Payment to Irish Sport Horse Geneic Testing Unit Ltd

In 1997, the then Department of Agriculture agreed to pay this Co Fermanagh based company a Peace and Reconciliation grant of up to £3.2 million for the purpose of implementing an innovative horse breeding project. The report records a range of departures from established standards of public conduct particularly in relation to conflicts of interest, appointments and the letting of contracts. The Audit Office says "it is important that the high standards of conduct expected from those running public bodies apply in equal measure to those running organisations (such is the Irish Sport Horse Genetic Testing Unit Ltd) which, although not public bodies, are almost wholly financed from public funds". In particular there is a need to ensure:

• conflicts of interest are avoided and seen to be avoided; and
• open competition in the letting of contracts and even-handedness in the appointment of staff.

Key points in the report include:

• serious weaknesses in the procedures used by the Department to select and appraise the project. The report states that there was "an insufficient division of responsibilities between those who developed this project and those who approved it".
• audited accounts the Company sent to the Department did not disclose any Board Member or Director interests. Subsequent investigations by the Department revealed a number of conflicts of interest, which in some cases, involved substantial amounts of Peace and Reconciliation grant money going to parties in which Board members had an interest.
• a former Chief Executive of the Company awarded contracts to her husband's firm. She did not seek approval for these transactions. When this Chief Executive was originally appointed in March 1996, the Board did not advertise the post, nor did it consider any other candidates.
• a Board Member of Irish Sport Horse Genetic Testing Unit Limited was also a partner in a veterinary practice. During 1996-97 and 1997-98 payments were made to the practice for goods and services. These goods and services were not subject to competitive tendering.
• the company paid excessive rental charges to Fermanagh District Council for the use of land and buildings at the Necarne Estate, Irvinestown. These charges were three times higher than the market rate.
• a technical review completed for the Board in February 1998 indicated that the project had significantly under-performed to date compared to what was expected in the investment appraisal which secured Peace and Reconciliation funding. The review also concluded that the Necarne site was far from ideal for the purpose of breeding horses and that other activities taking place on the site such as a car rally and a pop concert had contributed to poor breeding results. The Department considers that implementation of recommendations in the technical review produced much improved performance from 1998 onwards.