These fees were abnormally high before, during and after the rescue package

Committee report

The �60m project to re-develop the 52,000 seat national stadium had to be bailed out last year with a �5.75m rescue package.

The investigation by MSPs looked in detail at the complex project which involved contractors, subsidiaries, the Millennium Fund and other sponsors.

During their inquiry, MSPs were told that financial management of the Hampden project was worse than that of the Millennium Dome.

The committee found that the project was "fundamentally flawed" from the outset because of ambiguity over the role of The National Stadium plc (TNS).

MSPs also found that Mr Reilly's appointment to run TNS was made against "inappropriate criteria" and that his dual role with TNS and Queen's Park FC created conflicts of interest and genuine confusion.

Austin Reilly: Dual role created "confusion"

The report states: "The committee finds the attitude of TNS to be less than credible in their correspondence with McAlpine (the developers).

"It appears that either Mr Reilly was deliberately giving a partial picture to McAlpine or he was operating without clear knowledge of the financial situation.

"The committee finds that the management resources were insufficient for the task and key priorities were not met.

"Further, the fundamental structure was wrong and no effective structure was ever put in place.

'Foolish' expectations

"The committee believes that safety costs, acceleration costs and relaying the pitch were elements of the construction that should have been foreseen.

"Further, no work over and above that agreed with the co-funders should have been commissioned, let alone allowed to finish, prior to acquiring secure guarantees of future income.

A rescue package saved the project

"To do so, in the hope or expectation that things would turn out for the best, was foolish. The debenture scheme, on which so much depended, was not a secure guarantee of future income.

"The committee is surprised and concerned at the high level of professional fees accrued by QPFC and TNS.

"These fees were abnormally high before, during and after the rescue package.

"A substantial proportion of these fees will have been paid by the taxpayer and the taxpayer will not have had best value for money.

SFA deal

"During the rescue negotiations, commercial mediation might have been a quicker and cheaper solution."

Committee convener Karen Gillon said: "Nobody now regrets the existence of a National Stadium for Scottish football.

"However, the way in which this project was handled does not reflect well on the national game. Any future projects must learn from the mistakes identified in this report."

Jim Hastie, development convener of Queen's Park FC, broadly welcomed the report.

Brian Monteith: Euro 2008 in question

He said: "QPFC are glad that the report recognises the complexity of the problems which arose.

"The responses to Hampden need to be contrasted with the nature and level of assistance to high-profile projects at Wembley and elsewhere in the UK which remain in difficulty.

"QPFC have noted and will respond to concerns in the report such as the level of professional fees and costs incurred in negotiations to secure new management arrangements."

Tory sport spokesman Brian Monteith said the prospect of public funded stadia as part of a bid for Scotland to host the European Football Championships in 2008 must be seriously questioned following the "shambles" that surrounded Hampden.

He said: "If the committee's recommendations to tighten up on taxpayer and lottery funded schemes are not quickly accepted and introduced then there can be no confidence in such large projects for the future."

Debts paid off

Mr Monteith added if Scotland was to host Euro 2008, a more realistic approach would be to work with others such as the Irish Football Association and avoid the construction of new football grounds.

The stadium was saved from financial ruin in March 2000 after months of wrangling over its future.

The deal saw the Scottish Football Association (SFA) take over the running of Hampden the following month and the stadium's debts of �5.75m were paid off by the project's co-funders.

The SFA has rented the stadium for an annual lease of �800,000 for the next 20 years, most of which will go to pay the debts of owners Queen's Park FC.