Dubious decisions by Invest NI leaves taxpayers nursing whopping £23m loss
A large number of bad investments by Invest NI have left Northern Ireland taxpayers facing a massive £23m loss, new figures released to the Belfast Telegraph reveal.
A total of £27m was ploughed into 170 NI firms that have since gone bust, with just £3.9m of the total amount now deemed recoverable, files released under the Freedom of Information Act revealed.
The bad investments appear on Invest NI's balance sheet as fixed-rate loans, variable-rate loans and shares with companies that have either gone into receivership or liquidation.
"At the year-end, there are 27 cases of potential losses totalling £20,067,000 which are under management review," the agency said in a report.
Invest NI insisted it had not written off £23.1m but said it "made a doubtful debt provision to take account of the potential risk of non-recovery of this amount".
Just £1.3m of the £4m of investments listed as impaired or overdue but deemed recoverable has been clawed back in the past five years. Of the remaining £23m loss, more than £5m worth of loans have been non-performing since 2011.
About a third of the bad investments are deemed to be current, while two-thirds are considered historical and inherited from before the agency was created in 2002.
Invest NI said it continued to work to recover money, but about 40 of its bad investments are in firms that are in liquidation, receivership or have ceased operating.
Defending its record, the agency said in a statement: "Where Invest NI provides finance, it is in recognition of early-stage requirements. By its nature this may in turn lead to a higher risk position."
One of Invest NI's worst-performing investments was in a company linked to two former Invest NI board members.
Belfast-based Axis Three Limited, which secured £1m in 2006, was liquidated in March, leaving Invest NI with a £328,000 loss. The firm was given another £42,000 in 2009. Bryan Keating, an executive chairman and shareholder of Axis Three Limited, is a former vice-chairman of Invest NI. Tim Brundle, a former Invest NI board member, was a director of Axis Three.
Another bad investment was in Trace Assured Limited, which went bust owing £552,000. Alan Mawson, a director at the company, worked with Invest NI to finance start-ups through his firm Clarendon Fund Managers. He is also director of Nitech Venture Partners, a £3m fund established by Invest NI.
There is no suggestion of any impropriety on the part of anyone involved in these liquidated firms or in Invest NI.
Referring to the links, the agency said: "Due to the nature of Invest NI's operations and the composition of its board members, it is inevitable that transactions will take place with companies and organisations in which board members may have a beneficial or non-beneficial interest.
"Transactions with these companies are conducted on an arm's-length basis. Financial packages are subject to normal rules and procedures."