By Hans J. Marter

13th February 2004

A MAJORITY of councillors yesterday rejected a call for an independent inquiry into the financial dealings of the Shetland Development Trust (SDT) following the collapse of a major Shetland salmon farming business.

Instead they voted to bring the trust closer to the council, less than two years after a more independent structure had been implemented, separating SDT from the council’s own development department.

Shetland Development Trust, as well as Shetland Leasing and Property Ltd (SLAP) are set to lose almost £7 million following the collapse of three salmon farms since Christmas.

Only last summer SDT gave a £3.5 million loan guarantee to SSG Seafoods to buy more salmon feed. A few months later, they effectively pulled the plug on the company by refusing to invest further funds. SSG Seafoods went into receivership on 23rd December.

Councillor Alistair Inkster said the confidence of the public and the isles’ business community could only be regained with a “root and branch review” into SDT’s dealings.

He said that proposals made in a report by the council’s chief executive, Morgan Goodlad, to the meeting of Shetland Islands Council yesterday didn’t go far enough and didn’t “address the concerns made to me by members of the public and from the business community”.

However councillors overwhelmingly supported Mr Goodlad’s proposals to strengthen the trust’s relationship with the council, so that financial decisions would not be taken in isolation.

Councillor Inkster called for a roll call vote, but only councillors Geoff Feather, Iris Hawkins and John Nicolson supported his call, while councillor Gussie Angus, the chairman of SDT, and council convener Sandy Cluness abstained.

15 councillors voted for the following changes:

Under the new rules, the trust’s power to make investments in businesses is being capped at £250,000 with any request higher than that going to the council’s executive committee.

Investment decisions by the trust will be closer linked to the council’s economic strategy by presenting agendas, reports and minutes of the trust to the executive committee.

The trust’s project staff will revert to being members of the council’s economic development unit and “thus knitting together strategies and policies with investment proposals”.

The present structure of four councillors and four independent trustees is to continue with the difference that independent trustees will lose their £8,000 annual payment. They will, instead, be recompensed with an attendance allowance worth around £50.

The council also agreed that the changes made were to be for a transitional period only and should be reviewed again within the next 18 months after a new council director of development had been appointed.

On Tuesday, Mr Goodlad told the Shetland News Agency that the investment in SSG Seafoods may never have been made had the council’s development department been involved in the decision.