INVERGORDON no more . . . since the aluminium smelter stopped smoking on the Ross-shire coast 16 years ago, finding new manufacturing jobs for the area, like the rest of the Highlands, has been like searching for The Holy Grail.

Now local enterprise companies like Ross and Cromarty Enterprise, with its go-getting acronym Race, have been handed almost all the money earmarked for industrial development.

They have spent it, near Invergordon, on two huge office blocks. The offices, according to visiting professional advisers who trot the globe and have seen a few quid spent on offices, are magnificent. ''Palatial, something out of Dallas,'' said one.

They sit, like twin symbols of a dreamed-of future, just off the A9 at Alness.

All that is needed now is a company you can put your shirt on.

Now, there's an idea, shirt-making. A company offering to create hundreds of jobs making shirts, in Easter Ross, could occupy the offices, in style.

Ky-Lin (UK) did just that - for 14 months. Then, four weeks ago, it called in the receiver with debts of #3.5m, having received #715,000 of public money.

It has cost the jobs of 90 people at Airdrie and 55 at Alness - many of them textile workers lured to Easter Ross by the promise of a new industry for the area and who now find themselves stranded.

Ky-Lin was the third big Race-backed project in the area to go belly-up in the space of 16 months, swallowing the best part of #1m and dashing the hopes of the local workforce.

Woodpecker Toys, a German company, went bust in February last year, less than a year after taking a #95,000 grant, while JMG Marketing from Northern Ireland, which had a #125,000 grant, folded in November 1995 after lasting 17 months.

Local politicians are now asking how Highlands and Islands Enterprise (HIE) and Race vetted Ky-Lin - in what is by far the most expensive and ambitious project backed in the area since the new enterprise companies were created six years ago.

Public money was triggered by the company's promise that it could create 100 jobs within 18 months. Race paid out #465,000 and HIE #250,000. Race has said that, as the promised 100 jobs did not materialise, it had a right to ''claim back part of its money'' and should get back up to #300,000.

However, receiver Rod Owen, of KPMG in Edinburgh, said last week that #100,000 would be a more realistic target, while small local businesses, which were owed around #50,000 in total, will get nothing.

HIE is now under a comment blackout, during the entire six-week General Election campaign.

Race's chief executive, Mr Sandy Cumming, said before the blackout: ''We are in the risk business and we are here to invest in situations where the high street banks would normally not take that risk.

''In a portfolio of 500 companies, I don't think nine failing in six years is a bad record . . . Yes, we did do our homework. The actual decision was taken at local Lec level and the paper was scrutinised by HIE.''

However, inquiries by The Herald have established that the business plan was deeply flawed from the outset and the prospects for creating any sustainable jobs in the area were wildly optimistic.

When Race announced the new project in September 1995, it said Ky-Lin was ''in the corporate clothing sector of the apparel supply industry and a small and highly respected supplier of children's wear''.

However, Ky-Lin (UK) had been formed only five weeks earlier, by consultant Michael Green and his associate Peter Craven.

They had formed Ky-Lin Management Resources in May 1994, when they were called in by the ailing Henry Bannerman shirt factory in Airdrie as a ''corporate rescue team''.

Bannerman's, nevertheless, went headlong into ''administration'', a form of receivership, in February 1995. It was not Mr Green's first receivership.

Mr Green is listed at Companies House as being a director between 1991 and 1993 of Treebee Ltd, Munton Ltd, Flamingo Separates, XYZ Clothing, Likeshape, Beetee, Dunkeld Group, Hertford (UK), Texabond, Personal FX, and the Inigo Jones Shirt Company. In all cases, he is described as a ''corporate physician''. All 11 companies are listed as either dissolved or in receivership. His two personal consultancy companies, meanwhile, have both failed to file returns to Companies House, as required by law, resulting in one intended prosecution.

So Ky-Lin, claimed by Race in September 1995 to be a highly-respected textile company, was at that point a firm which had filed one set of accounts showing a #4235 loss for the year.

A credit check for The Herald on the company last week reported: ''The balance sheet indicates a deficit in both capital employed and shareholder funds. It is considered inadvisable to proceed with unsecured dealings.''

Race has argued that #750,000 was paid out in wages into the local economy, so its money was not wasted.

Nevertheless, The Herald understands that at least one third of that bill was accounted for by the generous salaries paid to themselves by Mr Green and Mr Craven, who received around #250,000 during the company's brief life and who were not based full time in Alness.

Mr Green was viewed as a ''visionary concept man''. He had originally been in the car dealership business, then moved into textiles as a consultant. Mr Craven, who became finance director of the group, was said to have a surprisingly low profile and subdued style.

Ky-Lin was a Chinese word meaning phoenix - an ironic choice given the often-expressed criticism of businesses which go bust, then reappear soon afterwards as new, very similar, ''phoenix'' companies.

Last week, Mr Green was understood to be one of the parties discussing with the receiver a possible new deal to rescue the Bannerman factory.

In 1995, Mr Green was trying to buy the Bannerman site at Airdrie from the administrator. He promised he could expand into new markets using Bannerman's tied factories in Morocco.

However, the administrator at Bannerman's could not find a buyer and regarded an offer by Mr Green and Mr Craven as too low.

Then, armed with a spectacular #3.5m deal which hinged on the support of the public agencies in Inverness, and persuaded the Midland Bank in Edinburgh, Ky-Lin (UK) was formed. The rescued phoenix company would operate from two sites, 186 miles apart, in Airdrie and Alness.

Race trumpeted that the company would have lower operating costs and an ''integrated assistance package embracing finance, property, and training help''. From the outset, however, Ky-Lin seemed unable to put in place the trained staff, or the cost base, it needed. Ky-Lin occupied three-quarters of one of the Dallas-style office blocks. It was cheap per square foot but far too big for the company's needs. The design team was located in Alness, away from the main factory at Airdrie where it would have made more sense to be. There was no cutting room at Alness and no trained supervisors in key disciplines.

One of the few widely-qualified textile consultants in Scotland, who was acquainted with Ky-Lin's plan and progress, told The Herald: ''Frankly, from the outset, I thought it would be a disaster.''