Alex Salmond defends Gathering event bailout

First Minister Alex Salmond has defended a "secret" government loan to the failed private company hosting last year's Edinburgh clan gathering event.

The Gathering 2009 Ltd went bust after receiving £670,500 in taxpayers' cash, including an £180,000 interest-free loan not disclosed at the time.

Opposition leaders expressed anger that funds were written off and companies involved had to lay off staff.

Mr Salmond said the action saved an event worth £10m to the economy.

The Gathering, held last July, was the showpiece of the Scottish Year of Homecoming, which used the 250th anniversary of the birth of Robert Burns to attract tourists with Scots connections.

This week, an investigation by public spending watchdog Audit Scotland into the event, which lost more than £500,000 and owed £675,000 to creditors, said the government failed to complete robust checks of the company's ability to repay the £180,000 loan, which was later written off.

During question time at Holyrood, Scottish Labour leader Iain Gray accused Mr Salmond of failing to support vital sectors like the computer games industry and the health service.

He asked: "What do you have to do to get help from this Scottish government?

"You have to put a kilt on and call yourself a clan chief. And then you can have a secret, interest-free loan, no questions asked.

"And here's the best bit - you don't even need to pay it back. Just promise the first minister a photo-op in a beaver hat and then name your price."

Also on the attack, Scottish Lib Dem leader Tavish Scott told MSPs he had heard of businesses involved in The Gathering having to make workers redundant, because they failed to get the money they were owed.

Decision 'stinks'

He asked the first minister: "Why did he in particular give the impression, or allow the impression to be given, to all those Scottish companies putting money into this event that their investment was safe and that his government would pick up the tab."

Mr Scott went on: "When Mr Salmond's SNP government authorised that £180,000, did ministers know The Gathering 2009 Ltd was on the verge of bankruptcy?

"Did ministers ask whether this company was trading from an insolvent position? Does the first minister recognise that's a criminal offence?"

Annabel Goldie, the Scots Tory leader, supported The Gathering, but added: "A laudable concept does not justify the Scottish government playing fast and loose with taxpayers' money.

Mr Salmond said The Gathering generated millions for the economy

"Just look at who has lost out because of this mess - the police, the ambulance service, more than 100 small businesses and, of course, the taxpayer.

"Quite frankly, this whole thing stinks."

Mr Salmond pointed out that The Gathering generated £8m for Edinburgh and £10m across Scotland.

He said the £180,000 loan, given after private company WorldPay stuck to an agreement to withhold cash from advance overseas ticket sales until after The Gathering, had helped small businesses by ensuring the event went ahead.

"The reason for the financial failure of The Gathering company is that they didn't generate the anticipated revenue over the weekend that was in their forecast," said Mr Salmond.

"Therefore, by definition, how could we know a company was going to become insolvent before the revenue hadn't been gathered that they were forecasting."