IDB project 'disturbs' committee

The Industrial Development Board was replaced by Invest NI in 2002

A Stormont committee has "profound concerns" at how the Industrial Development Board handled a project which was given millions of pounds.

The firm, Valence Technology, got £15m of government help before it relocated its manufacturing operation to China.

Days after receiving almost £4m in 2001, it made 320 people redundant.

Public Accounts Committee chairman Paul Maskey said the firm was producing a lithium battery at a cost of $57 but its retail price was just $12.

"Something doesn't add up there - that's a schoolboy error," he said.

In 2002, the IDB and small business organisation Ledu were incorporated into the newly-formed Invest Northern Ireland.

The Public Accounts Committee report said poor project monitoring and a lack of transparency meant the project "yielded few benefits for the taxpayer".

It is clear that, from beginning to end, there were serious lapses at a senior level in IDB's handling of the project Paul Maskey

"The committee has profound concerns about how the IDB handled the Valence project," the Sinn Fein MLA said.

"The widespread nature and extent of the shortcomings, which occurred over a 14-year period, mark this as one of the most disturbing cases that this committee has examined.

"The committee is particularly disappointed that well-established procedures designed to protect taxpayers' money were repeatedly ignored, and important lessons from earlier failures were not taken on board."

Valence Technology was supposed to set up a plant in Mallusk, County Antrim, making lithium batteries, employing 660 people.

However, it fell significantly short of its expected job and investment levels.

The government spending watchdog found that over a nine-year period to 2003, there were several critical points at which the IDB should have called a halt to the project for re-appraisal.

It said if necessary, it could have re-negotiated the contract, or terminated the project.

However, on each occasion, the IDB failed to do so and continued to provide funding.

Redundancies

In March 2001, the IDB agreed to increase the grant Valence received from £5m to £11m.

This was despite "significant cause for concern", with Valence's losses amounting to £176.18m.

It said days after receiving £3.9m, Valence announced 320 redundancies at the Mallusk plant, leaving only 97 workers there.

Mr Maskey said job creation levels at Valence had been "very disappointing".

"Against a target of 660 new jobs by March 1998, employment briefly peaked at 417 in 2001, with average employment levels being much lower," he said.

"Moreover, a very substantial proportion of the workforce comprised agency staff rather than permanent workforce, due to the uncertain future of the project.

"The committee was also disappointed to learn that only around one quarter of the Valence workforce came from areas of economic and social disadvantage. "

He said the report was "an indictment of a management culture within IDB which acquiesced in ignoring the rules, ignored crucial lessons from earlier projects and circumvented its own control process".

"It is clear that, from beginning to end, there were serious lapses at a senior level in IDB's handling of the project," he added.

"However, the committee recognises that none of the current senior management team in the Department of Enterprise, Trade and Investment and Invest NI was involved in the appraisal and management of this project.

"We note the assurance from the department that lessons have been learned.

"The credibility of this assurance is crucial if Invest NI is to earn the confidence of elected representatives."