Public Accounts Committee: The State could be sued for breaching EU competition law for the way it funded four marina projects, writes Liam Reid.
The Government failed to get approval from the European Commission before deciding to finance them, it was revealed yesterday.
In a detailed presentation to the Public Accounts Committee (PAC), the Department of Communications, Marine and Natural Resources outlined that over €3 million had already been paid to two of the projects, and that this may have to be reimbursed if they are found to breach state aid rules.
The funding was made at the direction of the Government, despite concerns from senior officials about the projects.
In what members of the PAC described as a "damning presentation", Mr Brendan Tuohy, secretary-general of the Department, said €5.7 million was allocated to the four projects during the Budget speech in December 2000.
They were a sailing school and pier at Kenmare; and three marinas in Cahirciveen, Co Kerry; Roundstone, Co Galway; and Rosses Point, Co Sligo.
Independent TD Mr Jackie Healy Rae, whose support provided the Government with a voting majority in the Dáil at the time, was credited with getting the grant aid for both Kerry projects.
Mr Tuohy said yesterday the Department was directed by the Government through the then minister, Mr Frank Fahey, to fund the projects, even though it had not yet put in place a scheme for funding such projects.
This was put in place in 2002 and had detailed selection and evaluation criteria and set time limits for drawing down funding.
He said the manner in which the projects were identified was at variance with such standards. "These four projects were subject to very close interest and ministerial direction at all stages of the management process.
"It was made absolutely clear there was a very strong wish that these projects progress; any difficulties arising for the Department should be seen in the context of seeing the projects progress as rapidly as possible."
He outlined the serious difficulties that the projects had encountered, including the fact that part of the Kenmare development had to be demolished as it did not comply with planning permission. It has received over €332,000 to date, but the Department has refused to sanction the remaining grant of just over €400,000 until its planning status is regularised.
Cahirciveen, the only project to have been completed to date, was scaled down considerably from its original proposal, although the grant aid of €2.54 million was not reduced. It accounted for 83 per cent of the entire cost.
Both the Roundstone and Rosses Point projects have yet to receive any grant, and Mr Tuohy said both still posed considerable problems for grant aiding, including the fact that most of the berths will remain in private hands.
He said the State funding would effectively constitute a direct subsidisation to these private boat-owners of between €48,000 and €56,000 per berth.
The manner in which the projects were developed "has presented my Department with severe process, legal and planning difficulties", he added.
Under EU rules there was a prospect that the monies would have to be reimbursed with interest, he said.
However, Fianna Fáil PAC member, Mr Seán Fleming, accused officials of "washing their hands" of the issue in the report, and said officials could object to funding if they had serious concerns, and said they should do so more often.