The council is trying to justify the writing off of more than £400,000 of money owed by former knitwear firm Judane by saying that a “significant proportion” was compound penalty interest built up in the last six years, according to a leaked document.
In a circular to councillors from head of economic development Neil Grant, he failed to say exactly how much of the total figure of £411,000 was interest but advised that the council’s lawyers believed it might be difficult to enforce the payment of such sums against the company. They had accrued since 2004, he said.
According to Mr Grant’s report Judane borrowed two sums from Shetland Development Trust (SDT), now the economic development unit, one in 1993, the other 10 years later, worth £860,000. So far, £761,000 has been paid back, with a further £190,000 to come. Councillors decided at a secret meeting last month to waive the remaining £411,000.
“The compromise agreement agreed at the council meeting on 9th December represents the best financial return to the Shetland Development Trust of the options available,” Mr Grant’s report contends.
More than a month on, there has been no public comment from the council on that decision. Officials say that a legal agreement is being worked out between the council and Judane.