Who was monitoring LEDU?

Following on from last month’s scathing report into Department of Enterprise, Trade and Investment’s Former Local Enterprise Development Unit, briefly noted here, the Comptroller and Auditor General for Northern Ireland, Mr John Dowdall, today published his report on ‘Into the West: Use of Agents’[download link here] [ITW operated from 1997 to 2004] which focuses its criticism again on LEDU officials – as the press release notes, “It is clear that there were serious failings in the management and control of ITW, at both a Board and an operational level and also within LEDU.” – BBC report hereThe press release has this to say about those agents, referencing the report –

ITW operated a network of overseas agents in Australasia and North America, initially focused on encouraging ex-patriates to return home to set up businesses and latterly to establish links with overseas companies interested in investing in Northern Ireland. Agents were involved in business development visits, a major element of ITW’s work costing some £490,000. Fees and expenses paid to agents amounted to a further £277,000.

Of those agents, very few had been interviewed, and fewer still had signed contracts with ITW –

Only 2 of the 18 agents engaged were identified through competitive means and only 4 were interviewed; the Managing Agent was appointed without competition and operated without a contract; there were only 11 contracts with agents, where the Audit Office expected around 33 and only 2 of these had been signed by both parties; and three-quarters of payments to agents were not covered by contracts (paragraphs 2.22 and 2.23).

and on the management of the agents in North America and Australiasia –

On the management and control of agents (Part 3)

ITW’s ability to properly manage and control the activities of agents was substantially undermined by the absence of contracts for most of the time during which agents operated. Even where there were contracts, ITW failed to properly apply a control framework. The absence of performance assessment, combined with a dearth of information reported to the Board, resulted in ITW’s failure to manage its agents effectively. Control was further undermined by a system of remuneration based on retainer fees, without reference to performance (paragraph 3.17).

On payments to agents and performance (Part 4) There was a clear lack of control over payments to agents, the vast majority being made automatically, without any assessment of performance or the fact that conditions of contract had not been fully satisfied. Generally, agent performance was poor – only two bonuses, amounting to £850, were paid in five years and little was achieved in return for the considerable sums of public funds paid out (paragraphs 4.8 and 4.13).

there was also an abortive trip to Australia, which cost £15,500 –

On a postponed visit to Australia in 2000 (Part 5)
ITW was invited to attend an event, the ‘Australian Technology Showcase’ in Sydney, coinciding with the Olympic Games in September 2000. The Audit Office found that ITW’s poor planning of the visit resulted in an avoidable loss of £15,500, caused principally by a ‘book first, recruit later’ approach.

The report also questions the relative value for money of the proposed visit – the principal purpose was to generate publicity for anticipated agreements, rather than the creation of new business. In addition, the majority of the planned participants were not industry representatives, but ITW officials and Board Members, District Council representatives and Northern Ireland local dignitaries (paragraphs 5.4 to 5.7).

And from the Main Findings and Recommendations in the press release –

It is clear that there were serious failings in the management and control of ITW, at both a Board and an operational level and also within LEDU. The report concludes that the Board failed to exercise the level of challenge and control required, but notes that non-executive members of a Board are generally entitled to rely on a company’s executive officers to perform their duties properly. The principal executive officer within ITW was the LEDU Regional Manager – he was founding Company Secretary and played the primary role in the operation, servicing and administration of the company.

At an organisational level, LEDU failed to ensure that it had adequate contractual arrangements in place with ITW when the company was established. It did not strengthen the arrangements over time and it failed to adequately monitor and evaluate the ITW projects and activities which it was funding. In addition, it did not exercise adequate supervisory and management control over its Western Office Regional Manager, which meant that his negligence and poor practice were allowed to continue unchecked.(Executive Summary, paragraphs 4 and 5).