Spending watchdogs have criticised two Scottish trusts for making 'unacceptable' pay-offs to former executives.

Ayrshire and Arran Community Healthcare trust paid more than£84,000 - including a 1 per cent bonus - to a former chief executive removed for poor performance after just a year in the job.

Scottish Ambulance Service trust paid a total of£224,000 to its former director of logistics, instead of an 'expected redundancy and premature retirement settlement' of£87,000.

The National Audit Office report on NHS Scotland's annual accounts says the two trusts were responsible for almost all of the£284,000 spent on 'compensation for loss of office' in 1997-98.

The payments made to the two executives were inflated by redundancy and pension settlements.

Ayrshire and Arran Community Healthcare trust's former chief executive was paid a 1 per cent performance bonus despite 'concerns' about the standard of his work.

He was later described in an NHS Management Executive report as 'failing to provide any real leadership and having none of the competencies required for the post'. But trust auditors found that criticisms of his performance 'were never formally raised with him'. The trust was unable to sack him without risking a breach of contract.

In a statement, successor organisation Ayrshire and Arran primary care trust stressed that the payments were legal, but said that it had 'implemented action plans' to 'strengthen procedures'.

The NAO criticised the Scottish Ambulance Service for 'inadequate' and 'unacceptable' arrangements in handing over a package , including£137,000 compensation for loss of office, to a director 'deemed surplus to requirements'.

Both pay-offs were legal but failed to follow Management Executive guidance, the report says. The Health Act, passed last month, gives the Management Executive greater powers to control termination payments.

The report notes that 'the accounting and financial controls across the NHS in Scotland are generally sound'.

Health boards reported a surplus of£1m for the year and trusts£11.7m.

Just two of the 47 trusts reported deficits for 1997-98, and these were due to property sales.

The accounts show that£17m has been put aside to meet claims for medical or clinical negligence, and contingent liabilities of£27m for claims assessed as having less chance of having to be met.

But comptroller and auditor general Sir John Bourn warned that there is still 'no estimate of the likely costs' for medical negligence claims dating from procedures carried out before March 1998. Liability for such claims 'may be significant', he added.

Nobody was available to comment at Scottish Ambulance Service trust.

National Audit Office Report of the Comptroller and Auditor General: NHS (Scotland) summarised accounts 1997-98 .

Stationery Office.£17.80.