Belfast Telegraph

Saturday 20 September 2014

Taxpayers' £350,000 'wasted' on hi-tech kit that was never used

Specialist equipment bought for a failed bio-tech venture will be disposed of — at a cost of more than £350,000 to the taxpayer.

The stock was purchased in 2001 by the Bioscience and Technology Institute (BTI) — a high-profile medical research facility — but was never used.

It has been stored away for the last 11 years and will now be offloaded, officials have admitted.

Documents reveal how items purchased with Government funding for the institute were instead used by other bio-tech firms in which some BTI directors and relatives had an interest.

One piece of machinery was later sold off at an £85,000 loss — with concerns that a company in which some directors had an interest gained at the expense of BTI.

SDLP MLA Joe Byrne raised the issue during a meeting of Stormont’s Public Accounts Committee earlier this year. According to minutes of the meeting, he questioned whether the equipment still existed and whether any cash could be recouped.

David Sterling, an official from the Department of Enterprise, conceded that the money had been “almost entirely wasted”.

“That equipment was almost entirely never used,” he said.

“It was put into storage and remains there. However, the reality is that that money has been almost entirely wasted.”

An Audit Office report concluded that the equipment, purchased for £357,000, had actually been bought to meet the needs of Genomic Centre of Excellence (GCE), a profit-making ‘spin-out’ company of BTI.

It noted that items bought by the institute matched that listed in the GCE business plan which was prepared by MTF Chartered Accountants — the company owned by BTI director Teresa Townsley and her husband Michael. According to the report, GCE ownership was effectively held by Mrs Townsley, Professor Paddy Johnston and Professor Roy Spence.

All were directors of BTI, but the clear conflict of interest was not addressed.

Shareholdings were also held by Mr Townsley and Jim Johnston, who is Paddy Johnston’s brother, the report states.

Most items were eventually placed in storage, but two, including a £99,379 DNA sequencer, were delivered to another BTI spinout company, Fusion Antibodies Ltd — another profit-making firm in which Paddy Johnston and Mr Spence held shareholdings of 12.3% and 2.5% respectively.

The Audit Office report states that Mr Townsley was also a shareholder, while Jim Johnston was a shareholder, director and chief executive of the company.

Fusion began using the DNA sequencer in late 2001, but without paying BTI a rental fee. But when a third bio-tech company, Genomic Mining Ltd — in which Prof Spence and Mr Townsley were involved — requested the sequencer’s use, it paid rent to Fusion, and not BTI.

Although the sequencer had a potential rental value of £40,000 over the timescale concerned, BTI was given only £10,354 when the directors’ company, Fusion, was finally challenged over its use.

In late 2004 the sequencer was sold to Fusion for just £15,000.

The Belfast Telegraph was unable to contact Mr Spence, the Johnston brothers or Mr Townsley for comment.

Background

The Bioscience and Technology Institute was launched 12 years ago with high-level Government support, but collapsed in 2002 without delivering any of its goals and leaving the taxpayer with a £2.2m bill.

The project was severely criticised in a Stormont report, which branded it one of the worst examples of incompetence and mismanagement ever seen in Northern Ireland.

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