The release of several hundred pages of Government documents on MediaLab Europe yesterday shines a light on efforts to save the flagship project by the State. Three secret reports on the former "Digital Hub" highlight its problems, writes Jamie Smyth

It also highlights some of the problems at MediaLab Europe that ultimately caused its two shareholders to walk away from a project which was announced with such fanfare by the Taoiseach back in 1999.

MediaLab Europe was the centrepiece of the Government's ambitious "Digital Hub" project, but failed to meet expectations on a research or financial level.

Three secret reports prepared separately by both the Government and the management and board of MediaLab Europe outline a catalogue of failures on the part of the research institute.

Perhaps, the most damning indictment of MediaLab Europe is provided by its own management in May 2004, a time when the full scale of the body's financial difficulties became clear.

The language in the report, which describes the working environment at MediaLab Europe as "hell", "chaos" and "inmates running the asylum", underlines the scale of the problems that faced the institute in its early years.

It also highlights a "young" and "inexperienced" finance and administration unit at Medialab Europe and equates board meetings with a history of "unstructured gatherings" rather than normal company meetings.

The comments reflect the first four years of MediaLab Europe , a period during which the fledgling research body had four different chief executives.

A separate report undertaken by a consultant appointed by the Government, Mr Tom Higgins,criticises MediaLab Europe and advises the State to link MediaLab Europe with a university.

This report highlights weaknesses in the research achievements of MediaLab Europe, which filed 12 patents during its five-year existence.

It also advises that the €9 million emergency funding sought by MediaLab Europe to keep it afloat may not be enough. Total funding worth €35 million could be required, says the document.

Yet despite the serious problems at MediaLab Europe, correspondence between its two shareholders MIT and the Government demonstrate that a rescue package was put on the table.

The package was dependent on the adoption of 11 core principles outlined by the Government including a reconstituted board, a new management team, a new academic programme, changes to the cash payments to MIT, and new intellectual property rules.

Intensive talks between the Minister for Communications, Mr Dempsey, and the Chancellor of MIT, Mr Phil Clay, continued through November and January.

Minutes of meetings between the parties demonstrate certain issues that may have been central to the collapse of the rescue talks in mid-January.

For example, Mr Phil Clay ruled out investing any of MIT's cash in the MediaLab Europe project at a meeting with the secretary general of the Department of Communications, Mr Brendan Tuohy. The minutes note that Mr Clay said "everything was on the table for negotiation" except a scenario where MIT would repay some of the €14 million it had received from the Government.

The State paid MIT the money for the brand name, management and research help that it provided MediaLab Europe. The documents indicate that the Government did not think it was getting a good deal.

Correspondence between the shareholders does not indicate a specific reason for the failure to agree a rescue package.

However, tensions between both sides are evident in some email exchanges.

In one email sent in November 2004, Mr Higgins strongly criticises the response of the founder of MIT MediaLab, Mr Nicholas Negroponte, to a set of proposals.

"Nicholas seems to have changed his mind - or not to have made it up. We could have lived with a few queries from Nicholas or even if he needed some clarification of points - but his response is so equivocal that it is impossible to discern a willing and enthusiastic partner working with us on a revised project or to have any confidence in MIT's commitment to making it work."

Ultimately it may have been a breakdown in trust between MIT and the Government that finally sank MediaLab Europe.