Over £4 million of taxpayer funding has been lost by Invest NI through failed investments in Fermanagh businesses.

Invest NI has tried to recover (or ‘clawback’) £5.7 million of funding it gave to Fermanagh companies in the past five years. Since 2011, only £1.5 million has been paid back, while £4.1 million remains outstanding.

The bulk of the outstanding amount is from Invest NI’s £3.5 million investment into the Lough Erne Resort, which went into administration in 2011. It is understood that Invest NI is unlikely to claw back that money.
Earlier this year, The Impartial Reporter revealed that Invest NI is attempting to claw back £70,000 it paid to a failed call centre in Enniskillen which promised 49 new jobs over three years, but only sustained three full time jobs and closed after 10 months. 

Clawback is triggered when a company defaults on the conditions in the letter of offer for financial assistance from Invest NI. If a company has failed completely and is in administration, Invest NI must join the queue of creditors awaiting repayment. If the company remains up and running, Invest NI will pursue clawback “to the maximum degree.”

Ulster Unionist MLA Rosemary Barton said the statistics “make worrying reading.” She added: “We need to remember that when Invest NI offer grant support to companies, it is taxpayers’ money they are spending, so care must be taken. However, an element of risk has to be involved in these calculations.”

In response to a Freedom of Information request from The Impartial Reporter, Invest NI outlined how much money it has tried to clawback and how much has been paid back in each of the last five years.

In 2011-2012, Invest NI attempted to clawback £1.44 million. It received payment of £1.43 million; wrote off £13,600 and has £0 outstanding.

In 2012-2013, Invest NI invoiced for the clawback of £4.08 million. It received just £21,000; wrote off £136,000 and has £3.9 million outstanding.

In 2013-2014, Invest NI invoiced for the clawback of £2,300 and received the full amount.

The £155,000 Invest NI tried to clawback in 2014-2015 remains outstanding.

The £23,000 Invest NI tried to clawback in 2015-2016 remains outstanding.

A spokeswoman from Invest NI stated: “Clawback is triggered when a company defaults on the conditions in the letter of offer for financial assistance. In a significant number of cases the act of default is company closure. If a default occurs, we normally go back five years prior to that default date and clawback grants paid in that period, subject to any specific provisions in the original letter of offer. Given that in many cases the company has gone into liquidation the ability to recover funds is limited, and the amounts recovered and timing of any repayments will be determined by the insolvency process.”

When asked to outline how Invest NI manages the risk of losing taxpayer money, the spokeswoman replied: “Invest NI has a comprehensive and robust set of assessment and approvals processes which must be completed before any investment decision is made and a legal letter of offer for support is issued to a business. These processes are designed to support the best possible decisions and, where relevant, mitigate any perceived risk. They include: a robust challenge and appraisal of the company’s business plan, assessment of expected economic benefit, independent panels to approve all offers, and legal Letters of Offer that clearly set out the obligations of all parties and which include clauses to protect public interest.”

She added: “Approval levels are commensurate with the scale of support envisaged, and range from Managers/Directors up to the Minister, depending on the scale of a project.  Monies are only released to a company when agreed targets/milestones have been met.
“If, despite all of the above, a company’s project fails then clawback is our process for recovery of monies paid.  If the company has gone into administration then this process is controlled by the Administrator and can take a number of years.”

Rosemary Barton believes that “these figures merit further questions at Stormont.” She said: “We all want more investment and economic development in the West, and many public representatives, myself included, have been unhappy with the perceived lack of Invest NI activity in County Fermanagh in general.

“What is equally concerning is the difference between jobs promoted and jobs actually created. It has been calculated that around 75 per cent of the jobs which are announced at the big photo calls surrounding these Invest NI projects are actually delivered on the ground. This is another issue which must be addressed by the Executive.”

Sinn Fein MLA, Sean Lynch commented: “While I welcome the fact that Invest NI are seeking the return of these monies they need to ensure that investment is targeted into long term sustainable projects that deliver meaningful job creation for the people of Fermanagh.”

He said: “There is an onus on Invest NI to ensure that public monies are spent to the highest level of effectiveness and efficiency. Clearly there has been an historical underinvestment west of the Bann that needs addressed.”