Shetland based director of Smyril Line resigns

Shetland Islands Council convener Sandy Cluness has resigned from his directorship of Smyril Line, it was announced last night (Tuesday), as it emerged he was receiving an annual director's fee of £4,500 from the Faroese shipping company.

Mr Cluness was not available last night to comment on suggestions that there had been a conflict of interest in representing Shetland's interests on the company board while receiving an annual fee from Smyril.

Josie Simpson, chairman of Shetland Development Trust which has £4.45 million invested in Smyril, said last night that he could not comment on whether Mr Cluness's resignation was linked to the fact that he was paid as director.

Mr Simpson said that the trust had accepted Mr Cluness' wish to resign with regret, and that his decision was due to work pressure as council convener.

Mr Cluness, who was appointed to the Smyril board in 2004 to replace SIC chief executive Morgan Goodlad, has been replaced as a director by the development trust's vice chairman Bobby Hunter.

The resignation the day before today's crucial full council meeting in which Mr Goodlad intends to reveal further details about the current protracted negotiations between Shetland and Smyril Line.

Junior members of the council are expected to demand why both Mr Cluness and Mr Goodlad were chosen to represent the islands in a dispute over Smyril's timetable next year, in which the company originally proposed to drop Lerwick from its summer schedule.

Councillors have already privately expressed their concern that both men had too close a business relationship with the Faroese firm to serve the islands' best interests.

Smyril was persuaded to run a reduced service to Shetland next year in return for a further £700,000 from the development trust.

In his report to councillors today, Mr Goodlad says that the investment into the company was still secure thanks to the value of the 160 metre Norröna (£60 million), adding that a "continuation of operational losses will not remain for too much longer".

He argued that in order for the company to stay afloat an alternative solution for the use of the huge Norröna during the winter months would have to be found quickly.

Otherwise, a further injection of share capital into Smyril Line would be inevitable, he said.

But Mr Goodlad was adamant that the improved transport links with Shetland Scandinavian neighbours have been of great benefit to the isles, in particular the local tourist industry.

In his report, he added: "We are in addition continuing contact and dialogue with Norwegian ferry companies, in particular with Fjord Line in which we have a small share, regarding possible development of direct Bergen/Lerwick/UK summer routes. These discussions will continue."

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