Punchestown seemed onto a winner with a new €15m equestrian centre. But can it ride out the storm, asks Liam Reid
It will be an unprecedented foray beyond the confines of Leinster House by the members of the Public Accounts Committee. This Wednesday they hope to see the subject of the latest Government controversy, the national agricultural and equestrian event centre at Punchestown.
Located in the heart of the Minister for Finance, Charlie McCreevy's constituency, the €15 million centre at Punchestown is one of the most controversial funding decisions of the Fianna Fáil/PD Coalition. At issue is not the benefit of such a project, but whether McCreevy, along with his ministerial colleague in the Department of Agriculture, Joe Walsh, ensured there was proper evaluation of the scheme before they decided to provide 100 per cent grant aid to the centre.
The genesis of the controversial centre dates back to the late 1990s, when Punchestown, owned by the Kildare Hunt Club, was in the middle of a major expansion plan, to transform it into an Irish rival for Cheltenham. As part of this proposal, management at Punchestown came up with the idea of building an agricultural and equestrian event centre. The racecourse had been playing host to three-day eventing fixtures since the late 1960s.
In November 1999, Punchestown management approached the Department of Agriculture with the idea, suggesting it would cost just under €7 million. Less than two months later, on January 20th, this was approved by the Minister for Agriculture, who asked McCreevy to provide 100 per cent funding of the centre.
The Minister for Finance approved the funding within seven days.
Four months later, however, Punchestown was again in contact with the Department of Agriculture. It had significantly revised and expanded the plans, which would now cost considerably more than €6.9 million. The money, €12.8 million, was formally applied for on June 2nd. Two months later, the Department of Agriculture formally approved the plan, with grant aid of up to €13.3 million.
The funding was for substantially more than just the event centre. It included the cost of the demolition of the racecourse stables and their replacement with a new €3 million block. New stabling was central to attracting major equestrian events to the centre, it was argued. The grant also included funding for a new entrance and pavilion.
Work got underway, but by the following year it seemed that Punchestown had miscalculated. Kildare County Council made extra conditions requiring a new sewerage system and more car parking space for the centre, costing an extra €1.5 million.
Punchestown management had met with McCreevy before seeking the original funding. On September 17th, 2001, they met him again, at his Naas constituency office. Less than three weeks later, the formal application was made, and the racecourse management was told informally within weeks that it would receive the extra cash. It was approved formally in January 2002, bringing the total funding to €14.8 million.
However, under the original terms of the grant approved in August 2000, the Government had stipulated a cap of €13.3 million. Unusually, the Department of Finance has said it was not aware of this cap.
The Public Accounts Committee was drawn into the Punchestown issue when, late last year, it emerged that the racecourse was on the brink of liquidation. Despite nearly €25 million in State funding, loans and grants including the building of the event centre, the racecourse owed close to €8 million. The precarious financial position had been discovered by English-born, Wicklow-based businessman, Nick Bullman, and solicitor John Ross, who took over as chairman and vice-chairman of the Punchestown board following concerns about the management of the course.
It transpired there had been serious deficiencies in the accounts of the racecourse over a number of years, and a reappraisal saw net assets reduced from more than €20 million to just over €1 million, with accumulated debts of nearly €8 million.
Late last year, Horse Racing Ireland (HRI), the national authority for horse- racing put forward a rescue package which was approved and has seen the racecourse returning to profit. However, with outstanding issues surrounding a value-added tax bill of at least €750,000, and questions about the validity of some of the leases, parts of the rescue package are still unimplemented.
In the meantime, these revelations about the precarious finances of the racecourse saw Public Accounts Committee chairman John Perry referring the funding of the event centre to the Comptroller and Auditor General. While the C & AG report found the money had been properly accounted for, Perry was highly concerned about the limited evaluation of the proposals carried out by the Department of Agriculture, despite the doubling of the grant application in the space of a few months.
He outlined his concerns 10 days ago at a Public Accounts Committee meeting, and both Opposition and Government TDs added their voices to criticisms of the nature of the grant evaluation.
The Government, including the Taoiseach, and Departments of Agriculture and Finance, have stoutly defended the nature of the project funding as being proper and necessary to provide an outstanding facility that was badly needed. They have argued that such a facility would not have been built if the Government had not intervened with the funding.
However, further questions have emerged about the centre, questions the committee members are expected to seek answers to during their visit on Wednesday. Indeed, PAC chairman, John Perry has said he is not satisfied with the answers he has received from the Departments of Finance and Agriculture.
One of the central issues to be addressed in the committee's visit is the use of the centre. The Government funded the centre on the basis that it would be used predominantly for agricultural and equestrian events. However, only 35 per cent of the usage of the centre is accounted for by agricultural and equestrian events. It has also hosted everything from music events to craft shows.
In seeking approval from the European Commission to fund the centre, the Department of Agriculture also said the centre was unlikely to ever make a profit. However, profits from operating the event centre on a commercial basis have been central to the turnaround of Punchestown's overall financial position.
A further question has arisen about the size of the indoor arena in the event centre, which is too small to hold major international showjumping events.
Indeed, during the Public Accounts Committee visit, TDs will see a principal example of the issues at the centre of the controversy. During their visit, the event centre will be preparing for Santa's Kingdom, which will open at the beginning of December.
Santa's Kingdom accounts for nearly half of the usage of the event centre, an event that is neither equestrian nor agricultural, if the reindeer are excluded.
Yes, ministers: funding all-clear
November 1999 Punchestown formally notifies the Department of Agriculture it will apply for funding for a national agricultural and equestrian event centre at a cost of €6.9 million.
January 2000 The Minister for Agriculture and Minister for Finance decide to provide 100 per cent grant aid for the scheme.
April 2000 Punchestown informs the Department of Agriculture that
significant changes to
its plans will bring cost to €12.8 million.
June 2000 Punchestown makes formal application
to Department of Agriculture, which makes formal
offer of a maximum funding of €13.33 million.
September 2001 Punchestown meets Charlie McCreevy to seek an extra €1.5 million for additional works required by planning conditions. Racecourse told informally in October that it would receive the extra money, which was formally approved.
November 2001 Nick Bullman and John Ross oust the chairman and vice chairman of the racecourse. They
establish that the racecourse is in a precarious financial position.
November 2002 Horse Racing Ireland proposes a rescue package, and takes over the day-to-day running of the course, bringing it into profit. John Perry refers the funding of the event centre to the C & AG to carry out an inquiry.