I TOLD YOU WE NEEDED TO TALK ABOUT THE SCOTTISH NATIONAL INVESTMENT BANK...

Previous questions as to whether the SNIB is operating unlawfully & the absence of conflict of interest procedures is now joined by risk assessment failures

The Scottish National Investment Bank (SNIB) already faces questions about whether it is operating unlawfully given provisions of the Scottish National Investment Bank Act 2020 establishing the SNIB remains to be fully implemented. But now that issue - already joined by questions about how it handles potential conflicts of interest - faces raised eyebrows as to its risk management procedures.

Risk management and diligence practices are both important aspects of governance for any entity charged with investing taxpayer cash as seed capital. The former protects against the uncertainties of investing by evaluating and assessing risk while the latter handles potential conflicts of interest which may at times arise. It is incredible then that Al Denholm, CEO of the Scottish National Investment Bank (SNIB) is admitting their risk assessment processes are inadequate and have cost the public £9m. At the same time there remains no mention regarding the SNIB’s investment strategy diligence practices failure to outline their handling of potential conflicts of interest.

At Holyrood earlier the SNIB Chief Executive Officer at the Scottish National Investment Bank admitted his organisation should no longer trust government legislation as a "reliable” mitigant to investment risk. Or in plain English, the SNIB should no longer assume the Scottish Government has checked whether its own legislation is within legal competencies.

This all arises due to the absolute debacle vis-a-vis the DRS scheme disintegration, which has exposed the SNIB as having failed to obtain their own legal opinion as to whether legislation proposed or passed is within the competence of Holyrood under the Scotland Act 2016.

An obvious point raised here is just how much damage this Scottish Government is inflicting to the credibility of Holyrood. Acts of parliament are no longer “reliable” mitigants to risk!

That the SNIB cannot realistically assume a Holyrood Act constitutes something businesses can take seriously when undertaking risk assessments prior to investment is depressing. Not least as it further diminishes the investment opportunities in Scotland by increasing risk when you have a government unable to ascertain its rear from its own elbow.

So far the DRS debacle has cost taxpayers £9m of losses from the SNIB’s end and tainted the well of investment in Scotland. Yet realistically the SNIB leadership now face the issue of why they failed to obtain the necessary independent legal opinion assessing whether legislation proposed or passed is within competency of Holyrood. Just why did the leadership assume a parliamentary act in of itself was a mitigant to risks faced? Some may suggest obtaining independent legal opinion prior to investing the public dosh they’re charged with ought to have been sought as a matter of careful risk-assessment management. If we’re being fair, we can say SNIB bosses are guilty of a understandable naivety in assuming you can simply rely on legislation (proposed or passed) to automatically represent a “reliable” mitigant to risk; but it’s proven a costly lesson for taxpayers to swallow.

But never forget that ticking away in the background is the continuing failure to resolve the lack of clarity as to how the publicly owned SNIB handles its potential conflicts of interest as well.

I previously wrote about the opacity and general absence of transparency concerning the SNIB in this area, so I won’t relitigate it here. Suffice, we can now add ineffective risk assessment procedures to the lack of clarity on handling of conflict of interest and non-existent Holyrood advisory-oversight boards.

As I expected, the SNIB increasingly represents a solid idea being poorly implemented amid growing questions of transparency and oversight. The incumbent government in Holyrood remains without an advisory board mandated by law able to provide “advice on the Bank’s objects, conduct and performance”. Thus the issue of potential SNIB unlawfulness remains floating in the air.

Questions of oversight of the SNIB and it’s internal procedures will keep coming to the fore given we remain in the dark about its policies for handling potential conflicts of interest as its CEO admits naïve - at best - risk assessment procedures has cost the public £9m. Nor incidentally will this episode be the last we hear of taxpayer losses to the tune of millions resulting from the SNP’s deposit recycling scheme disaster, but that’s a separate story for another day.

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