NWES: Failed KLIC loan probe 'to cost taxpayers up to 40k'
An inquiry into a failed council loan could cost taxpayers up to £40,000, according to a report.
King's Lynn and West Norfolk Council is calling in external investigators after its £2.75m loan to Norfolk and Waveney Enterprise Services (NWES) to build a business centre was not repaid.
The council says the inquiry will cover all aspects of its NWES partnership.
The report also revealed a £3m shortfall between the building's construction cost and its value now.
When the building was repossessed by the council, NWES said it would continue to work with the council and support tenant firms.
The document, going before the council's cabinet next week, says the probe will focus on alleged conflicts of interest in the construction of the Klic business centre, and relationships between the council and NWES.
The Local Government Association will help to appoint a chairman.
Search for answers
The inquiry will look into how NWES appointed a company owned by one of its then-directors to act as project managers. The enterprise agency has said contracts "were tendered where appropriate".
Council officers had raised concerns which were not acted upon.
Councillors' involvement in the "establishment, oversight and scrutiny of the arrangements" will also be examined.
The Conservative council leader at the time the loan was agreed - Nick Daubney - was also a former NWES employee and subsequently sat on its board.
Mr Daubney had declared an interest and removed himself from meetings where the loan and Klic were discussed.
The Klic building has been valued at £1.87m despite costing approximately £5m to build.
The council took possession of it in lieu of the outstanding loan amount but, despite this, the outstanding balance owed by NWES still exceeds £1m, including interest and legal costs.
The original loan to NWES was agreed with its previous management in 2014 and topped up by £250,000 in 2016 after NWES ran out of funds during construction.
The deadline for repayment was missed in November 2018.
NWES also received a £1m grant from the council.
In January a joint investigation by the BBC and Eastern Daily Press highlighted how the publicly-funded enterprise agency gave contracts worth £900,000 to Nautilus Associates, owned by then NWES strategic director John Balch.