‘Scathing’ report caused tension in agency, says Shannon Development chief

THE chief executive of Shannon Development yesterday admitted to TDs a report into its property management was “scathing” and had caused tension within the organisation.

Kevin Thompstone was giving evidence to the Dáil’s powerful Public Accounts Committee probing controversial land deals.

State spending watchdog the Comptroller and Auditor General (CAG) John Purcell described plans to sell a site at Gilloge, Clare, in 2004 for €3.3 million - despite it being valued at over €6m in 1994 - as “extraordinary”.

Mr Purcell said it was fortunate for the taxpayer that the deal fell through.

The handling of 3.5 acres of land at the Ennis Road, Limerick, also caused concern among TDs.

Mr Thompstone agreed with the committee that a report into Shannon Development’s property arm had been “scathing”.

Although the report, commissioned by the body, had caused some “tension” in the organisation, Mr Thompstone added that a new property strategy was being implemented.

Fianna Fáil TD Sean Fleming criticised a different report ordered by Shannon Development’s board into an aspect of the Gilloge deal from external consultants which cost €42,000 and looked at the body’s internal audit procedures.

“That’s another great day for consultants. That does not inspire confidence,” he said.

Mr Purcell said the “informality” of land valuation had been a cause for concern, though things had improved.

In a report issued in the autumn, Mr Purcell found Shannon Development had acted inappropriately in the procedures it adopted to sell its Ennis Road property in 1998. The spending watchdog estimated the decision not to sell the property by tender had cost Shannon Development €150,000.

Mr Purcell initiated an inquiry into the sale after concern was voiced to his office by a building company. The site was transferred to Shannon Development by the IDA in 1988, but the transaction was never registered in the Land Registry.

“The failure of the State agencies to protect the title of the property resulted in encroachment and a building company began dumping soil on the land.”

The CAG said he was concerned Shannon Development may not have got value for money when it sold the site in May 1998 to the owner of an adjoining factory for €254,000 without going through a competitive process. However, he noted that the amount coincided with a valuation given by an auctioneer.

Following another independent valuation which quoted a price of €415,000, he concluded the sale price was “probably broadly in line with what was obtainable in the circumstances”.

“Nevertheless, if title had been protected it is likely that Shannon Development would have achieved a better price,” said Mr Purcell.