among some of his constituents that the decision had been a political one taken by Slap members, several of whom were from Lerwick and further north, to the detriment of Sumburgh Airport.

“They suggested they were under pressure from the oil industry but if it was that desperate it could have waited. Sometimes we tend, when the industry says jump, we say how high. I think there needs to be, when an investment oppor­tunity comes up, sometimes you need to look at the political dimen­sions as well as the pure investment opportunities.”

In a statement, charitable trust general manager Ann Black said: “There was a routine periodic Slap report to Shetland Charitable Trust. In response to an earlier request from a trustee, this report included information on Slap’s investment at Scatsta and a discussion on this matter followed.

“The discussion centred around the tight timetables Slap had to operate within, in order to meet the requirements of the client, in this case the oil industry. The decision to invest in improving the infra­structure at Scatsta was taken by the Slap board, in line with pro­cedures followed for all com­mercial investments.

“Slap is a subsidiary of the Shetland Charitable Trust and has a board of directors appointed to oversee the investment decisions of the company. SCT trustees are given regular up-dates as to the activities of Slap, and its investment portfolio.”