FM signed off on ‘unregulated’ senior appointment at state bank
NICOLA Sturgeon signed off the appointment of a controversial Scots finance veteran to head the nation’s first state-owned ethical investment bank – even though he was given the nod without watchdog oversight and despite the First Minister agreeing the need for “substantial transparency”.
The Government has committed to investing £2 billion over 10 years to capitalise the Scottish National Investment Bank (SNIB).
It is regarded as an essential tool to revive the economy, although there remain questions as to when it will open.
However, there is criticism over the “unregulated” appointment of Willie Watt, which was signed off by Ms Sturgeon two years after she agreed to a plan setting in stone “the need for substantial transparency, regularity and probity” in the way the bank operated.
Former finance secretary Derek Mackay gave approval to Mr Watt to head the SNIB without ethics watchdog oversight through an “accelerated timescale” at the end of 2019. This was so it could be operational in 2020.
A Scottish Enterprise board meeting in November was told it was supposed to open “as scheduled” in July.
As of this week there is still no date for when it will be up and running – but the Scottish Government insists it will be this year.
In May, Mr Watt said: “We still believe we can launch in 2020 as planned and are working hard to make sure that we do.”
Mr Watt was chief executive at Martin Currie in 2012 when it was fined £8.6 million by US and UK regulators in a case. This knocked 84 per cent off annual pre-tax profits.
Papers relating to his appointment reveal that the appointment was signed off by the First Minister five months before a law was brought in ensuring that all future key roles at the bank would remain regulated.
Legislation to create the bank was first introduced to Parliament in February, 2019. The announcement of the four-year appointment of Mr Watt was made nine months later by Mr Mackay, but only after Ms Sturgeon’s approval.
The board chairman earns an annual salary of up to £60,000 per year for up to 48 days a year of work.
As part of the unregulated process, Mr Watt was asked if he was aware of any matter relating to his past or present conduct “which could possibly embarrass the Scottish Government, ministers or the Scottish National Investment Bank if appointed”. It has been confirmed the “conflict of interest” case was declared at Mr Watt’s interview.
He and other candidates were asked as part of a “fit and proper person test” to confirm that they were “not aware of having committed any offence or performed any act incompatible with the position”.
Scottish Labour MSP Neil Findlay said that the First Minister should not have signed off on the unregulated process. “This shows that Nicola Sturgeon’s warm words about transparency were worthless,” he said.
Mr Watt, chairman of the SNIB, said: “The issue in question related to an isolated conflict of interest situation at Martin Currie. As soon as we became aware of the issue we reported it to the regulator, fully compensated the client for any loss and restructured our compliance and governance functions to ensure that nothing similar could happen again. The FSA had no further recommendations once they’d reviewed the action we’d already taken. This was declared to the Scottish Government during the recruitment process.
“We are currently working hard to get the bank ready for launch this year against the challenging backdrop of the Covid-19 pandemic.”
A Scottish Government spokesman added: “The SNIB will open this year, and will be uniquely positioned to influence and shape the direction of Scotland’s economic recovery delivering patient, long-term investment to businesses, projects and communities across Scotland.”