To celebrate creative source reaching 100,000 subscribers, I've reached out to some of my favourite partners so that we can say thank you to you for all of your amazing support. For 7 days in a row I'll be launching giveaways for a total of 24 prizes worth over $6,000 so that you can get the chance to have your hands on some great studio gear and software. Each video also has a bonus secret code inside for you to get extra entries so make sure you watch the whole thing. Today's prize comes from Isotope. Hi folks, I'm Mike and I hope you're well. Isotope is one of those companies I've really enjoyed working with because I actually use their products in my productions all the time, I mean all the time, okay? And you can hardly talk about Isotope without talking about what I guess is their kind of flagship product which is Ozone. I use that extensively in my mastering and I've talked about that in a recent video. Let's take a quick look. We know it's big and we know it's popular but what makes it so great? It's true that you could create your own mastering suite using plugins from different sources but it's really nice with Ozone that you've got everything you need in one place. You can add or remove modules as you like and rearrange them etc.  To be quite honest with you, it's hard to think of anything they left out. So if you're not a mastering engineer and mastering still holds some kind of mystery for you then Ozone can be a big help. Apart from the automated features like the master assistant and the reference track matching, it's always had this kind of semi-tutorial feel about it. Just loading up a preset gives you an indication of what kind of modules you might use and what order you would use them in. As someone who's always in a hurry to release audio to platforms such as this one, YouTube, the maximizer module is an absolute godsend. You simply set up the requirements for the platform that you're releasing to, play your track and the maximizer figures out the best settings to achieve those requirements for that platform. Also when I think about Isotope, I think about RX. This is just magic to me. If you don't know what RX is, it's like that Swiss Army knife of tools and plugins so that you can fix faults in your audio. There may be pops and clicks or there may be things like fret noise and squeaks on a guitar. There's a whole range of things that RX can be used to fix. I made a video about the previous version of it. This one, version 9 at the moment, but I made a video about version 8. Let's just take a quick look at that now. So a great vocal performance can be ruined with plosives. This is the sound of wind rushing across the microphone and we particularly get it with puh and bust sounds. In the recording I'm about to play you, it's being caused by a tuh sound on the second word. You've taken my heart and you give it up. And again. You've taken my heart and you give it up. And one more time and remember to listen with headphones or studio monitors. You've taken my heart and you give it up. So I'm going to apply de-plosive from RX 8 on its default settings. Let's see what difference it makes. You've taken my heart and you give it up. Like magic. It's gone. An absolute favorite from me as well from Isotope is Nectar. It's really kind of a one-stop shop for vocal processing. Please check that out in the links in the description down below. I'm so pleased to tell you that Isotope have generously offered as a prize for this giveaway. The massive Music Production Suite 4.1. It actually includes everything I've talked about in this video and it's valued at around about 999 US dollars. In a moment I'm going to tell you how you can go about entering for this giveaway. But first of all, let's have a quick chat about the things that you don't need to do to enter. So to enter this giveaway, you definitely don't need to subscribe to this channel. You don't need to like this video and you don't need to make any comments down below. However, if you do think that this channel could be useful to you in the future, you can subscribe and if you do make sure you ring the bell so that you're notified about my other videos. Also if you'd just like to say thanks, you can do that by hitting the like button. It's very much appreciated. Now I'd love to hear from you in the comments down below about which part of this prize you're most excited about. As I say, you don't have to do any of those things to enter. So what do you have to do? So to enter for this giveaway, just go to homestudiogiveaway.com slash Isotope or follow the link in the description down below. Once you're there, you'll find that there's a number of different ways to enter and you can enter a number of times to increase your chances. I look forward to seeing your entries there. A massive thank you to Isotope for putting up this awesome prize and also a massive thank you to you, the people who got me to 100,000 subscribers. And I'll see you in the next giveaway video.


I welcome everyone to the 18th meeting of the Public Audit Committee in 2022. The first item on our agenda for committee members is to agree to take agenda items 3 and 4 in private. Are we all agreed? We are agreed. Thank you. The principal agenda item that we have this morning is continued consideration of the Auditor General for Scotland report, new vessels for the Clyde and Hebrides arrangements to deliver vessels 801 and 802. I welcome our witness this morning, Jim McCall, the former director of Ferguson Marine Engineering Ltd. You're welcome, Mr McCall. We also hope to take evidence this morning from the former chief executive officer of FML Jerry Marshall. Unfortunately, he's not now available, but, as always, the option remains open to the committees to consider whether we wish to seek further evidence at a future date. Mr McCall, we've got a written submission from you, so thank you for that. However, I would now like to invite you to make a short around two-minute opening statement before we get into questions. Right. First, thank you very much for the opportunity to be here today to participate in the process. I was also happy to participate in the RECC inquiry and the recent Audit Scotland review. Myself and the former senior management team have put forward a lot of factual evidence to assist those processes. In both cases, however, we felt it necessary to submit responses to both reports due to our concern that important issues were either not addressed, were factually inaccurate or had been presented in a way that was misleading. There are four main factors that have caused massive cost overruns and extensive delays, in our view. One is that the wrong type of vessels were selected. Two is insufficient development of the specification prior to the placing of the order. The third factor is shutting down all opportunities during this process for dispute resolution. The nationalisation and the steps that have been taken since then have been catastrophic. I am happy to expand on those later on if you would allow that. I think that it has been damaging what has happened to the reputation of the leadership team, our team and the workforce. There have been many false allegations about the quality of those people. With the right design, the proper specification, the shipyard and the workforce are more than capable of building all the ferries that are needed for the future of the Scottish ferries. You are right in saying that the themes that you have outlined in your opening statement are ones that we will return to over the course of the next hour or so. Thank you very much for that. You will be aware that the Scottish Government has released quite a large number of emails that give us some sense of things that were going on from 2015 onwards. Can I take you back to August 2015? We have published correspondence from Transport Scotland to Keith Brown, who at the time was the Cabinet Secretary for Infrastructure, Investment and Cities. On 20 August 2015, correspondence seeks his approval for SeaMile to award shipbuilding contracts of a total cost of £96 million—I think that it might have gone up to £97 million in the next few days—for two new major ferries to FML. Towards the end of the correspondence, references are made to the potential for a legal challenge from one of the unsuccessful shipyards. It goes on to state that SeaMile was confident that it could defend any challenges under those circumstances, but it said that the relationship between Scottish ministers and Ferguson's owner is well known. For the benefit of the committee, can you define the terms of that relationship at that time? I was on a number of entities that are non-paying organisations that are welfare to work, and I get involved in campaigns to get people into work, working with Skills Development Scotland and so on. I had a lot of interaction with the Government, and whenever there were any issues coming up with businesses that were in trouble, I always got a phone call from Alex Salmond to say, you know, would you have a look at that? Would you be interested in having a look? Now, everything that I had a look at, I said, I did have a look, and I said, no. I saw my role as a businessman to be to support whoever is in power and do my best to support the Government, and that's the relationship that I had with the Government. When he came and asked about the shipyard, that was one that we had a further look at, did diligence on and decided to go ahead with. So that was the relationship. It was very much a working relationship, and just for the record, I have never given money to any political party. I try not to be a supporter. I did support the idea at the time of more powers for Scotland, really, and I thought through the independence referendum last time that that might result in more powers being given to Scotland. That was the main reason for backing that, but other than that, there was no closer relationship. Although there were lots of photo opportunities taken at the time and because of events that I was involved in, it was also in the Council of Economic Advisers, along with a number of other people. You said in your evidence to the Rural Economy and Connectivity Committee that that is a bit later on, but you raised your concerns with the First Minister, the Cabinet Secretary for Finance, Economy and Fair Work, the Deputy First Minister, the Minister for Business, Fair Work and Skills and all three transport ministers. I think that you said that in an era of frustration, but you clearly had a very close relationship to a range of Government ministers. Yes, I think that it is because of the various bodies that I was on, the advisory council, the Council of Economic Advisers among the energy committee. There were others that I was on, and through those I was fortunate to be able to have access to the ministers. However, in what was happening in the yard, I felt that it had to be raised to a high level in the Government because of some of the frustrations that were going on and the costs and delays that I could see rolling up. I first flagged this up five years ago, and I was fortunate to be able to have access to them because of my relationship through various organisations. So, do you think that you had preferential access to them? Oh, no. You only need to look at the history to see that I didn't have preferred many, I know many, businessmen and not just business people but university principles and so on that had the same type of access because the Government tended to talk to a lot of people to get input. Okay. Obviously, there is a financial relationship between the Government CML and the company that you were the owner of. Can I go back to August 2015? I mentioned the email that was sent to Keith Brown on 20 August. Come 31 August 2015, the First Minister comes to the yard to announce that FML is the preferred bidder for the contract. That must have strengthened your hand in any negotiations that were taking place, didn't it? Well, it didn't because having been named as the preferred bidder, you would normally expect and we expected the order to be signed by September. We didn't sign the order until 16 October because we were holding out for some changes that we wanted to the contract. It wasn't acceptable to us in the form that we had seen it. From a negotiating position, the First Minister, the head of the Government, the leader of the SNP, comes along and announces Ferguson Marine as the preferred bidder. I mean, she would have been made to look pretty foolish, wouldn't she, if five and a half weeks later it was decided to put the contract back out to tender. That must have strengthened any negotiations that you were having with CMAL about the builders' refund guarantee. Well, we'd already agreed that before she announced it. You'd agreed the builders' refund guarantee. What was the agreement? I think that the final agreement was that we would put up a cash deposit of 25 million initially and then all materials and all work, the ownership of everything that went into the vessels would be the property of CMAL. So we had no work in progress, we had no value in all the work that we did or equipment we bought. It transferred to their ownership and our argument at the time was they've got better than 100 per cent refund guarantee because they've got everything that's gone into the vessels and they've got 25 million, which is on deposit that can be called. That later was changed into a 15 million deposit and a 25 million bond, insurance bond, which in the end they didn't claim, they forfeited claiming that 25 million bond. So we had put in place and we also offered up a payment company guarantee. We offered up an alternative to the idea of a cash refund guarantee. A cash refund guarantee means that if it's 100 million contract you have to deposit £100 million in the bank. It's a cash refund guarantee. We addressed this before we really put a lot of work into the proposal, the tender. I think that you have papers that show that we did bring this up with the local MP who I think had approached the Scottish Government. I don't know who he approached in it but the response came back from Derek Mackay saying that Stewart had raised the issue of the guarantees with him. He explained how the cash refund guarantees worked to Stewart. I have the document here that says all of that, the one from Derek Mackay who was the transport minister at the time. It says that, although Seymal preferred to have a cash refund guarantee, they have in the past waived this for an alternative. That gave us the green light to go ahead and put the resources in to put in the tender. A lot of work goes into these tenders. We weren't going to go ahead and do all of this if we weren't going to be allowed to negotiate some different form of guarantee. I'll tell you why we can't do it and many companies in the UK can't do this against foreign competition because in Germany the National Investment Bank put up the bonds for Flensburg, the shipyard there. In Poland they get back. In Finland and in Holland, in most European countries, it's not a burden on the company that's receiving the order. The Government stands behind it. I asked my first approach to the Government was can you stand behind this bond as they do overseas? They said, no, because we are the buyer as well. There's a conflict there. We had lots of discussion about how we might be able to do this. We put forward various options and they were on record and they were agreed before the First Minister announced that we were the preferred bidder. That appears to be at odds with the email correspondence, which has fairly recently come to light on 8 and 9 October, when there were serious misgivings expressed by the board of CMAL about the award of the contract without a builders refund guarantee? I can only show you what we have. We've got evidence. We've got emails showing what was offered to CMAL and what they accept it. This is by 31 August 2015. You mentioned there about a parent company guarantee. That's been the subject of some interest as well because some people said that they had the impression that Clyde blowers would underwrite the work. I think that you've later said that that was never the case. What do you mean by a parent company guarantee? There was a parent company at the top of Ferguson. It was a holdings company. We said that we would stand behind that, but we weren't giving a Clyde blowers guarantee. We have a number of companies that we invested in. If we gave guarantees for everyone, we too would have to be able to have the backing to come through with that. We couldn't just put up a guarantee if we didn't have the wherewithal to meet it. Again, it's 100 million pounds. No one in their right mind is going to put up a guarantee like that. That's why foreign competitors get the backing of a mechanism that's in place by their Governments. I want to move on to another area. You said in your opening statement, Mr McCall, about why you felt the contract has gone in the way that it has. If I take you to the rural economy and connectivity committee's inquiry, one of the conclusions that they made was that FML lacked the appropriate level of design capabilities, failed to manage the design process effectively and proceeded to build the vessels before the design had been suitably developed and signed off. How do you respond to that conclusion? It's not something that I recognise and it's not something that the Government's appointed expert recognises. In fact, he's on record. This is Mr Van Beek? Yes, he's on record. All you need to do is read Van Beek's evidence to the RACC and he will tell you that what he saw was quite different to what Seymal was saying. He also says in here that it appears that what was reported was that it was just what Seymal was saying. I don't know if you're aware of Mr Van Beek's background, but he's a serious expert in this and the only person that's been involved that knows in detail technically what he was talking about. He's an ex-royal navy procurement expert, worked in defence procurement for a long time and he was the person that worked in the two aircraft carriers. He was brought in because they were running over and in two years he saved them £800 million. He's got fabulous credentials and he's overseen the build of a lot of these naval vessels. He has backed our story all the way through. If you read what he has to say about Seymal... I've read it, Mr McCall. Why is no one paying attention to it? We're also paying attention to the outcomes here. Here we are all this time later and there are still no ferries, so this guy may have been the world expert on naval procurement, ferry procurement, but the fact of the matter remains. This contract is two and a half times over a budget in five years. That's because he wasn't heated in what the advice he gave. He gave advice that wasn't taken. It was ignored and he tried to engage with Seymal. He says it all the way through. He blocked him. He wouldn't listen to him. He wouldn't engage in any of the dispute resolution. Many people have had a go at this with him. Humza Yousaf, when he was transport minister, put out a paper and an email suggesting that they have a peer review with us, Clydeblores, Ferguson, Seymal and CalMac. We accepted it, Seymal didn't. Transport Scotland then proposed, and I've got the proposal from them, an expert determination process again blocked by Seymal. Every time somebody was brought up to bring in experts to look at this, it was blocked by Seymal. I don't know why they are allowed to do that, but Ministers are trying. Can I just stop you there, Mr McCall? You have said in your evidence to the Rural Economy Committee and in the written submission that you have given us that you were concerned about the relationship between the Scottish Government and Seymal. You said that we could not understand why the Government did not take a stronger stance with Seymal. We now know why. What do you mean by that? I wasn't aware of that at the time. The audit Scotland report was the evidence that came out about the chairman of Seymal's quite strong opposition to Ferguson getting the job. We didn't know that at the time, that there was strong opposition from Seymal. We wouldn't have taken that job if we'd known how strong the opposition was to us getting it. It looked as if they had been pushed into accepting Ferguson. That's what it looked like to me with the benefit of seeing the evidence coming out. That's why I said that we know that there was something that he was forced to do that he didn't want to do, and he's put it in writing. However, I think that there's more that he has against some members of the Government. But where's your evidence for that? It's just circumstances. My evidence says that, at every turn, when there would be the natural thing to have a dispute resolution process, that would be normal commercial practice. It was blocked by Seymal. If I was in a situation like this with one of the companies that I owned, I would tell them that we're having an independent expert determination here. I would say that we were right and that they were wrong, but we brought in early on a company called BCTQ experts in naval architecture to give us, Clydeblore's comfort, that what FMEL was telling us was accurate. They wrote quite a damning report, and we've submitted that. Now, we commissioned that so they would say it, wouldn't they? But those are professionals. They're not going to write a story that I want them to write. They're professional people. HKA are the same. They wrote the same. And then we had Luke Van Beek, who was independent from all of this, confirming what they were all saying. The evidence was all there, but no action was taken. Okay. I'm going to move on and ask Willie Coffey to ask a couple of questions that he's got at this stage and bring other people in if they want to come in. Well, thanks very much, convener. Good morning, Mr McCall. Just to begin by following on from the convener's question there about the Rural Economy Committee's report about the appropriate level of design capabilities and so on and so forth. Clearly, you can test that finding. Did you get the opportunity to give evidence to the committee and subsequently when you saw the report, were you able to challenge those findings and set that out in detail? Yes, I was able to give evidence to the committee and the senior management team of FMEL myself submitted a report to them after it was printed, highlighting some of the inconsistencies in what was put forward. Now, and we said in the front there, whilst we acknowledge many of the conclusions in the report, we are concerned that most significantly important issues have either not been addressed or factually inaccurate or have been presented in a way that is grossly misleading. And we've detailed them all in here. We said what was in the report and what our counter to it is, and we have evidence to back up what we've said. That's all in there and can be checked, can be fact checked. Thank you very much for that comment. There's clearly a disagreement with the committee's findings in its report that you've made that pretty clear. In the auditor general's report that we have, there's an issue about cables in the vessel being too short. The turnaround director when he was appointed unearthed this issue, and I want to ask you for your views on that. It says, can I just share this with you? The process identified that some of the 1,400 cables that FMEL had installed at the end of 2018 are too short to reach the required equipment. What do you say to that? How could that possibly come about if design and construction was preceding correctly? I know exactly how it came about. Part 4 of what I said about the way that this was managed when the yard was nationalised. When the yard was nationalised, they put in Tim Hare on the day that it was in fact, on the day that it went into administration. Tim Hare was managing it on behalf of the Government. He immediately dismissed most of the senior management team and many of the key managers below that level left. They were wiped out. They had to sign NDAs, which is why I've not got more people with me today, because they are gagged, and they can't get freedom from that, so they can't speak. However, they were wiped out, and those were the people who were intimately involved with every part of the chip construction. We also had a very effective management system in there, and we have evidence of Lloyd's, CMAL, CalMac, BA's systems giving us marks that are excellent for the systems that we have. We've got evidence of it, but we were told that what Tim Hare did was that he wiped out all the systems that we had, because there was no big enterprise planning system, integrated enterprise planning. Each individual there had their element of the plan, the system that they ran. There were meetings twice a day in what we called a war room, where everyone was together, and they updated every aspect of the progress in that chip on a day-by-day basis. That was wiped out of all those systems. I'm told that there was no planning meeting held for six months after Tim Hare went in. He also sacked the design consultants that we had engaged, called Vera Navas, who were working in all the design work in the background, supporting our design team. What was wiped out was all the people that knew what was going on, all the systems that controlled it, and the design people that were behind it.  They then brought in a new design team, and I think that it's been changed twice since then. The design team had nothing to go on, so they had to go into the ships and say, what do we have here, and start building up from where it is, what's the next thing we should do. We know that they have moved control panels, they have moved pumps, they have moved equipment. If you move them and there was a cable already in place to go to them, it might not reach where they've been moved to. That's what's happened. Those are the facts of what's happened. You notice that Tim Hare left this until, what was it, a week before he left to announce that this problem. Those cables were installed by Consberg earlier on. They are a very professional outfit. They had the design and install contract to put those cables in, based on the design that we had for where equipment was and where the control panels were. That's what they did. Those are not people that make those kinds of mistakes. For the avoidance of doubt, you're saying that the cables that were installed weren't short, because of equipment? The were short, but this is the crux of something that's been happening all along. Design changes. Read what Van Beek said when he was in and he was observing, he tried to freeze the changes. He said that the level of changes he's never seen before. If you keep making changes and moving things, then it has consequences on stuff that's already been done before, and that's continued to happen. You will read now of lots of, in fact, since the Government took over remedial work. That's not all remedial work. What you get, you're allowed in these contracts, is owner observations. An owner observation is the owner, IEC Mal, coming back and saying, we would like to change that. Now, probably 70 per cent of what they asked, we said no, because it wasn't something that was necessary. We were designing the vessel and we knocked it back. They're now getting a free hand in the yard to make all the changes that are nice to have things that they want and the changes that they want to make, and they're being called remedial work. They're not remedial work. If it was properly managed, you would assess whether it should be done. Is it a necessity or is it a nice to have? Does it have an impact on other things that you've already done? You would examine all that, and we did that in the past, and there'll be a record of how many owner observations that were called at that time are now called remedial work. That's the crux of the problem, is the constant changes and they're still happening. Just let me finish this, if I may, Mr McCall. What you said quite clearly is that the cables weren't short. It was because equipment had been moved around that caused the cables to, therefore, not be able to reach that equipment because it had all been moved. They weren't short for the design and the placing that we had for the control panels and other equipment. We know that this equipment has been moved about. We know that control panels have been moved. On the issue about the observation reports that you mentioned yourself, the information that we have, there are about 346 of those. 180 were carried out and 166 were either rejected or still outstanding. Does that fall within normal quality management procedures where a customer requests a change and the person delivering the contract disagrees that changes can be carried out? Is that where the dispute resolution issue fell as well? Was there a failure to agree about changes or was there just rejected change requests? How did that work? If we get a request, we would review the request and see whether it was something that affected the performance of the ship, whether it was a safety issue or whatever, and then we would decide whether to reject it or accept it. Was that process agreed in advance? If you build anything, it doesn't matter what it is, you are bound to get change requests as you go along. How to do that? Was there an agreement about how to approach that particular issue? Yes, but there is a process that we put up. We put up the request, we look at it and we say no to some and we accept others. That is at the heart of any quality control, quality management process, but the auditor general's report also said that there weren't any quality processes in place to manage those kinds of issues. Where do you think he got that? We have evidence here of people that have done audits, including Seymal, giving us 97 out of 100 per cent for excellent, and that is the term that is used in the form that they fill in for our procedures and so on. I am just talking about quality processes in place that give an agreed framework between a client and a contractor to resolve issues. We had all of that in place. We were audited by the people who were looking at the British shipbuilding strategy. Sir John Parker did a review of the shipyards in the UK and we got a glowing report. We went into all the control processes that we had and we got to the stage where we were nominated as a consortium partner with Babcock and the deed had started work on agreeing with Babcock the elements of the hull that we would build. The company was nationalised before. I think that it was just weeks after that that it was announced that Babcock had won that. The Babcock consortium and IE Ferguson, but that is all gone. We were heavily audited for all of that. We did not get through these audits by having the type of systems that you are reading about in that report. My final question is also a comment in the rural economies report that there was evidence that the contractor deliberately proceeded to construct specific sections of the vessel either out of sequence or not according to the proper specification. What is your response to that and how does that fit within a quality process? It is again back to the same basic problems, the four problems that I have said, but one of the first ones. When we get the order to start on this, we expected to go in and start the construction, start working the vessels. We got the order signed in October 16th. By April 2016, Seymal had to concede that the specified deadweight capacity could not be met without a change to the draft of the vessels. It is a key part of the spec that tells you the deadweight, i.e. the cargo that you have to carry, the number of people and the draft, because you need to have the right draft to get into the ports that it is going to. That had to be changed and it took six months to get to the decision on how that should be changed. That should be nailed down in the spec. That work should be done before the order is placed and it should be done by the buyer in their tender before they place the order in their tender document. That was six months after contract award and 20 per cent into the contract period. They also did not select an engine until the 27th of April 2016, six months in. The engine selection again was made 20 per cent into the contract period. Now, once they had decided on an engine, Ferguson then had to progress with the detailed propeller design, because that is dependent on the engine. Then you have to construct a model and carry out tank tank to prove that it is good. Seymal then decided that they were considering two different propellers. They started off in the spec as two identical ships. They said that they wanted to look at two different propeller designs. That was done by Wartsilla, who is the engine supplier that was specified by Seymal. If you are specifying an engine supplier, you should have gone through what you are looking for with them. We had no option but to go to Wartsilla. They were the right people to go to, but you would normally have all of that bedded down before you issued the order. You know that it is Wartsilla engines that you are getting. You know that they are the specialists in the design of the propellers as well, because it is all the same system. They wanted two instead of one, the same in both. That rather belied the concept that hulls 801 and 802 were to be identical. That propeller specification was of fundamental importance. Until it was selected by Seymal, the final lines of the hull could not be designed. The two most important ones would be the stern most block, which is block number one, and then the block at the very front of the bow of the ship. You are going into a great deal of detail here, and I think that it might be more— Can I summarise it then? Before we could start with block one, which is the last one, it was April 2017, and we were 50 per cent through the time of the project. That is why we started to build the blocks in the middle where we had the design nailed down. They were signed off by Lloyds, so we were not taking any risks. The whole design was not signed off by Seymal, because, again, you will see in the report by Luke Van Beek that they delayed on signing off on anything. They would not agree to sign off anything. It was a delay in signing off rather than the approval by Lloyds. We started to build the middle blocks. There is no prescribed sequence for how the shipyard builds it. They can build it in whatever sequence they want. There is no rule. We built the sections. It was out of the sequence that we wanted to build because we wanted to build two ships side-by-side on the slipway, starting with the sternmost blocks and building them out so that we could always get the equipment passed until we got the last block on. We could not do that. They were built out of our planned sequence, which contributed to the delays, but it allowed us to continue with work and minimise the delay, because we are already 50 per cent through the life of it. I want to thank you for all that detail. Those are issues that the committee has been trying to get some feedback on, and your input today on the record is helping me to understand them. I am sorry that you are taking so long, Mr Copsie, for me to get it out, but it is important to understand why it was done the way it was done. That is why we asked you the question. Thank you very much. If there are any points, Mr McCall, that you want to address in writing to us after the committee, please do not hesitate to do that. We welcome further written submissions. For those interested in the landscape of the yard and how it worked, I would point people to the evidence that Alex Logan gave on 22 January 2020 to the Rural Economy, the GMB convener at the Yard. Sharon Dowey has some questions to put to you. Can I ask why CBC purchased the shipyard in 2014? You mentioned earlier on in the evidence to Richard about Alex Salmond phoning you if businesses were in difficulty. It was to ask if you had any discussions with the Scottish Government or Scottish Ministers prior to purchasing the shipyard and if so, what the nature of the discussions were? Obviously, we met Alex Salmond and John Swinney at the time who were pushing us to have a look at it and see if we could come up with a plan to save it. We had discussions with them, but those are the only people that we had discussions with. It was their initiative in approaching us to see if we would have a look at the yard. Was that the extent of the discussions? Do you just have a look? No, they were quite aggressive in looking. We need to get something done here if you are going to do it. We went ahead. We had some market studies done. What is the opportunity? We did diligence. We decided that there was a great opportunity here. We would negotiate with the administrator at the time—I think that it was KPMG at the time. We negotiated with the administrator. We did have contact from time to time with Alex or John to see where we were progressing. It was just to check whether there was anything else that he needed. We did not. We just wanted to get on and complete our diligence. Were there any incentives from the Scottish Government of Foreign Ministers for you to buy the government? No, there were no incentives. I did have a request from them, which I put once we had finished our diligence. I found out that the ship had responded to a bid for four hybrid ferries. They were all similar. Two of them had already been built. I asked them whether they were intending to build the remaining two. They said that they were intending to build one more, but they had not committed to another two. I said that I wanted the right to that order. It was a bid that was put in by Ferguson, so I wanted the ownership of that bid in what we bought. We had been through European regulations, procurement regulations, and Ferguson had been awarded the order for four, although only two had been released by the Scottish Government. I wanted to be assured that that order would be honoured if it were placing the order for the third one. That was the only thing that I insisted on to complete the deal. That ferry was built. We agreed to do it at cost because we were just getting into the yard. It was built on budget and delivered six weeks early. So that contract went ahead? Yes, that went ahead. We eventually got that. We built the ship and we launched it. I'm told that it's operating very effectively now and it's of good quality. That's fine. You mentioned Elorone a bit, if male's inability to provide the full refund guarantee and that was in the invitation to tender. Why did you use the bid for the contract for 801 and 802 when that was in the invitation to tender, saying that you had to provide a BRG? As I said to you, we approached the local MSP. Sorry, who was the local MSP? I think it's the local MSP, is it not? Stuart. Stuart, Stuart, Stuart. The local MSP is Stuart McMillan. That's it, that's right. He came along to the yard and said, Luke, we've got the chance to bid for these two, because we can't put up a cash refund guarantee. He took it up with the Scottish Government. Now, I'm not quite sure who he took it up with, but it's in the email that came back, the email came back from Derek Mackay saying, effectively giving us the green light that you don't necessarily need to put up a cash refund guarantee that something else can be negotiated. That's the message we got back. I don't know if you've got that email from Derek Mackay, but I'm quite happy to give you a copy of it. That was done well before we submitted the tender, because we weren't going to put all the work in if we were going to have to put up a cash refund guarantee. So you had confirmation that you didn't need to supply the BRG before you put your bed in? Well, we had made it quite clear all along, and we had had confirmation in the terms of that email that an alternative would be acceptable. I know that in the audit that they had said that because you had mentioned it in your bid, it was assumed that you could provide a BRG and it wasn't until they got to the negotiation stage that they realised. At what point did CMAL or Transport Scotland know? Was it just the minister at that time or Stuart McMillan in the year? No, we were working with CMAL all the way through the bidding process. So they knew all the way through the bidding process? Right, so they were aware of it before it was announced that you had to go in that? Absolutely. Right, okay. Just another question was in the spec, and you mentioned that with Willie Coffey. Was the spec issued by CMAL at the start of the contract adequate then? No, I mean you will see that there are comments from well, BCTQ, HKE, but more importantly, because of his independence, commentor Luke Van Beek, that the spec fell way short of what you would expect to see in a specification. And that what happened is after it was issued, they started then to ask things like, I've gone through the draft chains, the deadweight chain, you know, the draft, the engines, the propellers, you know, all of these things were developed by them after they issued the order. So the invitation to tender, then the specification from CMAL was not adequate for any of the people? No, absolutely, and that's been confirmed by three lots of professionals, experts. And there's no experts that are countering that. I don't class Tim here as an expert and I don't class Kevin Hobbs as an expert because they don't have a background in naval architecture. You really need to understand the technicalities here. Well, had you not taken the contract for the two vessels, did you have enough work at the yard to make it viable? Would you have survived if you hadn't taken that contract? Absolutely, I mean, I could show you lists of orders that we had and we were also working on, and I can give you in a list of those if you don't have them, but we had plenty of work out there. What we had done from day one was look to diversify away from dependence just on Scottish ferries because we knew that that could be bumpy, they might not place an order, they might not have the funding for it. So we had a whole load of activities going on and we had a lot of other work. We had some fabrication work, we had a squad that went out to different yards and did repairs on different yards down south. We had quite a bit of work going on and we were also still working on Katrina, the small ferry that I mentioned earlier on. There was plenty going on in the yard and at that time there were probably about 130 people employed. It was an exciting future and I don't know if you've got the evidence but we have an investment paper that was prepared and approved to put a further £8.7 million into the yard. That was approved one month before we knew we were the preferred bidder. Would we go ahead with investing £8.7 million in it if it was totally reliant on that order? We wouldn't, we would have waited to see if we got it. That's just absolute nonsense that anything negative would have happened to the yard if it didn't get the order. I wish we hadn't got it because we'd be flying high just now with a whole load of different orders, including the type 31 destroyers working with Babcock. Okay, we are rapidly running out of time but I know that there are substantive questions that both Craig Hoy and Colin Beattie want to ask so I'm going to turn first of all to Colin. My main interest in this is following the public pound. There's a lot of money being invested into this, a lot of public money and I'm keen to understand how it's been dealt with now. At the point of nationalisation the vessels were basically largely incomplete. £128.25 million of public money was invested into the yard and into the construction of those ships. How was that money spent? It was on the ships. What happened is— Is there not evidence by the value at the point of nationalisation? Yes, it is. Every penny that was forwarded went into those ships and the ownership transferred to Semal. What was causing additional costs and additional things to happen is some of the issues that I've mentioned to you, changes, so there were further costs and there were delays. If you've got a six-month delay, that's six months more of a workforce that you've built up to do it, so there are costs. The costs were running way ahead but all of those costs were in those ships. All of it went into those ships and it was a—sorry to interrupt—but that had to be signed off by Luke Van Beek and PWC. That is all well controlled and that money went into the ships. Is there any document that—obviously you're saying that the money was absorbed by changes and so on to the specifications—is there any document that lays that out and puts costs against that? PWC audited what costs had gone in and advised the Government on what further costs would have to go in. That's the work that was required to build those ships. They weren't going to be built for £97 million. You know, there was a—these were a first of their type in the UK. They hadn't been done before in the UK. Lloyds had no processes for it. They were building their processes for LNG ships as they went. These were prototypes that were taking—costing more to build than was in the budget. It was variations and delays that caused it. Variations to what was asked for and delays. How does this committee identify those and understand what the costs are that are against them? Because they've all been audited. They ask for the PWC audits to look at the accounts of the invoices that are there, the time spent by people on them is there. That's what it went to. It's self-evident that that's what it cost. The 45 that went in, 15 and then 30, was very strictly controlled. Before it was released, PWC and Luke Van Beek had to sign off and say, yes, that work was done and that's what it cost. It's well documented and controlled by the Government. You're saying that the Government's got this information? Yes. It was well controlled. It's all there. It was all in the records of the company. I think that what I'm saying is, from the point of view of this committee, we can only look at evidence that we receive that we're able to scrutinise. The money came in and it went to build these ships. It went into the ships. Is there anywhere else that was leakage where it went? Have you got any suggestions as to where it might have gone? Well, we don't know. We're not experts in this. We're trying to find evidence. We did our monthly management accounts. We've got graphs of PWC that worked on it quite a bit. They've got graphs of the costs and graphs of the cash that was coming in, and there was a big gap. This was all well monitored all the way through. Let me turn to one specific area, which is those milestone payments, which totalled about £83.25 million. I'm looking at the report from the Rural Economy and Connectivity Committee back in December 2020. They say that, in paragraph 160, there's strong evidence that the contractor deliberately proceeded to construct specific sections of the vessel, either out of sequence or not according to the proper specification, purely as a means of triggering milestone payments on the contract. Again, paragraph 157, the contract of progressing certain work on the vessels either incorrectly or out of sequence purely in order to trigger payments against the contract. Cymruol Luc Van Beek also gave evidence to the committee that Ferguson has deliberately slowed down some of the subcontracting. I'm trying to understand—I'm a layman on this—I don't understand the naval contracts, but it seems to me that if milestones are at A, B and C and the work between A and B has not been carried out and just the work at that milestone to trigger a payment is being done, that doesn't seem to me to be right. No, it's a misunderstanding. Maybe I can explain. The milestones were based on the fabrication. That was one of the big milestones—percentage of fabrication. I told you that there was no prescribed sequence. For the committee to say that it was done out of sequence is not an accurate comment, because there is no sequence. What we had to do because of what I went over about the delay on the engines, the propellers, the draft—what we had to do was build sections that were not the sections that we intended to start with and not in the sequence that we intended, but that was our choice. That was our decision and it was up to us how we built that. The idea was to keep the work going and keep people employed and do as much as we could with the information that we had and we had approved by Lloyds. That's why we built the centre sections. That triggered milestone payments in the fabrication because we had done the fabrication and they were legally obliged to pay us for what had been done. There's no scultuggery here or manipulating what should have been done to trigger anything. It's insulting to insinuate that we would do that. If you look at how the milestones were laid out, it was on percentage of fabrication and we were doing the percentage of fabrication. In a different order from what we initially intended, it was valid and it was for a very good reason to keep the work going and the project progressing. Otherwise, we would have had people sitting about twiddling their thumbs and we would have had a big delay until we got this information sorted out. I think that this committee really needs to understand that because we look at what the previous committee produced and they seem to be looking at this from the point of view that it's extraordinary the way the milestone payments have been done and the fact that they're out of sequence and so forth. That implies to me what I'm reading here, just what I said, did that work between A and B take place to allow the milestone at B to be triggered? No, it wasn't a case of if you do all of these blocks that will trigger it and we did the last one to trigger it, it was on percentage of fabrication on certain items of equipment being bought. There was evidence that we had bought the equipment and it triggered if there were big payments for engines and big items, there would be a payment that you could call once you had bought that. When we bought it, it went into CMAL's ownership. We triggered payments. It was a payment to buy them but immediately it was transferred to CMAL. There was no triggering of payments to give us more. Whatever it triggered went to CMAL and it was equipment that was bought and it was percentage of fabrication. Our job as the management team's job was to keep as much as we could on programme by fabricating what we had cleared with Lloyd's at the time and not stand about waiting on decisions to be made that should have been made earlier before the specification was given out. There are certain statements in the previous report that seem to raise a question. For example, in paragraph 157, they state that the profile of milestone payments may have resulted in a contractor progressing certain work on the vessels either incorrectly or out of sequence purely in order to trigger payments against the contract. I do not know what I need to do to get this over and it is really important that the committee gets this. The payments were triggered by equipment being purchased or percentage of fabrication. If we are fabricating centre sections of the ship because we have them all cleared and we have Lloyd's signed off on them, that is valid to do and it is the right thing to do. I do not know how I can make that clearer. That is the absolute factual truth. That is how it was set up. Luke Van Beek had also made the comment in his submission to the committee that he thought the payments were wrongly put in place because they did not match the cash outflow. There was a mistake in the way that they were done. He said that they should have matched the cash outflow but it would never have matched it because there was additional work coming to be done, changes being made and it was always going to cost a lot more. What we were pushing for early on was to have mediation to agree on who is at fault here. I was not expecting FMEL to get off with it. I was expecting them to be responsible for some but, for sure, CML were not getting off with it or should not have got off with it but they are. Given your statement that those milestone payments were payments for large equipment and so on, and percentage of fabrication, it takes us in a full circle back to the value that was in the yard because I believe that we are talking from memory here, so it has opened the correction, something over £8 million, and yet... Where did you get the £8 million? That was, I am talking from memory, a valuation at the point of nationalisation. That is wrong because the value in the yard is that we had invested £28 million in the yard, that infrastructure was all there and that is value. The ships had all the value in them that we had been paid for plus more because we had lost some money out of it as well. All of that value was there. If you write off the value of the ships, I do not know where that £8 million came up. That, to me, is nonsense. The value in that yard when they took it over was the infrastructure and the vessels that they had if they were going to continue with them in a going concern which they have done. They had a lot of equipment there that had been paid for, a lot of fabrication that had been paid for and that value was there. What would your estimated value be? I think that we had called down something like £82 million at the time, and then there was the £45 million that the Government had forwarded, and we had put in a further £3 million that we had lost. If you add £45 million, £3 million, £48 million on to the £82 million, that is what I think. You mentioned the number of £130 million. I think that that is what we are saying now. FML accepted £45 million from the Scottish Government, but it said that it did not want the loans, so why did you accept them? All the way through, and I have evidence that suggests that the Government was working or the Government was working with us all the way through towards a dispute resolution process. The Government was very keen to make sure, and I have internal emails and emails to the Government saying, unless we can get a resolution, a dispute resolution that draws a line under who is responsible for what, we cannot continue paying 250 people in the yard, or however many were there, plus all the subcontractors. You mentioned earlier about us delaying slowing down subcontractors. We had to. We did not have the money to pay them, and you cannot invite people in and then not be able to pay them. That is why there was a lot of urgency on trying to get a dispute resolution, and that needed independent expert determination. That was pushed by Transport Scotland but was refused by the chairman of CML. He said that the board had taken a decision that they were not going to enter into independent expert determination. My question is, if they were so sure of their position, why would they be afraid to enter into an independent expert? They have not wanted an expert to get near this, and they would not speak to Van Beek. In fact, they were quite belligerent with him and his evidence that he gave to the committee that they just would not talk to him. That is what we have had all the way through. I think that the committee needs to realise that to get to the bottom of the very valid questions that you are asking, you need to have technical independent technical experts look at it as well. They have never been involved. The only one is Luke Van Beek. I urge him to read again his whole narrative, the submission that he made to the RECC. Read it closely. Obviously, the dispute between FML and CML was very significant. At any point was FML advised by the CML board that they would resign if there was any intervention in the dispute. Who advised that? Again, trying to push the independent expert determination, I went to meet Derek Mackay, who at that time was the finance secretary, and I met him in Hollywood. I was begging him to insist to force CML to accept an independent expert determination because if he didn't, this was going to get out of hand and it needed to be brought to a head. He asked the officials in the room to leave and he told me that he couldn't force them to do it because they had sent a legal letter to Government ministers threatening that if they interfered with them as an independent board, or if they continued to interfere with them as an independent board, they would resign en masse and say why. That is why when I read that the chairman of CML was staunchly against that at the beginning and it looks as if he was forced into accepting placing the order with Ferguson. I took that to be what Derek Mackay was referring to when he told me that. There was no one else in the room, so no one else can corroborate it, but perhaps the officials that were there at the meeting could tell you that they were asked to leave and leave me in the room. Why didn't FML ever pursue its claim in court? All along, we were being led to believe that we were going to have a dispute resolution and the Government was working with CML to try to get that to happen. Every time it was put up, they were told by CML, no. They were also told by Luke Van Beek at the end, have arbitration, don't nationalise this job because your costs are going to escalate. This is the cheapest way to do it. He has also, in his evidence, said, advised them that they should deal directly with CML, CalMac, and cut out CML. He was so frustrated with CML that he recommended cutting them out. We need to understand the technical things that went wrong here that are not of FML's making. On that last point, you said in your written evidence that Mr Mackay said that he would have a legal letter. What do you understand by that terminology? What is a legal letter? I don't know. Every time you challenged CML, they immediately threatened legal action. I know that they even turned up to the RACC with their lawyers and the lawyers were told to leave. That's the type of people they were. The reason that we did not go for it, we were being told by the Government that there was going to be a resolution. We were aware that it might not all be in our favour. We were aware of that, but we needed the resolution. They were giving us a solution to keeping things going because they were very clear that they did not want the people to be laid off, the workforce and work to stop. They wanted it to continue. To do that, they put in £15 million to start with. When they put in the £15 million, we had £15 million of our own money on deposit. My approach to them was, can we have our own money back to keep things going until we get to some sort of process to resolve this? They said that we can't do that. We need to make it a commercial loan, but we saw it as a bridging loan until we got to the point where we had a dispute resolution. That's what should have happened. That's what we were being led to believe. Then it became clear that we needed more money. Again, Jerry Marshall had suggested all the people who would have to lay off the subcontractors and everyone. We were told that the PwC was put in. They were told that we needed the £30 million, and they said that it would only last until a certain date. I think that it was the end of June. They told the Government how long it would last before they would need to put in more money. They were able to say that because they were analysing the costs and they knew how much it was costing to continue doing this work in these two vessels. It's when we got to the end of that period that the whole approach from the Government changed and they shut down and they were obviously on a plan to nationalise the art then, because to keep putting additional loans in wasn't feasible and we didn't want loans. We wanted a settlement, even if part of that settlement was some accost to us. I'm going to bring Craig Hoyin, but just to go back to the point about this legal letter, this committee was told in evidence last week by Chris Wilcock, the head of the ferries unit at Transport Scotland, that his understanding from the CEO of Seymal was that no such threat existed. We're going to get Seymal in in a fortnight's time, so we'll put some of those questions to them. I know that Kevin Hobbs has said that in the past. He said what? Sorry, he denies it? No, he said that no such lack existed. He wouldn't know at the time what happened. Well, he's the chief executive and this is a board. He wasn't appointed until just after this order was placed and it's since. But sorry, but you met him with Mr Mackay on 5 June 2018? Yes, but he was referring to something that happened earlier. Who was? Derek Mackay? Derek Mackay. Yes, he said, I can't go. So he says three years ago, I got a threat that people would resign. No, he didn't say the term, he said, we have had this letter. I'm trying to understand this. You said that a legal letter, he just received a legal letter. No, he didn't say on 5 June 2018 or this was a three-year-old legal letter. No, no, he didn't say when he got one, he just referred to the fact that they had in the past at some time received a letter threatening them. I don't know when that happened or who it came from. I don't know, but I swear under oath that that's what he said to me. And that's why I've asked for some kind of investigation under oath, because people need to tell the truth. Well, we work on the basis that people before us are telling the truth. Well, I do too. Craig Hoy wants to come in with a number of questions. Craig, thank you, convener, and welcome, Mr McCall. You referred in your opening statement prior to that about the fact that some of your former colleagues couldn't attend because they're subject to gagging orders. I'm not sure we need to go into the names, but can you say the kind of roles to which those gagging orders applied? At any stage were you involved in a gagging order and have you been released from one? No, no. The gagging orders were issued by Tim Hear, who was working on behalf of the Government as the managing agent in the Yard. There were, if I give you the titles, you know who the people are. It's fair to say that most of the senior management, finance, operations, naval architecture, purchasing, supply chain, safety—there are a few of them that have suffered depression from what's happened to them because they have been solid and their reputation has been solid by some of the false statements that have been made about the quality of work prior to the Government taking over. That's false. It's absolutely false. Those were really good people that we recruited. We had a fabulous workforce there. There is a very strong workforce there that are high-quality, skilled people. They didn't, when they were working for us, do bad welds or bad quality work and then all of a sudden be told how to do good welds and good quality work just by people who come in. The First Minister said to Parliament that if it was a Government gagging order that applied to any of those individuals, it would be lifted so that they could fully participate in any inquiry. Is it your understanding that those are Government-imposed gagging orders? Of course it was Government-imposed, but I know that the Audit Scotland approached the Government because we gave them a copy of the gagging order so that they could see that it wasn't a normal employment contract confidentiality agreement. That was a gagging order and Audit Scotland had that. They also had a key individual who was prepared to come up. Others won't because they are employed just now. Their reputation is being damaged by false accusations about what they were involved in before, and they are worried about that damaging their current employment. I understand that. I am going to go back over several of the issues that have been raised this morning. You said that you were encouraged to engage in the purchase of the yard. Were you encouraged to bid for those two vessels? Yes, but we wanted to, so I wouldn't say that we were put under pressure. This is something that we believed the yard could do, and I still believe that we could have done it if it had been properly specced or even managed in a different way early on. The First Minister said that all the way through the major consideration for awarding the contract to FML, particularly when it hit troubled times, was the preservation of jobs. Can you say hand on heart to the committee that if the contract hadn't been awarded to FML, there would still be jobs and a thriving yard there? We had 135 at the time, and we had a forecast because we had done all the work in the tight 31 destroyers, a number of other vessels that we had bid for, and we had predicted 700 people employed in the yard by today. You met the First Minister at Bute House, where you said that you raised a red flag about the project. Was this another one of those meetings where the officials were asked to leave the room? No, there were officials in the room. At least one, I think. Can you just tell us a bit about the nature of that meeting? What did you undertake to do? I went along and explained some of the delays, because we were now at... It was April 2017, and I told you before we could start work on block 1, 50 per cent through the project life or the planned project life. I contacted the First Minister when I realised that this is a problem. We had asked CMAL or the management in FML to sit down and discuss this, and they refused. They couldn't get them to discuss all the changes and the delays, and the fact that we were 50 per cent through and we were just getting the information to start on the block 1. That is why I contacted the First Minister out of desperation to force some discussion on it. I met her on 31 May. We started these blocks in April, and we had had some meetings in the yard with the management team. They had tried to engage with CMAL, but they were getting just blanked out. My appeal to the First Minister was that you need to get involved because this is going to get out of hand. We need them to engage with us, and she appointed Liz Ditchburn to oversee or to try and get the two parties together and to resolve the issues. Now, all through that summer and into the next year, there was no progress. It was just talking. On that point, you said that it was on 31 May 2017. In November 2017, the First Minister came to the yard to launch Glen Sannocks. That launch was as fake as it was painted on windows, was it not? It wasn't fake. No, that was a proper launch. Again, Luke Van Beek will confirm that it was the right thing to do, which he did in his evidence. As I explained to you, because we couldn't build from block 1 up, we couldn't build both vessels side by side. To progress with all the work that we had to do in 802, we had to be able to free it up in the slipway. We had completed all the work on 801 to allow it to—the hull was watertight. There was a lot of work done in the hull. There was work that we would like to have finished on the slipway, but we could finish it on the key side, giving us plenty of room on the slipway to accelerate work in 802. Had we not launched it, it would have impaired us working on 802. It was the proper logistical thing to do. You can build it on the key side. This was all work.  The windows were painted by the workforce, and I think that it is out of pride of them launching the ship. The windows were not cut out because they were not put in yet, but all they did was they painted the bits that were in the windows black, because they do not want it to look as nice as it can to be launched. However, that is a complete red herring. It is absolutely irrelevant to the progress of the ship. Who's idea was it for the First Minister to come along and have a great razzimataz photo call around this? Was that something that— No, that would be the Government and their PR people. We told them that we were putting that in the water to make way for 802, and she wanted to come out and be part of the launch. Just like she wanted to come out on 31 August and stand with the workforce and get a picture taken, and just like they wanted the order inside on the 16 October on the day of the conference, the SNP conference. I was going to turn to that because it strikes me that alongside all the technical issues here, there's been a political dynamic to rush this at various points for different reasons. You said in your submission that there was clearly a great pressure on the timing of the announcement that it was going to FML, and there is a high probability that pressure was also on CMAL to rush the invitation to tender. Has there been a political driving force throughout this? That's the impression that I have, because when I look back at all the evidence that came out and then I look at events that happened and the timing of them. Luke Van Beek also had given evidence to the RACC that this tender had been placed before doing sufficient work to put it out. Now, why would they do that? Why would they put it out quickly? We did hear in some of the evidence from Audit Scotland that the chairman of CMAL wanted to re-tender it. Well, they could have done that, but that wouldn't have been a good story. The timing wouldn't have worked. One of the other elements where it could be implied that politics was at play was around the nationalisation of the yard. At any point, did you suggest anything different that might have meant that potentially the amount of money that taxpayers have now been exposed to and the risk that taxpayers were exposed to would have somehow been shared? At any point, did you say, well, actually, maybe there's wrong on both sides here. Let's sit down and arbitrary for a different solution here, because I'm concerned, like Mr Beattie, about the public purse here, and post-nationalisation. It has got significantly worse. Was there an alternative route to getting these ships? Yes, when we got to the 11th hour and I realised that we were not going to get a dispute resolution process and we didn't have enough money to finish the vessels and we were not.  We were putting in additional money for an acquisition that we wanted to do to add on to the yard. That's what it was highlighted for it. We weren't going to put money in to subsidise a Government project in our view, but I did then put in a proposal to them for a financial restructuring where we would bear—our estimate at the time when it came out of the HKA report was that I think the total cost would be £194 million or £195 million. I didn't bring them up, but I have in my car. There are four big volumes of detailed work done by HKA who are naval architecture experts and marine engineer experts on the whole project. They spent four months doing it and a lot of money put in to get them to do it. They told us what we'd have to do. I said, look, we'll bear half of the upside. Half of the additional, say, £100 million, we'll bear that because our view was if it was just an arbitration and some people would just split the cake and say, you're responsible for having. I put forward a proposal to Derek Mackay and I also said to protect them from going above the £195 million. We would bear the cost of anything above that because that gave us an incentive to really make sure that it came in for that price. Derek Mackay came back and said that it didn't meet European rules. It breached MEOP or whatever, I don't know what the term is. State aid rules. Yes, state aid rules. I went and got a QC's report and it couldn't be clearer that there was no breach of state aid rules. It covered it in great detail and this was a respected QC with good knowledge of state aid rules. Just to be certain, you proposed a solution that could potentially have saved the taxpayer about £50 million here? No, £100 million because you're going to have to pay probably £100 million more than that. The Government said no. I gave him a QC's report and he said, well, we don't agree with it. I then went back and I've got the email trail back forward to him. I said, look, I've identified a second QC in Brussels who you could go to check it because I think we need to move forward with this in complete these ships and he said, no, we disagree and he wouldn't. I don't think he got independent QC's opinion. In fact, I know he didn't because if he did, it was such a clear cut case that it did not breach EU rules but it was turned down. So back to this kind of flagrant disregard for the public purse, you think they had taken the decision to nationalise in any proposal, even though it was in the better interests of the taxpayer, they weren't intent on proceeding on that basis. That was nationalisation was the only objective at that point, do you think? Yes, and it was because, again, there seems to have been an attempt to protect CMAL from any downside on this all the way through. Now, if we had done that, would CMAL have to pay the £194 million for the ship because that's what it costs? It doesn't matter who's, you know, if the Government would put forward half the money we did, well, they have to pay £194 million for the ship. They've said repeatedly, we're not paying up any more than 97 million. And in fact, the Government have actually taken the contract off them, so they're not being held to account. This is a Government organisation that is avoiding being held to account. Just my last question. Do you think that CMAL has got something over on the Government here? Yes. I mean, they've been advised, I mean, the selection of the vessels, you know, LNG, they shouldn't have LNG vessels there. CMAL didn't want them. Luke Van Beek gave evidence about speaking to the chief executive at the time of CalMac, and they said they didn't want LNG. There's no bunkering arrangements in place for LNG, and it's going to cost a lot of money to put that in place. They'd have to ship tankers up from the Isle of Granges now, and they can't do that. And they're now at obsolete technology. There's a couple of papers recently, one from a Norwegian minister saying that they wouldn't be buying any more LNG-fuelled vessels, and there's an industry report out saying that the emissions from LNG vessels are 80 per cent more toxic than diesel fumes, and that they all have to be eliminated. So you're now completing two vessels that are obsolete, and you're not going to run them in LNG anyway, because the infrastructure's not there. And if you did, you're going to be putting out poisonous gases between Brodyg and Erdrossan and the other routes as well. These are not green vessels, so they were wrongly specced. Now, the Government had been advised by the Ferry Advisory Committee, which was wound up, but before it was wound up, the two experts on it wrote a final report, and I'm sure you've seen that if you haven't, it's worthwhile getting a hold of, because they'll tell you that they're wrongly specced. Okay, look, we are in the final few minutes that we've got left, and I think that Willie Coffey, do you want to come back in? No, you're okay. Colin Beattie had a final point to make, I think, or question to ask. Colin. Yes, please. I just want to come back in on a couple of points that we touched on earlier on. I've managed to dig out here the cost of purchasing FML's assets, which is, and I realise there's all sorts of offset figures involved in this as well, so this is a crude figure, £7.5 million. That was the valuation put on all the assets in the yard, which is very far short, of course, of the money that went in there. The second thing I was going to make a point on was the milestone payments, £83.25 million, £82.5 million were milestone payments, £0.75 million were for contract variations, and that seems a very small figure. Yes. Listening to what you're saying about the changes that we made. Yes, because FML refused to agree to any of the changes. They wouldn't sign off on them, so you can't bill them for it. So there are large discrepancies that I would say? Large discrepancies, yes. Okay, thank you. The final point I'd like to put to Mr McAulay, is that you, at various times, have described this contract as catastrophic, and you've called it a fiasco. Do you share any responsibility for that catastrophe? I don't believe so, because we pushed hard. The way to do this was, we tried to work early on with the CML people on developing the spec, although it was underdeveloped when we got it. We tried as hard as we could. We tried very hard to get dispute resolution. We couldn't have done any more on dispute resolution. On nationalisation, we did offer an alternative to nationalisation, and Luke Van Beek recommended that they didn't nationalise. I don't know what else we could have done. Those two ferries inherently cost more than the first bid that was put in. If we do share some responsibility, it's perhaps in not realising the extent to which this might overrun and the extent of the shortcomings in the spec. However, in the HKA report and the BCTQ report, they say that things were emerging that you couldn't have foreseen, so we had to deal with them as they arose. I'm sure that we have some responsibility, absolutely, but compared to the big issue here, it's very small. Thank you for giving up so much of your time this morning and for furnishing us with some detailed and wide-ranging answers to the questions that we had. As I mentioned earlier, if you do, on reflection, have any other material that you think would be useful to the inquiry that we're running to help inform that, we'd be very happy to receive that. Again, thank you once again for your time this morning. Okay, and if there is anything else that you think of that you didn't ask, then I'm happy to either come back or answer any questions. I will now close the public session of this morning's committee meeting.


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Hi everyone, my name is Steph, this is Little Bookish Teacher and welcome all welcome back to my channel. Today I'm going to share with you some recent reads and these are all new picture book titles that have come into my life over the last month and I wanted to share them with you. I have four fiction titles and one nonfiction so I thought I'd start with a nonfiction because it's the different one in the pile and that is Superpower by Philip Bunting. This is a nonfiction title about renewable energy, what it is, how we get it, and why we need it. Now this is quite a text heavy book so this is probably not aimed at your younger picture book readers, it's definitely probably in middle and upper primary book. It basically has answers to all of the questions that kids might ask themselves about renewable energy. It is told in typical Philip Bunting style, really fun, whimsical, brightly colored illustrations along with text and information that correlates with that. Philip Bunting is one of those authors that I find really switches between fiction and nonfiction picture book texts with the greatest of ease while still making all of his books seem like they fit together because of his illustrative style. But all of his nonfiction books are really fun because they make learning about something as complex as renewable energy really simple and fun and at times funny because he just has a really great way of injecting humor into the books. So this is a really great one to add to your collection. I have a whole stack of his fiction and nonfiction titles and I have enjoyed every single one of them. Then we have A Little Bit of Respect by Claire Alexander. This one I picked up because it is about respect and that's one of our school values and I'm always on the lookout for books that reflect the values that my school has. It is about this little character here who is small and looks really cute and so all of the bigger characters in this world treat it like it's cute and tell it that it's very cute and essentially treat it like it's a baby and it gets very very upset by that because they're not showing it the same respect that they would other people just because it's smaller and it looks different and it's a really great conversation starter for younger readers. I don't think this one translates as well to middle and upper primary just because of the way that it's being written but this is a really great way of showing younger readers ways of being respectful to other people and respecting their boundaries and respecting their right to say no hang on I don't like the way that you're talking to me at the moment because you're not showing respect and I think that's important. All right then we have Pocket Treasure by Wendy Shureti and illustrated by Juliana Oakley. This one is about a young girl who has lots of clothes that she loves but her favorite is this yellow dress because it has pockets and anyone who wears dresses will know that pockets are like a precious commodity in any dress but her pockets are such a great size that she can fit in her favorite toys and she collects things. Little kids love collecting things in their pockets. You find anything in there. When she's in her class and her friends need things to finish off projects or they're like drawings or craft projects or things like that she happens to have things in her pocket like a button for an eye or a feather to add to a collage and she gives them to her friends but then when she's outside she's making a mud pie for her teacher's birthday and she goes to add some things to it and she finds that her pockets are empty because she shared everything with everyone else and this makes her really sad until her friends then come back and are able to share the things that they have collected with her and it's this beautiful whimsical look at just being a child and having a wonder of just the little things in life like paper clips and string because they do and they do amazing things with it. It's creative and it's fun. I love the illustrations in it and there's some really great diversity in the cast so these are the main characters that we see in the story and then I have two Chris Horton books. So I came to Chris Horton books through Oh No George which a colleague of mine shared with me last year and I'll have to bring it home and do a review of it because it's one of my favorite funny books but I've been meaning to pick up more of Chris Horton's books so I got these two and yes I know they're different formats I just picked up whatever I could find. So there is shh we have a plan and this is a really funny tale of these characters who are trying to catch a bird and every time they get to the bird they're like shh we have to be quiet we've got a plan shh we've got a plan but every time they get there they scare the bird off until this little fellow down here who is trying to entice the bird in a way that doesn't mean hurting it manages to show them that perhaps their original plan is not the way to go and it's very funny and then this one Don't Worry Little Crab is an absolutely gorgeous book about the fear of the unknown. So Little Crab and Very Big Crab live in a rock pool and they are about to go and explore the ocean for the first time.  So those are some of my recent kids picture book reads I will leave them all linked down below for you in the comments I would love to know if you have read any of these or if you're planning on picking them up alternatively I would love to know if you have found any kids books recently that you have absolutely loved. Please share them with me and with anyone in the comments so that everyone can find recommendations. If you want to let me know that you're here but you don't want to leave a comment feel free to leave a Crab emoji down below otherwise I hope the reviewer on the world just staying safe and healthy and I will see you in my next video. Thanks so much for watching, bye everyone.