Probe into council’s £6m business centre ends as ‘nothing to be gained’

PUBLISHED: 09:20 24 June 2020 | UPDATED: 10:52 24 June 2020

The King's Lynn Innovation Centre, pictured is a vist by the Duke of York in 2018. Picture: Ian Burt

The King's Lynn Innovation Centre, pictured is a vist by the Duke of York in 2018. Picture: Ian Burt

Archant 2018

An investigation into how a council lost thousands of pounds building a business centre has ended, because there is “little or nothing” to be gained from it.

The Duke of York talking to employees at the King's Lynn Innovation Centre. Picture: Ian BurtThe Duke of York talking to employees at the King's Lynn Innovation Centre. Picture: Ian Burt

Solicitor Alison Lowton was asked by King’s Lynn and West Norfolk Council to carry out an independent investigation into what went wrong with the King’s Lynn Innovation Centre (KLIC).

However she ended her investigation early stating the council had already done a thorough job investigating it themselves.

The council loaned an enterprise agency called NWES £2.75m of public money to build the centre.

But the council did not secure the loan and NWES defaulted on it in 2018.

It meant the council was left with a building which cost £6m of public money to construct, but was only worth £2.4m, surveyors found.

The building opened in 2016 and gives the council a rental income, but an internal council report, published in February, found “many weaknesses” in the project.

It also raised concerns about conflicts of interest between the council, NWES and a company called Nautilus which was hired by NWES to project manage the build.

The council has held two internal investigations.

Both were critical of the way the council acted and came up with recommendations.

But Mrs Lowton said that meant there was “little or nothing” to be gained from a further inquiry.

She wrote: “It is evident that there were serious issues about the management of the KLIC project within the council, loans provided by the council and the financial standing of NWES.

“Those seem to be well understood and both reports have a series of recommendations which, if adopted, would mean that this kind of project management and due diligence failure should not happen again.”

She said there were still concerns about what the money the council gave to NWES was spent on and why an additional loan was made by the council.

But her investigation would only cover the same ground as the internal council ones, she wrote.

She said this would cost the council “significant sums”.

“In the absence of any evidence or suggestion of fraud or other criminal acts, this is not a sensible use of the council’s resources,” she concluded.

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•Analysis, by investigations editor Tom Bristow

This report marks the end of a sorry story for King’s Lynn and West Norfolk Borough Council.

It shows how, when relationships get too close, a lack of scrutiny can end up costing us, the taxpayer, millions of pounds.

Since we first started writing about problems with the KLIC, in 2018, the council has carried out two internal investigations, both of them have been damning.

The first, from its audit committee, in March 2019, found it carried out no due diligence on NWES and legal agreements were “inappropriate” and weighted heavily in NWES’ favour.

In other words, it was taken for a ride.

It also failed to address conflict of interest concerns about one of NWES’ directors, John Balch, also being the managing director and shareholder of a company paid by NWES to manage the project, called Nautilus Associates.

The second investigation, from a cross-party group of councillors in February 2020, raised similar criticisms and described the council as “naive”.

The purpose of the independent investigation was to get to the bottom of why all this happened.

It is therefore surprising that the independent investigator has thrown in the towel before completing her investigation.
She said she felt she would not have found out anything new.

The problem with that is you do not know what you are going to find until you start looking.

She also said her investigation would waste the council money.

The council is already facing a massive loss from mistakes with the KLIC, so spending more money to find out why, may actually be a good use of public cash.

The main people involved with the KLIC project, at NWES and the council, are no longer in post.

The leadership of both organisations has changed and they will now look to draw a very firm line under this.

But this debacle should not be forgotten the next time a public body spends millions of pounds on a development.

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