T in the Park organisers warned they could move out of Scotland unless they could address the "severely reduced revenues" associated with its relocation to Strathallan before the Scottish Government awarded them £150,000 of state aid, Culture Secretary Fiona Hyslop has said.

The claim was met by incredulity from MSPs - including an SNP member - during a heated session of Holyrood's Education and Culture Committee in which Ms Hyslop was accused of funding a "fraudulent application" by organisers DF Concerts with "a whiff of cronyism" due to former government adviser Jennifer Dempsie's role in facilitating key meetings.

Ms Hyslop was asked why the Scottish Government provided state aid to a profitable company with a major corporate sponsor.

She said: "The Scottish Government provides funding to profitable companies to safeguard jobs and support the economy in all of the sectors that are part of the key economic strategy of the Government.

"However, in relation to T in the Park, the costs of the transition, particularly the unanticipated costs, meant that, in the terms that they themselves have given information, that a seven-figure amount was required to provide for those costs, in particular moving from Balado to Strathallan.

"In light of the seven-figure costs and also in relation to the severely reduced revenues that they were anticipating, as provided to us in their budgeting in relation to that event, meant that the event itself, for this year certainly and in years going forward, would not be in a position that they would want to continue.

"Shareholders of the company were giving them an indication that it would be preferable for them to move, if there was not profitability for the event itself, from the multi-day, multi-stage festival which brings the economic benefit to rural Perthshire, to a single-day, single-stage event possibly in other cities like Glasgow as they have been doing recently.

"Or to move the festival itself away from Scotland.

"That would have the economic situation where the £15.4 million of economic benefit coming to Scotland would no longer be in Scotland."

Liberal Democrat MSP Liam McArthur said: "You've got an event that's sponsored by Tennent's, who I would have thought would have had some concerns about an existential threat to the event or it moving to a single-stage, single-day event and therefore could have been approached in relation to their own approach to the event."

SNP MSP Chic Brodie said: "Because of the economic nature I disavow the notion that T in the Park, which is co-joined with Scotland, that they would move."

Ms Hyslop said: "It was clear to me that the organisers faced a number of unanticipated additional costs in staging the event as a result of the requirement to move from the previous site at Balado and three-year only time-limited condition attached to the planning consent attached to the new site at Strathallan.

"Following a detailed consideration of options I approved £150,000 from the major events budget for operation costs associated with the transition to the new site."

Conservative MSP Mary Scanlon said: "Can I put it to the Cabinet Secretary that this was a done deal given the applicant's close connection with the SNP?

"£150,000 to a company with multimillion-pound profits. You decided to allocate the money then you scurried round the state aid, which included more that £150,000 worth of officials' time, to find which budget it might fit into.

"The request was for infrastructure, but under no circumstances should this money have been paid for infrastructure.

"So if this was not a fraudulent application I would like the Cabinet Secretary to tell us why."

Committee convener Stewart Maxwell said: "I would just urge caution about that language. Just be careful."

Ms Scanlon said: "Well I would be very happy if she told us there was nothing fraudulent here."

Ms Hyslop said: "I'm sure you will take the guidance of this committee very carefully in terms of the language that was used and the allegations that have been made."

She added: "The applicant Geoff Ellis (DF Concerts chief) has, as far as I am aware, no associations with the SNP. It was Geoff Ellis I met with, Geoff Ellis I had the discussions with."

She said she was permitted to provide "operational state aid for the transition specifically for venue hire and costs specific to the transition i.e. planning consultants costs".

Labour MSP Mark Griffin said there was "a whiff of cronyism" surrounding Ms Dempsie's involvement.

Ms Hyslop admitted she did meet Ms Dempsie and Mr Ellis at the SNP conference, and said Mr Ellis attempted to discuss T in the Park's difficulties there.

However, she said she did not know that requests for an official meeting to her private office came from Ms Dempsie.

Asked if she met Ms Dempsie at the SNP conference, she said: "Yes I did, very briefly, and because Geoff Ellis wanted to let me know about the concerns about it they were looking at the planning.

"Because it was planning, as I do with everybody, I said as a Government minister I can't discuss planning issues.

"He told me about ospreys and the environmental work they were doing on ospreys, but I made it quite clear because it was still subject to a planning condition by Perth & Kinross Council I could hear what he was saying but I couldn't discuss anything."

She added: "I didn't know that the request for a meeting came from Jennifer Dempsie.

"Jennifer Dempsie didn't attend the meeting that we had with DF Concerts, and indeed I had no discussions about funding with Jennifer Dempsie."

She continued: "She was a staff member for DF Concerts. If she worked in terms of arranging diaries for Geoff Ellis that is a matter for DF Concerts.

"In terms of her connections with me, I know of her having worked as a special adviser finishing her contract, I think, in 2009.

"So in the last six years I've not had a relationship with her either in terms of friendship or anything like that."

She went on: "She wasn't a consultant, so in relation to some of the payment issues, for example in relation to the grant for venue hire and planning consultants, that would not have gone to Jen Dempsie because Jen Dempsie was an employee of the DF Concerts."

Labour MSP John Pentland said: "Why then would a private company be able to secure direct access to the Cabinet Secretary through a former aide to Alex Salmond rather than go through official channels?"

Ms Hyslop said: "Government meets with business people all the time... particularly when there are issues of concern."

She added: "I don't decide who DF Concerts employ or don't employ.

"I don't expect everybody in Scottish Government, the thousands of civil servants that we employ, to know who she is or to alert me.

"I don't think people should have to show a party card in order to work for their employer, I think that would be an incorrect situation."

Labour deputy leader Alex Rowley said after the meeting: "This was a very unsatisfactory appearance by the Culture Minister which left a whole host of questions unanswered.

"Waiting until the evening before the meeting to release 600 pages of documents smacks of desperation to avoid difficult questions. The heavily censored pages reinforce the impression that the Cabinet Secretary and the Scottish Government have something to hide.

"I don't think anyone could hold that up as a shining example of transparent government, so it's not surprising that some of the Cabinet Secretary's answers were greeted with incredulity. Between the committee evidence and the freedom of information documents, the last 24 hours have raised more questions than they have answered."

He added: "We believe only a full parliamentary statement will now do and we will be calling for Fiona Hyslop to make a full and frank statement before the parliament at the earliest opportunity."

Scottish Conservative culture spokeswoman Liz Smith demanded that First Minister Nicola Sturgeon "step in and give us some straight answers".

She said: "The Culture Secretary has raised more questions today about the controversial funding for T in the Park than she has actually answered.

"T in the Park is a major cultural event but this was public money and, to date, despite repeated requests, we have not received details of what was supposed to be a cast iron business case behind £150,000 being awarded to DF Concerts, nor do we know exactly what it was spent on.

"Indeed, all we seem to get instead of clarity is lots of redacted statements. This is simply not an acceptable outcome to today's evidence session.

"It has also just increased suspicions that the grant was a done deal because of Ms Dempsie's close connections to the SNP.

"The public will quite rightly be furious. T in the Park is a commercially viable festival supported by one of our largest breweries; the Scottish Government put on record today that it did not examine other possible funding sources in detail so this just increases the pressure on the Cabinet Secretary to explain why £150,000 of public money was required.

"It's now time for the First Minister to step in and give us some straight answers."