Scotland’s state bank could lose £9million it has invested in the deposit return scheme

Chairman Willie Watt told MSPs today that the Scottish National Investment Bank would suffer “significant losses” from the bankruptcy of the scheme’s administrator.

He said he expects SNIB to lose more than half of the £9million it has given Circularity Scotland since May last year, but it could be 100 per cent of it.

“That’s the truth,” he told Holyrood’s Economy and Fair Work Committee.

Mr Watt denied that SNIB gave Circularity Scotland the money to cover start-up costs as part of an agreement with the Scottish Government.

He also insisted that proper due diligence had taken place prior to investing the money.

However, he also said that SNIB was comforted by ministers’ commitments that the project would go ahead as planned.

Al Denholm, SNIB’s new CEO, said the due diligence on the investment had been impressive, but acknowledged that SNIB could suffer its first major loss on the venture.

The DRS aimed to improve recycling rates for beverage cans and bottles by charging a refundable 20p deposit on each container and returning the empties to stores.

For months, Green Secretary Lorna Slater had claimed that the DRS would be operational by mid-August, despite business concerns.

But the UK government restricted its scope under the Internal Market Act, which aims to harmonize trade within the UK, and banned the inclusion of glass.

This prompted the Scottish Government to postpone the DRS until at least the end of 2025, leaving Circularity Scotland unable to go ahead as industry bodies refused to continue funding it.

Circularity Scotland went bankrupt yesterday, losing up to 60 jobs.

She refused to say how much money, if any, will be returned to the SNIB.

Nor did Green Minister Lorna Slater, who was in charge of the DRS, say on BBC Radio Scotland this morning how much money the SNIB would lose.

She survived a Conservative-led no-confidence vote over the saga in Holyrood yesterday.

SNIB, which is 100% owned by Scottish Ministers, was set up in 2020 to invest £2 billion of public money in long-term projects supporting the transition to net zero.

In May 2022, the company invested £9m in Circularity Scotland, helping to mobilize a further £9m from the Bank of Scotland.

Coincidentally, Mr Watt and Mr Denholm appeared at the Economic Affairs Committee this morning and were asked about the implications of Circularity Scotland taking office.

Mr Watt said he expects more information from administrators in a few weeks.

“As for the impact on our loan, we don’t know exactly what impact it will have.

“But I think it’s fair to say that there will be significant losses on the loan we have made to Circularity Scotland and we will report those losses as soon as we know what they are.”

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