Highlands and Islands Enterprise: financial management review of Cairngorm Mountain

Annex A. Scope of Work

Scope of investigation

A number of issues have been raised in the media and in parliament and the scope of our review will seek to address these, including:

Section 1

• Original tender process
  • Consideration paid to HIE for CML
  • Evidence of access to finance provided by Natural Retreats
  • Structure of original transaction, and HIE due diligence
  • Clarify bidder company relationships

Section 2

• Monitoring oversight by HIE for the operational contract
  • Process in place
  • Action taken by officials at key decision points
  • Accountability of HIE Accountable Officer/Board

Section 2

• Investment in infrastructure
  • HIE announced in 2014 that £6m was to be invested by Natural Retreats. Of this £6m, £4m was a loan from HIE to Natural Retreats which was not taken up.
  • HIE's additional investment over the contract period is reported to be £3.4m. What was the rationale for this in light of the anticipated private sector investment?

Section 2

• Operational contract
  • Management fees and other intercompany charges (e.g. administration fees) – how did HIE assure itself that these were reasonable on signing the contract?
  • Clarification of which nature of fees paid by HIE throughout
  • In 2016 a new business plan for NAIL was approved – what due diligence was undertaken by HIE at this point?

Section 3

• Administration in 2018
• HIE's conduct of the transaction to take the Cairngorm services back in house. HIE were sole bidder and paid £462k. What due diligence was undertaken to ensure reasonable?
• Status of company and personal guarantees in favour of HIE and whether they provide any mitigation
• Contingent liabilities/budgetary pressures emerging from transaction.