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The reckoning is due, and the Under-Secretary of State needs to answer other questions. I have posed those questions about the SDA, but there are even more important ones. Will the Under-Secretary of State give us details of what Gomba paid for Stonefield? After all, we are interested in public money and the public interest. When I was recently in Jersey, I found accidentally that the receiver was suing Gomba-Stonefield for £100,000 still outstanding. Previously, I was told that only half the money had been paid. That would seem to mean a figure of £200,000 for the purchase. Is that correct? If so, why was the higher offer of £300,000 refused in favour of Gomba? Why did Gomba get Stonefield for a figure not much more than the value of the engines, axles and other components in the factory.
Why was there no written agreement between Gomba and the receiver and the SDA about the takeover? It would seem to be sensible business practice to have that important agreement in writing. Does the Under-Secretary of State accept that the lack of a written agreement resulted from a hasty deal because of Tory party pressure involving the Prime Minister, ultimately resulting in the damaging dispute between the SDA and Gomba, which was used by Gomba as the excuse for moving from Cumnock to Rochester?
What investigations did the Scottish Office or the SDA carry out into Gomba, its other activities and its registration in the offshore tax haven of Jersey before agreeing to approve acceptance of its offer? Was the fact that Mr. Shamji was a friend of the Prime Minister OK for the SDA and the Scottish Office? There is a strong case for some kind of inquiry into what happened at the time of the take over to see whether it was done properly.
Let us consider what contact the Industry Department for Scotland, for which the Minister is responsible, had with the Department of Trade and Industry to follow up Gomba to ensure that a company that still owes the receiver £100,000 and whose remaining assets at Cumnock have been attached by the SDA as security for outstanding rents, is not receiving more financial assistance from another Department. What has the Scottish Office done to alert the Department of Trade and Industry about this company and what guarantees have been obtained about continued production in Britain?
It is strongly felt, not just by me but by others, that Rochester is merely a staging post before production is transferred overseas.
Above all, what is the Minister doing to ensure that the SDA is more adept in its dealings with companies like Gomba and to ensure that the fiasco of the Stonefield saga is not repeated? Does not the whole episode confirm that the Government's original decision to seek private capital for Stonefield was unwise and responsible ultimately for the destruction of Stonefield and the loss of jobs. in Scotland and show that a successful public company can with the Government's connivance be effectively carved up by the private sector sharks to whom the Government are crazily and catastrophically committed, whatever the cost to the country?
Let us hope that the Minister and the Government are doing something to ensure that the Stonefield fiasco is not repeated in other parts of the country.
12.17 am
§ The Under-Secretary of State for Scotland (Mr. Allan Stewart)
I have no doubt that the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) is honest in his anxiety about the project, and I appreciate that. Unfortunately, he completely destroyed his case with the absurd and ludicrous conspiracy theories with which he has just regaled the House, starting with my right hon. Friend the Prime Minister. Those absurd allegations are without foundation and completely undermine the credibility of his case. May I make two introductory points? The first is that some of the allegations made by the hon. Gentleman are the subject of legal action by Gomba-Stonefield against the SDA. I am sure the hon. Gentleman will therefore recognise that I cannot respond in detail to some of those points. Secondly, I understand that the hon. Gentleman has made allegations about the SDA in a newspaper article published in Glasgow tonight. I have not seen it, and I am informed that the chairman and the chief executive of the SDA are considering the most appropriate response.
In 1977 the SDA invested £1 million in the company called Stonefield Developments Ltd. That gave the agency a 49 per cent. holding in the equity. As the hon. Gentleman said, unfortunately the chairman, first managing director and founder, Mr. James McKelvie, died in August 1977. Following that, the agency became effectively responsible for the company's management. Following an independent report from Mr. John Barbour, the SDA took a controlling interest and the company was then renamed Stonefield Vehicles Ltd. The company continued to experience difficulties. During 1978 it experienced serious financial pressure and the agency, as an interim measure, guaranteed a further £300,000 of additional overdraft facilities. So, by May 1979 the SDA had already invested a total of £3.3 million in the project.
The company continued to face such serious difficulties that the agency's bank overdraft guarantee had to be increased by £700,000. In September 1979 the SDA requested approval to make a further investment of £2 million. As the hon. Member knows from his previous Adjournment debate on the subject, the Government then concluded that that would not be sufficient to provide the self-supporting network of marketing and back-up facilities that was envisaged and that the likely volume of sales would not in any event be adequate to support the large-scale expense involved in providing such a network.
The Government considered that the best prospect was for Stonefield Vehicles to ally itself with a commercial organisation which could supply the sales and marketing expertise, and preferably the sales network, which were 967 needed. The Government extended further funding of £700,000 so that the agency could continue the search for a private partner which it had started as early as 1978.
The Government also approved the provision of a further guaranteed £120,000 by the agency to match a purchase option taken out by Tozer, Kemsley and Millbourn while that company assessed the market possibilities for the vehicle. Eventually it concluded that the sales prospects were not sufficiently promising to justify exercising its option to purchase. That is a key theme. No one doubts the technical excellence of the vehicle. The problem from the beginning has always been sales.
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