Scottish Government minister warned about Prestwick US military allegations last year

A senior Scottish Government minister was warned of allegations that Glasgow Prestwick Airport is using taxpayers’ funds to “financially subsidise” US military aircraft at the struggling hub.

By The Newsroom Friday, 4th October 2019, 10:50 pm

US military stopovers at Glasgow Prestwick Airport have increased sharply since Donald Trump became president. Picture: John Devlin

Justice secretary Humza Yousaf was sent allegations last year about the misuse of public funds at the loss making state-owned airport, which has seen a significant spike in US military traffic in recent years.

Opposition politicians have accused the SNP MSP of “gross hypocrisy” over its stance towards US president Donald Trump, and accused the Scottish Government of “subsidising Mr Trump’s military expansion.”

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As revealed by The Scotsman yesterday, multiple sources familiar with the troubled airport’s military business allege it is waiving so-called service fees for inbound US Armed Forces flights in order to bolster traffic and maintain its lucrative commercial relationship with the US Defence Department.

Justice secretary Humza Yousaf was told last year of allegations the airport was "subsidising" US miltiary traffic. Picture: Jeff J Mitchell/Getty

Sources with direct knowledge of US military business at Prestwick said the cost to the heavily-indebted airport and, as a result, Scottish taxpayers, runs into seven figures. The fees in question can amount to several thousand pounds, depending on the type and weight of individual aircraft.

The executive agency, Transport Scotland, had declined to address whether it or the government were aware of the allegations that the airport - reliant on loans from Scottish ministers worth £38.4m - was waiving service fees for the US military.

But The Scotsman has learned that while serving as transport minister, Mr Yousaf received specific warnings last year that the South Ayrshire airport was using “public loans from Scottish taxpayers to financially subsidise US military flights.”

The information sent to Mr Yousaf’s office, which has been seen and verified by The Scotsman, included specific allegations that the airport was waiving fees for customers.

A US Congressional investigation is examining US military payments at Prestwick and Donald Trump's Turnberry resort. Picture: John Devlin

Mr Yousaf’s office is understood to have passed the matter to Transport Scotland, who claimed the airport alone was responsible for deciding whether to strike “potential deals.”.

‘Potential deals’

Responding to the allegations in private after they were raised last year, a staff member at the agency wrote back: “It is for the airport’s management team to consider all potential business opportunities to take the airport forward, which includes any potential deals they offer to potential customers.”

It added: “The Scottish Government does not intervene in Prestwick Airport’s commercial discussions and the airport must be free to operate on such a commercial basis, in line with state aid rules. Any deals and incentives that Prestwick offer is a matter for the airport.”

Transport Scotland last night told The Scotsman it was for Prestwick to determine the “specific detail of any commercial arrangements,” and said ministers and officials have had no contact with the US military, the Trump Organisation or Trump Turnberry regarding Prestwick.

However, amid ongoing scrutiny of spending by the US military spending at the airport and Mr Trump’s nearby resort - where the Pentagon has spent at least £147,000 between August 2017 and this July on rooms for US aircrews - calls for transparency are growing.

Michael Matheson, the transport secretary, has previously confirmed to Holyrood that Prestwick is responsible for booking rooms at Turnberry for US crews on layovers at Prestwick. Mr Trump’s resort is one of 13 hotels used for bookings, but was the only one named on pamphlets distributed at closed door meetings between Prestwick staff and US Armed Forces representatives.

Responding to the news that Mr Yousaf’s office has long been aware of allegations about Prestwick’s financial arrangement with the US military, Patrick Harvie MSP, co-leader of the Scottish Greens, said: “If this is correct then it means ministers knew that a public asset was handing out freebies to the outrageously well-resourced American military machine.

“What’s worse is that they did not intervene, because the airport is owned by the Scottish Government. In other words, an asset owned by the Scottish people is subsidising Donald Trump’s military expansion and the Scottish Government felt that was legitimate business by its airport?

“That is totally unacceptable. The relationship between Prestwick and the US military must be halted immediately, and I expect the transport secretary to make a statement to parliament explaining exactly how this has been allowed to happen.”

‘This reeks of gross hypocrisy’

Jamie Greene, the Scottish Conservatives’ shadow transport secretary, said: “This reeks of gross hypocrisy from Humza Yousaf who is first to criticise Donald Trump when it suits him in public, whilst apparently turning a blind eye to deals with the US administration in private.”

“The SNP cannot escape the fact that they have hopelessly mismanaged Prestwick and failed to deliver a long-term strategy that attracts investment and secures the future of the airport.”

Colin Smyth, Scottish Labour’s shadow transport secretary, said: “The level of hypocrisy from the Scottish Government is breathtaking. On the one hand they criticise Trump and his foreign policies and on the other hand, SNP ministers has been found out for keeping secret the level to which the US Air Force has been touted for business.

“It’s time for the SNP government to come clean on the extent to which the deals with the American military have contributed to what appears to be a turnaround in the airport finances in the last year.

“If there is an over reliance then it raises real questions over whether the recovery is sustainable should the current US inquiry lead to a cut in usage of Prestwick by the American military.”

He added: “At the end of the day this is a publicly owned airport which has received a huge amount of taxpayers money and where thousands of people rely on for direct and indirect jobs.

“We need the maximum transparency from the government to reassure workers instead of the current cover up of the facts we are seeing from ministers which will do nothing to instil confidence in any potential buyer”

The Scotsman has also obtained confidential board minutes from meetings of Prestwick Airport Holdings Limited which details extensive discussions about changes to the way fuel sales are recorded in financial accounts.

‘Extrapolating out President Trump’s visit’

The public versions of the minutes, which date back to last summer, are heavily redacted on the basis of Prestwick’s commercial interests. However, the original, unredacted versions reveal the scope of the airport’s commercial interests.

They refer to “several changes” to the content and format of executive reports, so that they only highlight areas of “importance, concern, and interest.”

They note that “military and general aviation” are to be included in the finance report, and suggest Prestwick’s management have made changes to the way it records revenue from fuel sales, referencing the “financial performance of fuel uplift rather than quantity.”

Elsewhere, the minutes detail talks of the “increase in military activity and associated fuel uplift” at the hub, and includes suggestions of “extrapolating out President’s Trump’s visit.” The minutes note that “this number would distort the figures going forward.”

The airport did not respond to questions about any such changes to how it records fuel sales and Mr Trump’s visits.

A spokesman for Transport Scotland said: “We are aware of the correspondence which made reference in general terms to US military traffic. We responded at the time, stressing it is for Glasgow Prestwick Airport to determine the specific detail of any commercial arrangements, a position we have been clear about from the outset.

“Prestwick is operated on a commercial basis and at arm’s length from the Scottish Government, in compliance with European Union state aid rules. Ministers do not intervene in the commercial discussions at the airport.”

He added: “The senior management team at the airport has been tasked with all aspects of taking the airport forward, including building on existing revenue streams. Prestwick has handled military and private flights since the 1930s and it remains an important part of the airport’s business. Arrangements are no different to those in place before the airport was brought into public ownership.