What happen was he went and party late and never show up for practice the next morning.
The club decide to take the hard line on this disciplinary issue and told him that was the final straw, better he find a next club.
It just so happen the finals was coming up and the management would not budge on the decision and so allow him to play the final.
I lived in Edinburgh at the time and remember the whole drama...McLeish didn't really have much choice...the picture in the paper had Latas in a car looking rel drunk, and he was subsequently charged for drunk driving...the media were saying how the manager had to do something to maintain respect...McLeish would have looked like a pushover if he didnt act. Apart from the drink driving charge, I think he had also broken the clubs rules which said no drinking 2 days before a game (another game, not the cup final)
Now the scene was that Latas was due to leave the club at the end of the season anyway whereas McLeish had every intention of staying...so I guess McLeish felt he did what he had to do...coupled with the fact that he would have known Celtic would have blown dem out anyway (they won the domestic treble that year, Henrik Larsson mash up everyting and everyone in his path)