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Last Updated: Tuesday, 8 February, 2005, 17:13 GMT
EC funding use inquiry extended
Nigg Bay
Auditors will examine the funding of the Nigg Bay dock development
Nearly all the projects funded by the European Commission in the Highlands and Islands over a five-year period are to be investigated, it has emerged.

The unprecedented move follows an audit suggesting widespread mismanagement.

BBC Scotland has learned that the number of projects under review will increase from 14 to 37.

An EC spokeswoman said this was to determine whether there had been difficulties in individual projects or a fault in the entire accounts system.

The European audit looked at 37 projects across the Highlands and Islands.

Auditors inspected 14 projects funded by the European aid programme between 1994 and 1999 and all 14 failed the initial inspection.

Figures in the document produced by the European Commission suggest potential payback could be between 16m and 20m
Bob Wylie
BBC Scotland investigations correspondent

The EC is now extending its audit to the other 23 projects.

Elizabeth Holt, head of the EC office in Scotland, said: "What the commission is going to do is to audit the other 23 of the representative sample of the projects in the Highlands and Islands programme.

"Only then will we know if this is just a problem with a number of individual projects or whether there is a problem that is systemic to the whole Highlands and Islands programme."

Highlands and Islands Enterprise (HIE) has denied claims it mismanaged the funds.

In a comprehensive eight page rebuttal, the enterprise body challenged the findings of the EC audit, which claimed that funding HIE received for seven of the 14 projects was ineligible.

European grants have been spent on projects like the Cairngorm Mountain Railway, the docks at Nigg Bay and transport infrastructure within the Highlands.

The Nigg Bay development was one of the projects in the first audit.

Expenditure questions

It received a European grant of 3.2m towards a total cost of 8.2m.

The EC wants to examine three aspects of the Nigg project.

It will look at why there were apparently no receipts from the project for less that 1,000, why 700,000 of expenditure cannot be verified and why the price of the contract finished up almost 250,000 more than the price that was tendered.

BBC Scotland investigations correspondent Bob Wylie warned that millions of pounds worth of funding over dozens of similar projects may need to be returned.

He said: "There's been some dispute about the total potential payback to Europe in all of this.

"The Scottish Executive suggests the figure is between 7m and 10m, but the figures in the document produced by the European Commission suggest potential payback could be between 16m and 20m."


SEE ALSO:
Euro audit finds project problems
07 Feb 05 |  Scotland


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