The Scottish Government has been accused of deceiving MSPs, as documents reveal it was warned of potential legal action over the costs of a steel mill.
The Scottish Government obtained the Dalzell steel mills from Tata Steel for £1 in April 2016 in a “back-to-back” sale, before it was immediately transferred to metal tycoon Sanjeev Gupta’s Liberty Steel.
But the plant in Motherwell has been under pressure as the Gupta Family Group (GFG) Alliance is investigated for alleged fraud.
This means the Scottish Government could be liable for all of the clean-up costs if Liberty Steel collapses.
Business Minister Ivan McKee previously told Parliament that discussions around the liability for clean-up costs were still ongoing.
However, documents obtained by the Scottish Liberal Democrats revealed McKee was notified on 14 December 2021 - the day before he addressed MSPs - that the government could face court action in the event of Liberty Steel’s collapse.
The Scottish Government has disputed claims that they will be eligible for the clean-up costs, but the letter told ministers: “We note that it is not within the Scottish Government’s competence to make a legally binding determination on the existence of state aid.”
Instead, the firm said it would, if necessary, be a “question for determination by the courts”.
Willie Rennie, the Scottish Lib Dem economy spokesman, has urged McKee to apologise. “These documents confirm our long-held suspicion that in the event that Liberty Steel goes bust, and the assets don’t cover the clean-up costs, then it would be Tata’s intention to take the Scottish Government to court at that stage to force them to pay for the clean-up costs.
“We have seen at other industrial sites, like Ravenscraig, that this can run into the tens of millions.
“Moreover, Ivan McKee told Parliament last December that Tata were taking time to consider the situation.
“What these documents also reveal is that he had already received their answer the previous day, including the threat of legal action, he just chose not to tell Parliament about it.
“This is just the latest step in a cavalcade of Scottish Government deception,“ he continued, adding: “The minister should come to Parliament and apologise for his parade of obstructionism and set the potential costs to the public purse if Tata follow through on their threat of legal action.”
A Scottish Government spokesperson responded: “The Scottish Government acted at pace in 2016 to support a transaction involving Tata Steel and Liberty House to ensure steel communities in Scotland had a future.
“This saved the Dalzell and Clydebridge steel works, rescued more than 100 jobs and retained steel plate production in Scotland.
“Subsequently, ministers were advised that one specific part of the contract arrangement may not comply with state aid rules.
“This finding was reported promptly to the Scottish Parliament and means in the unlikely event of the indemnity ever being called upon, no money would legally have to be paid out by the Scottish Government.”
GFG Alliance and Liberty Steel declined to comment.
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