Money to regenerate pit town was used to buy bike parts firm
THE Auditor General’s report sets out in detail how public money intended to make possible the regeneration of one of Wales’ most deprived areas ended up being used to buy a motorbike parts firm in Buckinghamshire that later went bust.
It describes how the initial £2m grant application for the grant (PDG), made in March 2012, did not refer to the acquisition of specialist manufacturer of racing motorcycle components firm FTR Moto.
The grant was intended to support the first phase of the Circuit of Wales project and contribute to £9.7m of planned expenditure.
However, FTR Moto LLP wrote a letter of support dated September 11, 2011.
It stated willingness to consider relocation from Buckinghamshire to Ebbw Vale and the letter was used to bolster the firm’s application for a grant. The minister, Edwina Hart, decided to approve the grant on August 9 that year.
The Auditor said he had seen early draft of the grant award letter, dated August 31, 2012, which did not include any mention of the motorbike firm.
However, at some point between then and the formal approval being issued some six weeks later, on October 2012, the item “FTR” had been included on the schedule of approved expenditure under the title of “land acquisition”.
The FTR transaction had already taken place on September 28, 2012.
However, the grant award letter backdated the period covered by the grant to August 1, 2012
The report says: “Notably, we found that the Welsh Government had not obtained a copy of the contract agreed between HoVDC and FTR’s sellers; this contract was instead provided to us by HoVDC.”
Under the terms of the contract, HoVDC agreed to acquire the FTR Moto brand name and the assets of FTR Moto LLP as well as the assets of an associated company, Fabrication Techniques UK Ltd.
HoVDC transferred these to a new company, which it then named FTR Moto Ltd, and to which it appointed directors.
Mr Carrick is not a director of FTR Moto, although it is wholly owned by HoVDC, in which he has a controlling interest.
FTR Moto Limited went into administration on October 16, 2016. Its 2015 accounts showed net liabilities of £508,709.
The report says: “We have seen no evidence that the Welsh Government considered whether HoVDC’s acquisition of FTR, using public funds, represented good value for money. The Welsh Government also failed to conduct any due diligence or any other inquiries into the financial standing of FTR.”
Referring to an incorrect public statement to the Western Mail denying that public money was involved in the purchase of the company, the report states: “The press statement is both incorrect and misleading because: HoVDC did not acquire ‘FTR Moto Ltd’, but instead acquired assets from FTR Moto LLP and Fabrication Techniques UK Ltd, which were transferred to a new company which was then named FTR Moto Ltd; and the Welsh Government did in fact approve PDG funding of £300,000 for the purchase, of which £275,961 was paid to HoVDC; and the Welsh Government had in fact provided a total of £9.33m of funding to the CoW project, of which £2m was PDG.
The report states: “The Welsh Government has explained to us that these errors arose within the team responsible, which had only checked against the £7.33m loan guarantee expenditure, forgetting about the £2m PDG.
“We find these errors surprising, given that this team was also directly involved in agreeing the FTR acquisition as eligible expenditure within the PDG grant award; and reviewing claims under the PDG grant expenditure schedule which included FTR Moto.”