'Catalogue of failures’ led to spending scandal at Scotland’s water watchdog

A “catalogue of failures” is to blame for the “inappropriate and unacceptable” use of public money at Scotland’s water watchdog, a report has found.

The Water Industry Commission for Scotland is said to have been wasting public money, “failing in its responsibilities” – leading to a lack of financial control, failing to follow its own rules, and leaving MSPs with “deep concerns”.

The Scottish Parliament’s Public Audit Committee also found “significant weaknesses and failings in the Scottish Government’s approach” to the watchdog’s management.

The findings have come from the committee’s latest report into the Water Industry Commission for Scotland (WICS) finances on Friday.

The board’s “inappropriate and unacceptable” spending on training courses for senior staff, benefits to the workforce and, hospitality has already been widely reported.

However, the report said there was also a “complete failure by the Scottish Government to challenge the culture at WICS”, which led to the unacceptable use of public funds.

Speaking as the report launched, audit committee convener MSP Richard Leonard called the evidence he heard about the arrangements at WICS “simply extraordinary”.

“That the body, charged with promoting long term value from Scottish Water to its customers, itself failed to live up to the standards required of a public body left the Committee with deep concerns,” Leonard said.

“But the Committee is clear that there also appears to have been a serious lack of oversight from the Scottish Government. This failure from those who are meant to be safeguarding the public purse is simply unacceptable.”

Tory MSP and committee board member Graham Simpson said the behaviour of the watchdog “has been deplorable”.

“From lavish five-star dinners to swanky trips abroad flying business class and expensive training courses – all on the public purse – this organisation had a wild west approach to spending,” Simpson said.

“The Scottish Government, who were meant to be watching what was going on, was sleeping at the wheel and must also take the rap.”

The report on Friday is the latest in a series of investigations to try and figure out what went wrong, and how to prevent failures like it in the future.

The Committee has now called on the Scottish Government to review its systems for identifying concerns with public bodies to ensure any issues are caught at an early stage.

High-end meals, gift cards, and luxury purchases

The water watchdog first came under scrutiny in 2023 after an Audit Scotland report found evidence of “inappropriate spending”.

That original report found almost £75,000 of WICS expenditure did not meet public spending rules and £20,000 did not represent value for money.

More specifically, the report revealed that the former chief executive of WICS had an expense claim for a £170 Mulberry wallet approved during his time on the board.

Alan Sutherland also put glasses costing £290 on his expenses, among a number of “bulk” claims which appear to have been approved en masse without proper oversight.

Further investigations later revealed that Mr Sutherland had claimed a £400 high-end restaurant meal on an office credit card, with the expense being paid despite failing to provide a receipt.

He stood down from the board within hours of an Audit Scotland report being released.

Mr Sutherland’s departure cost the public purse £105,488 as he was paid six months’ salary and legal fees were incurred.

WICS also spent more than £77,000 on a course for a senior executive at Harvard Business School in the US. A further £2,600 was claimed to provide every staff member with a £100 gift card for Christmas.

The report recognised that there has been widespread Board and management departures from WICS, and indeed from the Scottish Government, since the first audit reports were published in 2023.

The Committee also confirmed that no further non-compliant spending was found between January and March 2024, but they said “this must be kept under close scrutiny”.

Nonetheless, the audit committee called on the current WICS board to undergo refresher training on their roles and responsibilities to ensure that the failure of responsibilities does not happen again.

It also called on the Scottish Government to review its systems for identifying concerns with public bodies to ensure any issues are caught at an early stage.

“We have heard about significant changes within WICS and the organisation’s commitment to improve the governance arrangements. These are clearly welcome. But we want to see concrete evidence of these changes to ensure that the unacceptable culture that was in place has truly gone,” Leonard said.