The embattled Circuit of Wales (CoW) has suffered another setback after an official report by the Welsh Auditor General reveals concerns over 'significant shortcomings in way Welsh Government has managed risks to £9 million of taxpayers' money'.
The proposed MotoGP-standard circuit in South Wales has been in a state of limbo for some time, after concerns over the viability of the project caused the Welsh Government to announce early last year that it could not underwrite a proposed £357.5m of private sector investment, before rejecting a second revised bid for funding in July.
Now the Welsh Government itself has come under fire from the auditors for its oversight of initial fundingto circuit developer, Heads of the Valleys Development Company (HoVDC). In total, it has so far provided over £9.3 million to support the development of the circuit near Ebbw Vale and has agreed a further £16 million of repayable finance.
But in his 63-page report, auditor Huw Vaughan Thomas said that while the Government had "appropriately commissioned extensive advice and considered a range of benefits and risks before deciding to provide this initial support", its appraisal of the information which underpinned its decisions to date was "flawed".
Particular criticism was levied at the decision by HoVDC to use some of the awarded funding to purchase the FTR Moto company, based in Buckinghamshire, England. Around £300,000 from a £2million grant was spent in 2012 on the purchase of the firm, which manufactured motorcycles for the Moto2 and Moto3 World Championships. Funds transferred to FTR were later written-off in HoVDC's accounts and then, in October 2016, FTR went into administration.
The report states: "The Welsh Government has been unable to explain to the Auditor General's satisfaction why it permitted a property development grant to be used by HoVDC to acquire a motorcycle engineering company in Buckinghamshire," adding that this was "inconsistent with the grant scheme's purpose".
The report concludes that, once decisions were made to provide initial financial support to the CoW project, the Welsh Government did not do enough to manage public funds properly. Funding arrangements did not provide strong enough security for public money; conditions applied to different funding streams were inconsistent and, where they were in place, weren't always enforced.
"Using public money to support private infrastructure projects in Wales can help boost regeneration and economic development," said Mr Vaughan Thomas. "In doing so, public financing needs to be managed robustly, with proper standards of scrutiny, vigilance and oversight.
"It's unfortunate that, in the case of the Circuit of Wales, we have identified significant shortcomings and so the Welsh Government needs to learn from my report, particularly if it decides to provide any further support for the project to progress."
In a strongly-worded statement on the circuit website, HoVDC welcomed the audit report, describing it as providing a "clean bill of health for the Circuit of Wales team, our plans and the project," adding that it "shows that our directors have been completely exonerated of the false claims made over the misuse of public funds."
The statement - which makes no mention of the FTR purchase criticisms - continues: "The report shows that we have always operated within conventional commercial practices, ordinary company activity and standard accounting processes and, where the specific Welsh Government loan is concerned, very carefully adhered to and implemented advice on spending eligibility provided by the Welsh Government's relevant officials.
"CoW has at all times been fully transparent, open and clear in its engagement with the Welsh Government. It has assembled a very senior management team with an impressive track record in major infrastructure, regeneration and automotive focused projects, whilst retaining the support of world class organisations to deliver what will be a vibrant location for business, sports, leisure, culture and the arts.
"With this firmly behind us, we are ready and raring to go to deliver thousands of important jobs, exciting events and valuable visitors to south Wales."
The Circuit of Wales retains a contract to host the British round of the MotoGP championships until 2020. But with the track remaining a vision on paper only, a deal was struck to lease Silverstone in over the past years, an arrangement which is also in place for 2017. It had hoped to finally host the event in Wales in 2018 - an ambition that seems unlikely to be met.