Irish Sport Horse Genetic Testing Unit Ltd: Transfer and Disposal of Assets

The Irish Sport Horse Genetic Testing Unit Ltd (Sport Horse) was set up in 1996 to establish an innovative elite horse breeding project. Between 1996-97 and 2000-01, the project received a £3.3 million grant from the Department of Agriculture and Rural Development (the
Department). In July 2001, Sport Horse ceased trading and all remaining assets – an Equine Reproductive Technology Centre (the Centre), 95 horses (estimated value of £110,000), and a stock of frozen semen were transferred to the Department.
A report published today by John Dowdall CB, the Comptroller and Auditor General follows up concerns raised by the Assembly’s Public Accounts Committee (PAC) in September 2001. These included the Department’s upfront payment of £500,000 for a 25-year lease of the
Necarne estate in Co. Fermanagh at which Sport Horse was based. His report also examines the disposal of the assets transferred from Sport Horse to the Department, including the circumstances in which part of the semen stock was destroyed and the value of that loss. It
also considers the Department’s handling of a subsequent Freedom of Information request regarding the loss.

Main Findings

• Developments, since 2001, show that PAC was right to probe the Necarne lease and that the assertion by the Department’s Accounting Officer that the lease arrangement was ‘a good deal’ has not been borne out.
• The Department should complete the economic appraisal which is looking at all the options for continuing equine education in County Fermanagh, including possible termination of the Necarne lease, given that its 2006 Strategic Investment Review suggested that current arrangements are below the optimum level. However, the Necarne lease does not provide for early surrender; the Department is committed to the unexpired portion of the lease (estimated at £300,000). Future operating costs for Necarne until the lease ends in 2023 are some £3 million.
• The Centre, built in 2000 at a cost of £160,000, is not finished internally and had been built without planning permission and lacked building control certificates (now obtained retrospectively). The Centre could not be sub-leased and potential rental income (estimated at £46,000) has been lost. On termination of the Necarne Lease, the Centre - valued at £0.25 million in 2005 – will revert to the lessor, Fermanagh District Council. The Centre was built by Sport Horse on registered parkland, without prior consultation with Environment and Heritage Service (EHS).
• It appears that insufficient regard was given, by the Department, to safeguarding the frozen equine semen it received on liquidation. In 2006, semen stored in a tank of liquid nitrogen was found to be dead; an internal investigation by the Department concluded that its loss was a result of poor communication. There were no formal written procedures or clear instructions by management in place for regular checking of liquid nitrogen levels within tanks.
• Pre-liquidation of Sport Horse, the semen was valued at £45,000 but on transfer a ‘Nil’ value was attributed because of uncertainties over authenticity, quality and viability.
• A number of issues considered relevant to the Department’s handling and response to a Freedom of Information request into the loss of the semen stock were identified; the Department said that the request was handled appropriately at the time.