A business centre which a council spent almost £5m of public money on is in fact worth less than half that, sparking further concerns over a controversial deal.
King's Lynn Council and the New Anglia LEP gave £2.75m in loans and another £2.1m in grants to enterprise agency Nwes to build the King's Lynn Innovation Centre (KLIC) between 2012 and 2016.
But Nwes, which has hit financial problems, failed to pay the loan back last year leaving the council and taxpayers out of pocket.
The council is looking to take over ownership of the centre but a valuation of the building showed it was only worth a little over £2m, according to sources.
A council investigation into the scheme (below) confirmed: 'The acquisition of the building does not cover the cost of the loan (£2.75m) and this was never considered during the initiation of the project.'
It also found that the deal was 'heavily weighted' in favour of Nwes and against the council.
Labour councillor Charles Joyce said: 'It is outrageous that the building is not worth the loan amount. It is a scandalous waste of money.'
Despite not paying the loan back, Nwes continues to lease the building rent free as it agreed a five-year deal with the council for a peppercorn rent. Nwes rents the building to businesses and it is almost completely occupied.
A council spokesman said: 'In order to support the project, it was estimated that five years would give Nwes a chance to break-even in terms of achieving full occupancy.
'The ground rent lease therefore had a peppercorn rent for the first five years, after that the annual rent was agreed at £18,000 with regular rent reviews. This would be payable from April 2021.'
They added: 'The council remains in positive legal discussions with Nwes regarding the recovery of the full loan amount and interest and therefore it cannot comment upon the detail until a final outcome is known.
'However the council can confirm that it hopes those involved can achieve a smooth transition with as little disruption to the occupants of KLIC as possible.'
In March councillors voted to hold an independent investigation into why it handed the money to Nwes without carrying out checks on its ability to pay the cash back.
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