€8m investment in cinema ‘most appalling waste of public funds’

Public money has been used to build a bar, restaurant and cinema for a private company to make a profit, the Public Accounts Committee (Pac) has heard.

The Pálás cinema in Galway city, dogged by construction and financing issues and taking 12 years to complete, has been the subject of intense scrutiny given the €8.4 million in State funding.

Fianna Fáil TD and Pac member Marc MacSharry said because the cinema was ultimately taken over by Element Pictures on the basis it would run a for-profit cinema, the project represented "the most appalling waste and poor use of public funds".

The Pac was questioning officials from the Department of Culture which, in its previous incarnation as the Department of Arts, had been the chief funding body. A report on the cinema project was compiled by the Comptroller and Auditor General last year.

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“What we have done here is build a bar, a restaurant and a cinema for a commercial entity to make a profit,” Mr MacSharry said.

Although Element Pictures , which also runs the Lighthouse Cinema in Dublin, has invested about €1.65 million in the Galway project, it must only pay €1 in annual rent for the next quarter century.

“I just can’t believe we paid €8.4 million into a commercial entity with preferential rents and terms for 25 years,” Mr MacSharry said.

The cinema’s eventual opening as the Pálás earlier this year was a long awaited conclusion to a controversy that has trundled on for years.

Pitched in 2006, it had an initial cost estimate of €5.2 million and was expected to be built by about 2009. Its final bill is in the region of €9.5 million, and took 12 years.

Despite that experience, Katherine Licken, secretary general at the Department of Culture, said the department's Access II Scheme, under which it had been financed, had successfully delivered 40 other projects.

‘Utter failure in management’

Solas-Galway Picture Palace Teo, the company behind the initial project, went into liquidation and remains under investigation by the charities regulator. Element Pictures subsequently assumed control of the Pálás lease but must run it as an art house cinema.

Ms Licken said that despite the commercial nature of the arrangement, the arrival of the Pálás had ultimately delivered on the original ambition - an arthouse cinema for the city, the only such facility outside Dublin.

Galway West TD Catherine Connolly, who sat on the city council during much of the cinema's development period, said while it was a wonderful idea it ultimately represented "an utter failure in management".

Ms Linken said the department had supervised the project and had intervened on numerous occasions, even considering shutting it down in 2015.

However, Ms Connolly said that while serving as a councillor she and colleagues had “struggled” to ask questions.

“There is a certain element that one is a philistine if one questions it,” she said of the arts.

Other funding sources for the cinema included Galway County Council, the Irish Film Board and the Western Development Commission.

Ms Licken said her department had accepted the two recommendations made by the C&AG in his report regarding the future approach to investment projects where the State carries a risk.

“Now projects applying for capital grants are expected to be at a much more advanced stage with well-developed business cases and budget plans,” she said.

The department will undertake a post-project review later this year once final accounts on the cinema have been delivered.