Troubled heritage body told to address 'unacceptable' governance

Scotland's spending watchdog has told Historic Environment Scotland (HES) it must address "unacceptable weaknesses" in its governance in a strongly critical report.

Auditor General Stephen Boyle found the heritage body had issues with procurement, data breaches, problems with complimentary tickets to events and no formal register of interests for its leadership team in an annual audit.

It follows allegations of corruption, an internal racism row and the suspension of the body's chief executive in October after an investigation into her conduct.

HES said an independent review of its structure, efficiency and culture will be set up in the new year in order to ensure failings were rectified.

Mr Boyle said there had been allegations of a toxic workplace culture, which needed to be fully investigated and addressed.

"Historic Environment Scotland is navigating a period of significant instability and challenge, with a number of staff-related matters that need to be resolved," he said.

"My report outlines unacceptable weaknesses in HES's governance arrangements. It is critical that strong controls are now put in place to prevent the risk of fraud and demonstrate that value for money is being achieved."

HES is an arms-length body, which receives Scottish government funding, maintaining more than 300 historic sites including Edinburgh Castle.

The annual audit of its accounts revealed weaknesses in the financial management of electronic purchasing cards (which allow employees to pay for goods and services) and hospitality.

About one in four staff members had one of these purchasing cards - £1.9m was spend on 400 cards in 2024/25.

It also found the board had not properly scrutinised the cancellation of a £2.9m specialist archive storage project - with a further £500,000 likely to be spent.

Mr Boyle said HES had operated without a chief executive or accountable officer for almost six months this year when the Scottish government should have provided a substitute.

HES has published its annual report and accounts, highlighting an increase in visitors to its sites (4.7 million).

It also said heritage tourism had generated £935m for Scotland's economy.

A HES spokesperson acknowledged "the serious governance issues and cultural problems" identified in Mr Boyle's report.

They said: "We are committed to rebuilding trust through strong governance, clear processes, and a culture of accountability.

"We have strengthened internal controls and compliance monitoring and are updating relevant policies and procedures."

The Scottish government said it was working closely with HES to resolve the issues raised.

HES chairman, Sir Mark Jones, told Holyrood's culture committee in October that a series of investigations were ongoing "into grievances of various kinds".

This was in response to Scottish government officials receiving a whistleblowing report in June, claiming "financial/procurement improprieties" involving a director.

Meanwhile, chief executive Katerina Brown was signed off work on health grounds in May after less than a year in the role.

She was suspended in October but returned to the role.

The National reported in September that the body's operations director, Craig Mearns, had faced disciplinary measures over comments made about visitors at Edinburgh Castle. He was allowed to continue in his job.

Then the Scotland on Sunday reported that an HES senior leader had been sanctioned over claims she danced provocatively by "twerking" at a corporate event at Edinburgh Castle in 2023.

The senior manager was said to have made celebrity guests Martin Compston and Penny Lancaster "uncomfortable".

The Scotsman reported in October how an independent HR consultant had been brought in to investigate the alleged behaviour.

They recommended a review of the organisation's culture after finding staff were reluctant to speak due to a "fear of retribution".

As first reported by The Times, former chief executive Hugh Hall, who resigned from the organisation in August, has been reported to the Ethical Standards Commissioner – Scotland's ethics watchdog.

Meanwhile, the Information Commissioner's Office – a UK data protection regulator – is investigating complaints of data leaks at HES.