Watchdog probes IT company finances

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An IT company was awarded a 1.3m euros (£950,000) grant to buy equipment which “in all likelihood” cost it 30,000 euros (£22,000), a public spending watchdog has concluded.

The NI Audit Office (NIAO) examined an EU-funded broadband scheme, known as the Bytel Project, which was tasked to improved connectivity in Craigavon, Belfast, Armagh, Dundalk and Dublin.

It found the equipment involved was bought from the company’s sister firm and never used in the final project.

Bytel Networks Ltd said its grant aid claims had been “fully scrutinised”.

In its report, the NIAO said it had found “major failings” including inadequate verification of grant claims.

The Department of Enterprise (Deti) is now suing the company involved, Bytel Ltd, in an attempt to recover more than 4m euros (£2.91m).

In 2004, Bytel applied for an EU grant for a high-speed broadband project which was aimed at improving connectivity in border areas. Grants were being made available by the Special EU Programmes Body (SEUPB) with Deti and the Irish Department of Communications providing oversight.

Bytel’s bid was initially rejected due to doubts about whether it was value for money. However, it was later reassessed and narrowly passed the qualification threshold.

Shortly after the grant was approved, Bytel’s partner withdrew from the project and the specification of the scheme changed significantly.

That should have led to a re-appraisal which would have meant a major reduction in the grant.

However, Deti and the Department of Communications failed to carry out a reappraisal.

Ultimately an assessment found that Bytel had spent less than 4m euros on the project and should have received a grant of less than 1.4m euros (£1.02m).

A whistleblower subsequently went directly to the NIAO and it was only then that a serious investigation began.

Kieran Donnelly, the auditor general, said: “Bytel shows what can go wrong when projects like this are not handled properly. “I have serious concerns over how it was managed and the legitimacy of the grant payments made.

“The responses to whistleblowers fell well short of the standard required and a robust investigation took too long to complete.”

Bytel Networks Ltd said it had “delivered what it was required to deliver and more”. “It received funding following claims for grant aid which were fully scrutinised, assessed and audited by Deti before any grant was paid.”