Out of control: Housing Executive slammed as scathing audit reveals 'fundamental' conflict of interests in land deals
A damning report published today has revealed how a former senior member of the Housing Executive was involved in "fundamental" conflicts of interest over land deals.
The report by the Audit Office also endorsed a Stormont committee that had accused a section of the NI Housing Executive (NIHE) of being "for many years, out of control".
The report, published today by the Northern Ireland Audit Office (NIAO), said the Housing Executive made key failings at a turbulent time in the property market.
- Land not being properly advertised on the open market;
- a failure to show value for money, especially when dealing with private developers, and
- Serious conflicts of interest.
The report said a number of land and property sales were badly mismanaged by the Housing Executive in recent years - two of which prompted criminal investigations. Both cases resulted in PSNI investigations which were ultimately dropped due to insufficient evidence.
In 2010, serious concerns were raised about NIHE dealings over two sites in Belfast - Nelson Street and Hardcastle Street.
Colm McCaughley, director of the NIHE's Housing and Regeneration Division, retired from the Executive in November 2011 after he was suspended following an investigation into a property deal at Nelson Street. A close family member had links to private developer Big Picture Developments.
In June 2006, property developer Barry Gilligan, the director of Big Picture Developments and a former Policing Board member, had been asked to consult on the social housing project for 66 units.
Questions were raised when just one month later his company bought the site and soon submitted a planning application to use it only for commercial purposes.
There were accusations of a conflict of interest when the plan was defended by Mr McCaughley.
In 2010, Mr McCaughley said a family member was then a director of Big Picture Developments, which the auditors said "represented a clear conflict of interest".
It said it appeared Mr McCaughley was aware of the conflict, as reflected in comments in emails to other NIHE staff stating that, "I had best stand aside from the review" and "I am struggling to stay away from this".
No transactions were made between the Housing Executive and Mr Gilligan. No allegations of wrongdoing were made against him in the report.
There was further controversy with the disposal of NIHE land at Hardcastle Street in Belfast. In March 2005 it was sold "off-market" to a developer for £98,000.
The land was not advertised and a private developer complained he was not given the opportunity to bid for it.
The complaint was upheld and the developer was offered £20,000 compensation. He rejected the offer and sued NIHE for £75,200.
NIHE also paid the buyer's planning fees, which reduced the developers' costs and the amount received by the public sector.
The Audit Office report stated: "The Public Accounts Committee concluded in 2013 that 'the Housing Executive's Housing and Regeneration Division had been, for many years, out of control.'
"Our examination of the Housing and Regeneration Division's management of land transactions from 2004 up to 2010 clearly supports the Committee's conclusion."
Mr McCaughley was suspended on September 30, 2010 having been on sick leave since March 23, 2010.
Comptroller and Auditor General Kieran Donnelly said he hoped the report would act as a warning to other public bodies.
"Governance regimes require a culture of compliance if they are to be effective and those entrusted with the leadership must give the lead on this," he said.
Mr Donnelly added that since 2010, both the Department of Social Development and NIHE have acted to address the failings.
The Housing Executive is Northern Ireland's biggest landlord, with over 82,000 homes.
It also has one of the largest land portfolios. Some is used to build social homes while other parts go on the open market.
From 2004 to 2010 the local property market was described as "extremely buoyant" with many private developers trying to acquire land from the Housing Executive (NIHE).
Since 2005 there have been 1,374 land disposals, including 161 to registered housing associations for new-build schemes.
In 2005 the value of NIHE land with development potential was estimated at £409m.
Since the property crash this has plummeted to just £31m.
In January 2010 alleged irregularities were raised in respect of NIHE's dealings with a privately owned site at Nelson Street in Belfast. The case was formally referred to PSNI.
In March Colm McCaughley, director of the housing and regeneration division in NIHE, went on sick leave. By September he had been suspended.
In September 2010 the NI Commissioner for Complaints found maladministration in relation to disposal of land at Hardcastle Street in Belfast.
In December NIHE chief executive Paddy McIntyre retired. Colm McCaughley stepped down in November 2011.
By 2013 the PSNI concluded that "there was no likelihood or prospect that it could prove fraud to a criminal standard on the referred land disposal cases".