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WE NEED TO TALK ABOUT THE SCOTTISH NATIONAL INVESTMENT BANK...
Is the SNIB operating unlawfully? The Act establishing it isn't fully implemented. Why is there no mention in SNIB investment strategy concerning how it handles potential conflicts of interest?
Is the Scottish National Investment Bank operating unlawfully? The law establishing the SNIB requires an advisory board to be established to provide “advice on the Bank’s objects, conduct and performance”. But it still does not exist. Why is there no mention in the SNIBs investment strategy concerning how it handles potential conflicts of interest? Taxpayer money is at stake and transparency is required.
For those who don’t know, the Scottish National Investment Bank (SNIB) is a state-owned investment and national development bank. It doesn’t operate as a normal commercial bank nor does it accept deposits. The purpose is to use public money as ‘seed capital’ to help kick off private investment funding for commercial projects across Scotland.
However there are grounds to question whether or not the SNIB is operating lawfully. The Scottish National Investment Bank Act 2020 establishing the SNIB received royal assent, passing into law on 25th Febuary 2020. And since that date certain sections of the act of the Scottish parliament have still not been honoured.
And the section in question (section 29) lays out the sorts of provisions which - if not respected - could potentially cast a shadow over the lawfulness of the SNIB’s operations to date in regards to dispensing public cash as seed capital.
Section 29 of the act reads
“29 Advisory group
(1)The Scottish Ministers must establish and maintain an advisory group to provide them with advice on the Bank’s objects, conduct and performance.
(2)The advisory group is to—
(a)be provided with sufficient resources by the Scottish Ministers to carry out its functions under this section,
(b)include at least 1 member appointed to represent the interests of trade unions.”
As of my writing this article the Scottish Government has not fulfilled the obligations of this section. Put simply, there is no advisory group in existence which would provide the Government (thus taxpayers) with expert advice as to SNIB operations, conduct or performance. So the SNP government has failed to establish an advisory board for the Bank, contrary to the legal obligations of a Holyrood act of parliament.
I have not been the only person to spot this incongruous problem. When Disruption Banking approached the SNP government for comment they (as I have) found an administration refusing to be drawn on why the board has not been established. Nor could I (or the people at Disruption Banking) ascertain what the Scottish Government’s views of the legality of SNIB activities in the absence of the Advisory Board.
The Holyrood administration merely commented “the Scottish National Investment Bank Act 2020 committed ministers to the establishment of an advisory group. Now that the Bank is fully operational, work is underway to meet this requirement.”
I will point out that “work is underway” provides taxpayers with no insight as to what this work actually materially consists of.
This all becomes more interesting when we consider the SNIB has provided seed capital (taxpayer money) to companies where senior figures have also served - by appointment - on Scottish Government advisory boards.
One example would be the CEO of biopharmaceutical firm Elasmogen. Ms Caroline Barelle was appointed to a Scottish government enterprise and skills strategic board by the SNP administration in January 2020. She continues to be a member of the board. While serving on this advisory board, the firm she was CEO of would receive in May £3.5 million in taxpayer dosh from the SNIB May 2022.
For those interested, the Scottish government enterprise and skills strategic board expenses billed to taxpayers for 2020/21 was £2,517.50; despite it being the year of lockdown and work from home. So, while these advisory boards are important to grant expert insight and advice to government officials and ministers, they are not free. Some boards grant remuneration for membersand expenses occur. In the case of the Scottish government enterprise and skills strategic board, prior to Covid there were £34,541.20 expenses charged to taxpayers (2018-19)
Naturally it is important highlight that Elasmogen and the other firms in question deny that the investment involved any conflicts of interest. And this could easily be true, but given the SNIB’s investment strategy concerning diligence practices makes zero mention of how the SNIB handles potential conflicts of interest, the issue is a relevant one.
All the more so in the context where the SNIB is operating while section 29 of the Holyrood act giving it legality remains unfulfilled. There is no advisory board in existence giving the Scottish Government “advice on the Bank’s objects, conduct and performance”. Equally there is no mention in the SNIBs investment strategy concerning how it handles potential conflicts of interest.
And nobody inside the SNP-led Scottish Government seems to care, despite this all involving huge amounts of your taxpayer money. £2.2 billion of taxpayer dosh pledged to the SNIB within the first ten years of its existence to be precise.
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Scottish National Investment Bank Act 2020, https://www.legislation.gov.uk/asp/2020/3/enacted
Public sector pay policy 2022 to 2023: technical guide, https://www.gov.scot/publications/public-sector-pay-policy-2022-23-technical-guide/pages/6/
Costs incurred by Enterprise and Skills Strategic Board:, https://www.gov.scot/publications/foi-202100223537/
SNIB Investment Strategy, https://www.thebank.scot/sites/default/files/2022-11/the-bank-investment-strategy-2021.pdf