At least £3.5m was wasted in the failed attempt to set up a university on the Springvale site in north/west Belfast, a government watchdog has said.
US President Bill Clinton cut the first sod
The Northern Ireland Audit Office said a project which was expected to cost £70m ended up as a £4m further education outreach centre.
The Audit Office said the idea was unduly optimistic and raised the hopes of the community to very high levels.
Its report said there should have been a viability study.
It also said the Department of Employment and Learning was told that the university intended to abandon its part in building a new campus at Springvale, but did not formally withdraw for another year.
The department should have insisted that the other bodies involved were told the bad news as soon as possible to reduce the level of upset which resulted when the university announced it was pulling out in October 2002, said the report.
In its defence, the department said that would have been premature and would have destroyed the credibility of the project.
The University of Ulster said it accepted it should have been more open and transparent with its partners.
However, it said it could not proceed with a project which seemed not to be financially viable.
'One independent body'
The university's reasons for getting out of Springvale boil down to finance.
When it linked up with the Belfast Institute of Further and Higher Education to develop the campus, it had a surplus of £18m, but by the time it pulled out, it was in £7m of debt.
The Audit Office said the project would have done better under one independent body rather than a partnership.
Sinn Fein West Belfast MP Gerry Adams said the project was "strangled to death".
"The Springvale Education Village was designed to make higher education accessible to those most disadvantaged, throughout west Belfast and Shankill. It was also to play a significant role in a process of social and economic regeneration in this area," he said.
"This investigation by the Audit Office reveals that the concept, and the agenda for regeneration was strangled to death by senior government officials and the University of Ulster."
DUP North Belfast MP Nigel Dodds said important lessons must be learned for future projects.
"This is an important piece of work and poses a number of significant questions," he said.
"The submission from DEL within the report confirms that the whole project had a significant political dimension".
"Although not specifically stated, it is reasonable to assume that the delay in assessing affordability, both by the university and government departments, and leading to a waste of £3.6m of tax payers' money could have been avoided if there had been the political will and a realistic approach to the project."
The first sod of the Springvale campus was cut in 1998 by the then US President Bill Clinton.