Legal challenge to Lews Castle plans

Concerns about the process leading to contract
Concerns about the process leading to contract

A bitter row between the local tourism industry and the Comhairle over plans for the accommodation element of Lews Castle reached a head this week with legal action being lodged against the local authority.

Kenman Holdings Ltd, which is the holding company for Cala Hotels (The Cabarfeidh Hotel, The Royal Hotel and The Caladh Inn) have raised an action in the Court of Session seeking a Judicial Review of the decision to award the contract to Natural Assets Investments Ltd.

This action is supported by more than 40 small local businesses and there are also strong concerns from the Outer Hebrides Tourism Association about the plans.

The legal challenge is on the basis that the tender process ‘was not genuine’ and was ‘significantly non-compliant’ with European laws.

Kenman Holdings Ltd have also lodged a complaint with the European Commission on the grounds of breach of European Rules on the award of concessions and the rules of state aid.

The Comhairle has stoically defended action taken in regards to the project and say if legal proceedings transpire, it will be ‘vigorously defended’.

Kenman’s Managing Director, Kenneth Mackenzie said: “Our action has the support of over 40 small local businesses who, whilst very supportive of the museum and ground floor renovation of the Castle, are seriously concerned their businesses will be badly damaged by the subsidised operation of the accommodation proposed on the upper floors of the development.”

The row first erupted when it was highlighted the at the plan for the castle included self catering accommodation and not a luxury hotel as had been the original impression.

A spokesperson for the Outer Hebrides Tourism said they continued to be concerned about the displacement of trade from existing businesses.

“Outer Hebrides Tourism was in extensive dialogue with CnES, representing both the concerns of the members in Lewis and Harris over the risk of unfair displacement of trade from the existing local businesses by a highly subsidised accommodation operation at Lews Castle and also highlighting factual errors and misrepresentations within reports used by CnES in making their decision. These industry concerns were not accepted and the contract was awarded whilst we were still in discussions with CnES.”

In response to the threat of legal action and the comments by Kenman Holdings Ltd, Leader of the Comhairle Angus Campbell said: “We have every confidence in our processes and procedures regarding the Lews Castle Museum and Archive project, including the appointment of our operator partner. If the threat of legal action and formal complaint transpires, it will be vigorously defended and responded to by the Comhairle.

I am extremely disappointed at what I hope is not an attempt to undermine the most significant investment in cultural and tourism assets ever undertaken in the Outer Hebrides. This is a flagship, generational project for the community of the Outer Hebrides which will create much needed jobs and benefit businesses throughout the area. I would encourage as many people as possible to go and meet the Natural Retreats in the Town Hall over the next three days and to hear the facts for themselves about what the opportunities are. The new Tourism Strategy highlights Accommodation as a key strategic action, especially investment in the range and quality that meets expectations.”

He added: “I also want to dispel the statement in Mr MacKenzie’s press statement regarding a subsidised operation. Natural Assets Investments Ltd are committed to a minimum capital contribution of £500k as well as taking the whole operational risk associated with the project. The procurement of the private sector partner undertaken in 2012 was open and transparent. Despite registering his interest during the open tender period, Mr MacKenzie chose not to submit a tender.”