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Stormont will write off £2m given to failed research firm

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Northern Ireland's Bioscience and Technology was offically launched in 2000 with one of its aims being to boost the local economy, but it has failed to deliver on any of its initial goals

Northern Ireland's Bioscience and Technology was offically launched in 2000 with one of its aims being to boost the local economy, but it has failed to deliver on any of its initial goals

Northern Ireland's Bioscience and Technology was offically launched in 2000 with one of its aims being to boost the local economy, but it has failed to deliver on any of its initial goals

A Stormont department is expected to write off more than £2m of taxpayers' money provided to a cutting-edge medical research company.

The Bioscience and Technology Institute (BTI) was officially launched 10 years ago with high-level Government support, but failed to deliver on any of its goals.

Its aim was to boost the Northern Ireland economy through the promotion of pioneering medical-related scientific research.

BTI has been the subject of a long-running and confidential company inspection probe — as revealed by this newspaper in early 2006.

The Belfast Telegraph has now learned details of a written briefing on the case provided behind closed doors to MLAs last week.

The document, from the Department of Enterprise, Trade and Investment (DETI), admitted: “The project did not achieve its stated objectives and no economic benefit was derived from the public funding that was provided to the company.”

DETI also told Assembly Members that the “practicality” of recovering the grant-aid supplied to BTI was being considered.

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“It is, however, almost certain that the £2.2m funding provided to the company will be irrecoverable,” it added.

The briefing was provided to Stormont's cross-party Public Accounts Committee, which is poised to examine the case.

The BTI company inspection was launched at the end of 2005 by the department.

MLAs were told that key issues from the probe included:

  • Conflict of interest issues within BTI's management.
  • Concern over the propriety of payments — including a £100,000 finder's fee paid to Belfast solicitors in relation to a building acquisition.
  • Weaknesses in the monitoring of the project by Government funding bodies.
  • Investigations into the circumstances surrounding the company's purchase of certain plant and machinery, which were never used.

The briefing to MLAs also stated that BTI was “technically insolvent” and would be formally wound up.

BTI was officially launched at Hillsborough Castle in June 2000 in a bid to develop Northern Ireland's part in an expanding global industry.

Biotechnology includes the development of new drugs and vaccines, but also covers other areas including agriculture and manufacturing.

The BTI project was initially supposed to be located in the grounds of Belfast City Hospital, with a site provided free of charge.

Instead it acquired an office building called Harbourgate at Sydenham in east Belfast in 2001.

The £100,000 finder's fee that has been investigated by company inspectors was paid in relation to this property.

The briefing to Assembly Members also stated: “The Harbourgate building cost £5m, payable to a developer.

“The building was subsequently sold, in 2005, by the Ulster Bank for £4.55m. The latter sum was used, in that year, to satisfy the bank's debt and partly redeem one other secured debt.”

The briefing further said: “I would ask that, when considering this material and its handling, the committee would bear in mind the need for confidentiality to avoid any risk of prejudicing any legal, or other, proceedings that may ensue from the issues referred to above.”

In with a bang and out with a whimper while public count cost

The Bioscience and Technology Institute (BTI) could hardly have received a better start in life.

Its official launch took place in June 2000 at the grand location of Hillsborough Castle, with the then First Minister David Trimble performing the honours.

An accompanying Government Press release said the project would “promote the development of world-class, leading edge, health technologies” and provide “a major boost to the economy”.

Mr Trimble commented: “This will enhance significantly Northern Ireland's health technologies infrastructure.”

The Press release said the institute was being supported by Queen's University, the University of Ulster, Belfast City Hospital and the Royal Victoria Hospital.

It also stated: “The US National Cancer Institute at Bethesda, Maryland, has already pledged its support for the project.

“Links have also been established with the Harvard and Massachusetts Biotechnology Institute in Boston; Beth Israel Deaconess Hospital, Harvard; and CDP, an Atlanta-based company which assisted in setting up a similar project at the University of Texas in San Antonio.”

Financial backing was listed as coming from a number of sources including European peace funds, enterprise quangos and the International Fund for Ireland.

The institute also received support from a private sector source. Past company accounts reveal a loan of £1.2m was received from “an individual party”.

The importance of the BTI venture was also made clear in a 2001 Press release by the Department of Enterprise.

It reported that the institute was among the Northern Ireland bodies taking part in the world's biggest biotechnology exhibition in San Diego.

The department's then permanent secretary Bruce Robinson said participation in this US event was an “immensely important initiative”.

Also in 2001, BTI announced that it had purchased a new 65,000 sq ft building at Sydenham in east Belfast. But by the following year, the venture was hitting trouble.

In a 15-month accounts report submitted in 2003, the company stated: “The directors have indicated their intention to sell the company's Sydenham building following the recommendations of a strategic review in January 2003.”

There were no further Government Press releases about the high-profile initiative, and it had ceased trading well before its name re-entered the public domain.

That came in February 2006, when the Belfast Telegraph revealed that a company inspection had been ordered by Government officials.

At that stage, the Department of Enterprise declined to spell out the extent of the public purse's losses from the venture.

The answer to that question is now highly likely to be £2.2m — with every penny of the support provided by the taxpayer expected to be “irrecoverable”.

Analysis

A long wait for truth to emerge

By David Gordon

It may be some time yet before the full glare of public accountability finally shines on the Bioscience and Technology Institute (BTI) case.

Government officials are still deliberating on possible follow-up actions in light of the report from the company inspection.

Eventually, the saga will be the subject of a hearing and report at the Assembly's Public Accounts Committee (PAC).

One of the questions the MLAs will have to address is why the investigation process has taken so long.

The inspectors were appointed in the case as far back as December 2005.

In a report in May 2006, the House of Commons PAC called for the probe to be concluded “as soon as possible”.

Stormont's PAC has been briefed on the case since the restoration of devolution in 2007.

Its hearing can be expected to focus heavily on the oversight of BTI by public bodies.

The institute's funders included two organisations that no longer exist — the Industrial Development Board and the Industrial Research Technology Unit.

These two bodies were merged into Invest NI on its establishment as a “super quango” in 2002.

The forthcoming Assembly inquiry may also want to establish if more could have been done by Invest NI to salvage economic benefit from the BTI project.

The bioscience sector has huge potential, so it is more than a disappointment that this venture did not deliver at all.

The Assembly Committee is sometimes criticised for investigating issues that date back many years.

But it has had no option but to sit back and wait for this one.


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