Tricia Marwick: Demanding answers

In a written parliamentary answer, Enterprise Minister Iain Gray's confirmed that the arrangement was approved by the Scottish Executive.

Tricia Marwick, an SNP regional MSP for Mid Scotland and Fife, demanded to know why Scottish Enterprise had cleared the firm's overdraft with the Royal Bank of Scotland.

She said that energy policy is reserved to Westminster and therefore the pay off should have been the responsibility of the Department of Trade and Industry (DTI).

She said the UK government had been dealing with the Longannet shutdown and they should have footed the bill.

Acted as guarantor

"I have been trying to get answers for months from the Scottish Executive about Longannet," she said.

"Energy policy is reserved to Westminster and Scottish Executive ministers are unwilling to answer questions about it.

"If that is the case then the Scottish Executive must explain why Scottish Enterprise acted as guarantor and not the Department of Trade and Industry.

"I also want to know if the directors of Scottish Coal were required as part of the agreement to give a personal guarantee to the financial institutions or whether they have walked away unscathed and the public purse in Scotland has taken the hit."

When it went bust we were left in the situation where we had to pay the overdraft.

Scottish Executive spokesman

But a spokesman for the Scottish Executive insisted that the agreement had been entered into in June 1999 - before devolution.

He added: "At the time the company was experiencing cash flow problems and it would have been the end for them if they hadn't had someone to guarantee their overdraft.

"Gus MacDonald was education and industry minister at the Scottish Office at the time and agreed that Scottish Enterprise would act as guarantor to save 750 Scottish jobs.

"When it went bust we were left in the situation where we had to pay the overdraft."