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Last Updated: Tuesday, 11 September 2007, 16:47 GMT 17:47 UK
Probe reveals contract concerns
By Mark Daly
Investigations correspondent, BBC Scotland

Sir Ian Byatt
Sir Ian is chair of the Water Industry Commission for Scotland
Scotland's chief water regulator has been criticised after a BBC investigation revealed concerns over the handling of a 1.5m contract.

Sir Ian Byatt, chairman of the Water Industry Commission for Scotland (WICS), is at the centre of conflict of interest allegations.

His organisation awarded the contract to Frontier Economics, a firm he has a close association with.

WICS denied the allegations and said Sir Ian was not involved in tendering.

Sir Ian has been senior associate with Frontier since 2000 and also works as a highly paid consultant for the company.

The commission denied any impropriety.

More transparency

However, it has failed to provide any clear evidence that he declared the potential conflict during the three month tendering process.

It is not recorded as mentioned until 7 February, the day before the contract was awarded.

Under the banner of "Water" on the Frontier website, Sir Ian appears next to Dan Elliot, who was responsible for spearheading Frontier's bid to the WICS.

It is this close association, and the "appearance of a potential conflict of interest", which has led to Des McNulty, Labour MSP and long time industry observer, to call for more transparency.

He said: "I would hope that an appropriate clarification can be arrived at that the tender has been let appropriately.

"We need to make sure that, in Sir Ian's responsibilities with the commission, and with his duties at Frontier, no conflict of interest has taken place."

"Given the close association with Frontier careful attention was required to make sure the process was transparent.

Mr McNulty added that if this is found not to be the case then further investigation would be required.

Sir Ian has a long history in the water sector and is largely associated with overseeing the privatisation of the industry in England and Wales.

He was an adviser to Margaret Thatcher, and the UK water regulator between 1989 and 2000.

Tender process

His appointment to the WICS was greeted with dismay by many in 2005 as it was seen as a move towards the privatisation of Scottish Water, one of the last remaining utilities companies in the public sector.

WICS was established to set the water rates and make sure Scottish Water's 1bn a year budget is being spent properly.

Sir Ian's supporters said he played an essential role in improving the performance of the company.

Sir Ian, who earns 46,000 per year for the two day per week role, was unavailable for comment but WICS stressed that their tender process "satisfied statutory requirements".

A Scottish Government spokesman confirmed it knew of Sir Ian's association with Frontier and was unaware of any impropriety.

The BBC has passed its files to Audit Scotland, the public finance watchdog, which will look into the matter.

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