Hans J Marter

12 March, 2008

SHETLAND Islands Council has to claw back £100,000 handed out in grants to local fish meal producer Shetland Fish Products (SFP).

The news comes on the back of a reprieve from the European Commission after it found the council in breach of state aid regulations last November.

Yesterday (Tuesday) it emerged that the EC had granted the SIC the right to apply the “de minimis” rule on the Fish Factory Improvement Scheme and the Fishing Vessel Modernisation Scheme, which had previously been judged illegal.

This means that fishing partnerships on around 20 vessels who received grants of between £400 and £7,000 during the first half of this decade will not have to pay the money back.

The amount the SFP factory owners have to pay back is being reduced as a result of the ruling.

During the 1990s, SFP received a number of grants totalling £92,000 to improve its Bressay plant.

SIC head of economic development Neil Grant confirmed yesterday afternoon that his department now had to claw back a total of £100,062 from the company, a sum which includes compound interest on the £92,000 minus the amount allowed under “de minimis”.

Council chief executive Morgan Goodlad said the local authority now had no other option but to request the money back.

He added that the council would keep the money for SFP in a special fund while it fouhgt the EC's state aid decision before the European Court of Justice in Luxemburg.

No one at SFP was available for comment. Plant manager Mark Waldstrom said the issue was dealt with by the factory’s owner, Irish multi national Origin Enterprises plc, but their head of marine protein Tom Tynan did not respond to requests for comment.

In a statement, Mr Grant said: "The commission has now confirmed that the de minimis regulation can apply retrospectively to the grants given under the Fish Factory Improvement Scheme and the Fishing Vessel Modernisation Scheme subject to provision of confirmation of compliance with certain technical requirements.

"Shetland Islands Council is very pleased with this outcome as it means that no recovery will be required in respect of the grants covered by this decision.

"However, this decision from Europe means that the grant aid not covered by de minimis, for Shetland Fish Products Ltd amounting to £100,062 (including compound interest) will require clawback.

"The monies given within the Fish Factory Improvement Scheme to Shetland Fish Products Ltd will need to be recovered unless the Shetland Islands Council application for annulment is successful."

A decision on the application of the de minimis rule on the First Time Shareholder Scheme, which affects as many as 78 individual fishermen, is not expected before next month.

Mr Goodlad said: "We remain very concerned about the long time it is taking to make a decision on the whether to apply de minimis on the First Time Shareholder Scheme.

"It would have a serious impact on the communities should individual fishermen be required to pay back the grants."

Earlier this year, the council appealed the commission's state aid decision at the European Court of Justice. A decision on that appeal is not expected before 2009.

Anyone interested in delving further into this subject can download the three EC decisions on state aid, dated 15 November 2007, here.