Anglesey fish farm grant risks not heeded, auditor general finds
No measures were put in place to mitigate the risks of an Anglesey fish farm failing when the Welsh government granted the project £5.2m in grants, a report says.
The auditor general found that although procedures were followed, they were not suited to a project on such a scale.
Penmon fish farm went into administration in 2011, two years after it opened at a cost of £11.9m.
The Welsh government said it had made significant improvements to processes.
The auditor's report released on Wednesday, said the procedures followed at the time the Welsh government approved the grant were "unsuited to a project of this scale, complexity and risk".
The monitoring of progress of the project also did not focus enough on the risks identified during the project's appraisal.
As a result of strengthening the funding regime for European grants and improving the management of complex projects, it was more likely that significant risks would be identified during the appraisal and evaluation process, the report noted.
It recommended four additional changes to the process.
But noted the government had since overhauled its approach to grants.
The fish farm in Dinmor Quarry, Penmon, which promised 30 jobs, had been due to be completed in 2003 but encountered problems which resulted in delays and increased costs.
It eventually opened in 2009 producing sea bass.
The farm went into administration in 2011 and its assets were sold for £1.2m in 2012.
Welsh ministers authorised a £40,000 grant to pay for oxygen to be pumped into the water for the estimated two million fish at the fishery while the deal was being done.
The site's former owner, Selonda UK, was fined £50,000 after it admitted allowing the discharge of "trade effluent and chemicals" into a protected coastline.
The new owners have invested in new technology and are producing around 1,000 tonnes of sea bass.
Auditor General for Wales, Huw Vaughan Thomas said: "My report on this project illustrates clearly some of the shortcomings that used to exist with the Welsh government's grants management arrangements.
"Significant steps have since been taken to improve these arrangements, and my recommendations are designed to further strengthen the management of risks associated with complex projects that are supported by public funds."
The Welsh Conservatives called the situation "appalling" and "unforgiveable".
Shadow finance minister Paul Davies AM said: "This report confirms just how appalling this situation really was.
"Ignoring risks or failing to mitigate them is absolutely unforgiveable - particularly when millions of pounds of taxpayers' money is at stake.
"This is not the first time the spotlight has fallen on Labour ministers running fast and loose with public cash and grant management. It must be the last."
A Welsh government spokeswoman said: "We welcome the report on the Penmon Fish Farm, noting that the project substantially delivered its objectives and remains a successful business operation, supporting jobs in North Wales.
"Significant improvements have already been made to our grants management arrangements since the period under review, and these recommendations will help us to support continuous improvements in the monitoring of projects supported by public funds."