Correspondence obtained by Disruption Banking reveals that Eddie McAvinchey, an Executive Director at the Scottish National Investment Bank (SNIB), believes “our committee processes are terrible here.”
Apparently referring to the conduct of the Bank’s risk management committee during a deal, McAvinchey told colleagues: “I think Risk has screwed this up.”
“Some of what DC said was just rubbish. Our committee processes are terrible here,” he said. It is understood that “DC” refers to the Bank’s former Head of Investment Risk.
This admission from one of the Bank’s senior executives raises questions as to whether the SNIB has the proper risk management structures in place to invest taxpayers’ money safely.
A former employee of the Bank told Disruption Banking that SNIB sees a high turnover of staff and often does not have key positions filled. This potentially means that the Bank is limited in its ability to assess the risk levels of proposed investments sufficiently.
The former employee noted that “the Financial Controller position went up three weeks ago, suggesting the current one has resigned. The Head of Investment Risk resigned in August 2022 and has not been replaced. The Head of Impact resigned in December 2022 and, as far as I know, has not been replaced. At least four senior associates resigned.”
“The committee processes weren’t thorough as all the heads left – there was no true accountability, or appropriate experience to approve deals,” the former employee added.
The “terrible” processes could help to explain why the Bank has performed poorly since it began operating in November 2020. The Bank made a loss of £3.4 million in the year ending March 2022. Last week, the Chairman of the SNIB told Members of the Scottish Parliament that he expected to lose more than half of the £9 million loan the Bank offered to Glasgow-based company Circularity, after the firm went into administration.
A spokesperson for the Bank said that this correspondence shows the committee processes working as they should and added: “the allegation made about committee processes has been investigated and there is no evidence at all this was credible. We are also considering our legal options.
“The Bank’s investment process is rigorous and is overseen by an investment committee that objectively assesses each business case on its commercial merits and its anticipated impact against the Bank’s missions.
“This assessment includes the consideration of appropriate due diligence, and it is a process in which we have complete confidence.”
Disruption Banking previously revealed that the SNIB has invested millions into firms linked to the Scottish Government and that the Bank may be operating unlawfully.
Author: Harry Clynch
