A government bid to recoup money from a collapsed Fermanagh venture had to be halted — as its headquarters had been built without planning permission.

That's one of the damning new revelations on a horse breeding firm that was bankrolled by over £3m of public money.

The failed Irish Sport Horse Genetic Testing Unit initiative had already been castigated in a past Assembly inquiry.

Now a follow-up report by the watchdog Northern Ireland Audit Office has added a series of further embarrassing details to the saga.

These include the accidental destruction of frozen horse semen stock left over from the scheme.

Concern has also been raised about a Fermanagh land deal entered into by the Department of Agriculture and Rural Development (DARD).

The Sport Horse company — which received a £3.3m grant from DARD — was set up in 1996. It closed down just five years later.

The company was based at the Necarne estate in Co Fermanagh and aimed to encourage the breeding of elite performance horses.

DARD took over the firm's assets following its shutdown, including its Equine Reproductive Technology Centre built at Necarne at a cost of £160,000.

Frozen equine semen stocks were subsequently transferred to an Enniskillen agricultural college campus. In April 2006, staff discovered that semen in one of the two tanks had been destroyed due to an absence of liquid nitrogen.

The Audit Office report, published today, also stated that the department had sought to sub-lease the Sport Horse Necarne centre in 2003.

"However, the department found that it could not lease the centre as it had been built without planning permission and building control certificates and was constructed to agricultural — not commercial — standards, even though the centre would have been used for commercial purposes by Sport Horse."

Retrospective planning permission was secured in 2004, and building control approval followed the next year.

DARD spent £6,500 preparing the centre for building control and leasing. But it still could not rent it out, as further investment was required to meet the demands of new environmental legislation.

"The department has been unable to sub-let the centre which remains vacant," today's report said.

"Potential rental income of £46,000 (from 2003 to 2007 at £9,000 per annum) has been lost."

Potential rental income of £46,000 has been lost

The centre is now officially valued at £246,000, while two associated sheds are listed at £160,000.

These properties will be transferred to Fermanagh Council when DARD's lease for the overall 230-acre Necarne estate is terminated.

The department agreed this 25-year land lease deal with the council in 1998, making a £500,000 up front payment. Necarne is used as an agricultural college base, with students receiving equine education.

The lease obliges the department to maintain the site, and to eventually yield to Fermanagh council all premises "together with all additions and improvements made".

DARD has stated publicly that its 1998 agreement with the council was a "good deal".

But today's Audit Office report concluded that this assertion has "not been borne out".

A departmental review in 2006 recommended the closure of the Necarne college facility, with equine-related activity being located at the Enniskillen campus.

However, the lease with Fermanagh council has no early surrender clause for Necarne.

The Audit Office said DARD would be unable to recoup the unexpired portion of the lease costs, which is estimated at £300,000.

Its future operating costs at Necarne up to the expiry date of 2023 are in the region of £3m, its report added.