THE interim boss of the collapsed outsourcing giant Carillion has stepped aside as an adviser to the Scottish Secretary.

David Mundell told MPs that Keith Cochrane OBE had decided to end his role at the Scotland Office while the firm’s demise was under investigation.

He said Mr Cochrane did not want "to become a distraction".

The move follows the Sunday Herald, the Herald’s sister paper, highlighting Mr Cochrane’s influential position in the Tory government.

Mr Cochrane, 52, who sat on Carillion’s business integrity and audit committees before taking temporary charge last year, is the lead non-executive director at the Scotland Office.

In the wake of Carillion going into liquidation with debts of more than £1bn and a £600m pension deficit, the SNP said Mr Cochrane’s political role was “untenable”.

The UK Government has ordered a fast-tract inquiry into the company’s directors.

At Scotland Questions in the House of Commons, the issue was raised by Paul Sweeney, the Labour MP for Glasgow North East.

READ MORE: David Mundell urged to drop Carillion interim chief executive as Scotland Office adviser

He said: “It turns out that [Mr Mundell’s] key adviser tasked with increasing awareness of devolution across government is none other than the interim chief executive of Carillion.

“Given the shambolic handling of [Brexit legislation] last week, how does the Secretary of State think that’s going?”

An unhappy-looking Mr Mundell replied: “It is not correct to suggest that non-executive directors take policy decisions in relation to government departments.

“Keith Cochrane has done an excellent job as a non-executive director of the Scotland Office and I pay tribute to him as one of Scotland’s most respected businessmen.

“However, he has decided himself, in order not to become a distraction at a time of very important work for the Scotland Office, that he will step aside from his responsibilities until the investigation into Carillion and any subsequent enquiries are complete.”

As recently as Saturday the UK Government had insisted: “Mr Cochrane continues in his role with the Scotland Office.”

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A chartered accountant from Scotland who used to lead the Weir Group, Mr Cochrane was appointed interim chief executive of Carillion last summer on a £750,000 salary.

In 2015, he was appointed lead non-executive director (NED) at the Scotland Office and Office of the Advocate General - getting paid £300 a day for each meeting he attended.

The Scotland Office’s 2016-17 annual report and accounts said he had “undertaken a significant programme of engagement with Lead NEDs from across UK Government departments. This direct engagement has supported and enhanced the work by the Secretary of State for Scotland and the Scotland Office Director, at Ministerial and Permanent Secretary level, to heighten awareness of devolution across Whitehall.”

It added: “Since Keith Cochrane’s appointment the visibility of the Non-Executive Board Members have increased considerably, especially across Government.”

Mr Cochrane was also listed as being part of a wider network of NEDs across the UK Government that discussed the priorities of the Tory administration.

READ MORE: David Mundell urged to drop Carillion interim chief executive as Scotland Office adviser

The “chair of the committee” at Glenalmond College private school, Mr Cochrane backed No in the 2014 Scottish independence referendum, arguing independence would create "costs and uncertainties" for business".

He is also an advisory council member of the pro-Union think tank These Islands.

Shadow Scottish Secretary Lesley Laird said: "David Mundell’s lack of judgment in appointing the interim chief executive of Carillion as an adviser is matched only by his failure to act decisively since reports of the relationship emerged.

“That’s why I wrote to him asking a number of key questions that still require a response and I will be chasing that with the Secretary of State.

“Rather than removing Mr Cochrane as an adviser, he has waited for his position to become untenable and for him to voluntarily stand aside.

“He has lost his grip on his department, his advisers and cannot even keep his band of Scottish Tory MPs content.

"Perhaps it is time for him to follow Mr Cochrane out of the door.”

SNP MP Tommy Sheppard said: "Keith Cochrane's decision is overdue and a recognition - by him - that his role at the Scotland Office was absolutely unacceptable given the collapse of Carillion.

"David Mundell's failure to act and failure to recognise this had to be dealt with, is just another sign of his utter lack of judgement."