HIE said the report showed its decisions were "sound"

Highlands and Islands Enterprise's (HIE) put more than �14m into Cambrian Engineering and then Camcal.

PricewaterhouseCoopers said the investment did comply with its internal procedures, but questioned the effectiveness of them.

HIE said the report showed its decisions were "sound".

PricewaterhouseCoopers point to Cambrian engineering's assertion of projected growth in sales from nothing to �32.5m in three years through its work at the Arnish yard in the Western Isles.

KEY FACTS Arnish was involved in the Beatrice offshore wind farm project, which has seen a large turbine erected in a North Sea oil and gas field HIE invested a further �500,000 in the yard last December Sections for a wave machine were constructed at the yard and then delivered to a site off Portugal

They said no evidence was provided to HIE of the company's assertion it was virtually certain to win the contract to build all 300 turbines for a proposed giant wind farm on Lewis.

PricewaterhouseCoopers also questioned whether Cambrian's management had the right skills or understanding of the renewable energy market.

They said HIE's interrogation of the company's proposals could have been better researched and more rigorous.

Donnie Macaulay, of HIE, said: "This report essentially acknowledges the difficult market conditions of this potentially lucrative industry.