Wales politics

Tories raise ministerial code questions over Ideoba collapse

Edwina Hart and Andrew Auerbach at Ideoba launch
Image caption Edwina Hart and Ideoba's chief executive Andrew Auerbach at its launch in January 2014

An adviser for the Welsh government criticised for his involvement in the collapse of a high-tech company has left his job.

There have also been calls for an inquiry into whether the Welsh economy minister broke the ministerial code over dealings with the firm Ideoba.

The company collapsed in April.

It has since emerged that the contract of the government's property adviser David Goldstone was not renewed when it expired in April.

Ideoba was run by former Plaid Cymru MP Adam Price and a US finance expert. It closed after being unable to secure a £150,000 loan from the Welsh government.

Mr Goldstone, who was said by the Welsh government to have been acting in a personal capacity and not as part of his role as an advisor on property, had advised against providing the loan.

But a loan offer of a smaller amount was offered on the condition that it was matched by funding from the firm.

Mr Goldstone said he decided not to renew his contract with the Welsh government because of the complaints about his involvement in Ideoba.

But he insisted he and the minister had done nothing wrong.

"It's not appropriate for public money to be invested in a venture where this is a risk," he said.

"All the advice I have given has been totally appropriate."

Unaccountable individuals'

He described criticism that he gave the advice not to invest because of Adam Price's connection with Plaid Cymru as "preposterous" and "ridiculous".

He also denied being given privileged commercial information.

But the Welsh Conservatives have questioned why he was involved in discussions with Economy Minister Edwina Hart about the loan when he was employed to offer advice on property matters only.

In a letter to the first minister, the leader of the Welsh Conservatives, Andrew RT Davies said: "It cannot be right that the minister and her officials are holding lengthy discussions over the granting of public money with completely unaccountable individuals, and it does pose a question as to whether the ministerial code has been breached.

"I would also urge you to consider whether the ministerial code has been broken in this instance, as it is clear in Mr Goldstone's own words that he has discussed privileged commercial information with the minister and her officials."

Image caption The former Plaid Cymru MP Adam Price lost nearly £70,000 in the venture

A Welsh Conservative spokesman said whilst Mr Goldstone's decision to step down from his Welsh government role was welcome, the reason behind his departure required urgent explanation.

"It also does nothing to explain the minister's involvement in the affair and her decision to hold discussions on a private business matter with a completely unaccountable individual; discussions which, it is alleged, led to the collapse of a firm and the loss of up to 100 new jobs," the spokesman said.

He added Mrs Hart's position could become untenable if it was found she had broken the ministerial code in discussing or sharing private commercial information with Mr Goldstone.

Ideoba specialised in financial services with the aim of creating website search engines, giving investment organisations access to advice from 300 million experts across the world.

The Welsh government had already invested £175,000 in the company which employed up to 10 people in highly skilled, well paid jobs.

The company's aim was to create 100 jobs in the future.

It appears there were cash flow problems at Ideoba, which led to staff not being paid on time.

According to documents filed at Companies House, staff are owed £40,000 as a result of the collapse, which they are unlikely to receive.

The parent company in New York lost £500,000, Ideoba's chief executive Andrew Auerbach's US firm lost more than £250,000 and Adam Price, who was a director but not a shareholder, lost almost £70,000.

Ideoba has said private investors were willing to come on board and the £150,000 loan from the Welsh government would have kept the company going until that could be arranged.

Mr Auerbach said David Goldstone told him the reason it was not given was due to Adam Price's decision to stand for Plaid Cymru at the next assembly election.

This claim has been dismissed by the Welsh government as "demonstrably false" and "frankly ridiculous".

A Welsh government spokesperson said: "No matter how many times the Welsh Conservatives try to repackage these allegations, there is nothing new and no evidence whatsoever of any wrongdoing.

"We have addressed these issues and our position on this matter has already been made perfectly clear."

Property career

David Goldstone is an 85-year-old businessman from Swansea who made his millions from property.

He has been chairman of both Swansea and Cardiff football clubs.

Edwina Hart appointed him as a property adviser when she was the health minister and she continued to employ him in that role when she became the economy minister.

The Welsh government also appointed him to the board of Cardiff Airport, which it owns.

The Wales Audit Office is currently looking into whether to launch an investigation into the Welsh government's handling of Ideoba.

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