Regeneration Investment Fund for Wales is wound up

The investigation is focusing on the decision to sell the sites privately rather than by a public auction

A regeneration fund which is at the centre of an investigation by the Wales Audit Office has been wound up by the Welsh government.

Auditors are looking into the sale of 16 parcels of publicly-owned land that were sold for about £20m by the Regeneration Investment Fund for Wales.

There are concerns they could have generated much more for the taxpayer.

The investigation is focusing on the decision to sell the sites privately rather than by a public auction.

This week South Wales Police also said it was considering whether or not an investigation into the sale of land by Regeneration Investment Fund for Wales (RIFW) was required.

In a statement, Housing Minister Carl Sargeant said after consultation he was going to draw the investment activities of the fund to a close.

He also said the effectiveness of the fund had been seriously damaged by the cumulative impact of investigations and that closing the fund would free up money to be invested in other areas.

In March last year the parcels of land, situated across Wales, were sold to a Guernsey-based firm called South Wales Land Developments.

Instead of there being an open tendering process, 18 property agents and developers were approached and the sites were bundled together in one portfolio rather than sold individually.

The Wales Audit Office (WAO) began an investigation last year.

WAO director Mike Usher said: "Welsh government officials have kept the Wales Audit Office informed of developments.

"It remains the auditor general's intention to publish the results of his value for money study of the Regeneration Investment Fund for Wales before the end of the calendar year.

"As our audit work is ongoing, we are not able to comment more fully at this time."

Blueprint

In July, Mr Usher said: "Whilst our study is examining all aspects of RIFW, including its governance arrangements and its oversight by the Welsh government, we are also undertaking a detailed examination of all land disposal transactions and investment decisions.

"In particular, our auditors are looking at the RIFW decisions to sell land privately rather than by public auction."

The nature of the land varied from farms in Gwynedd to a former industrial site in the Cynon Valley and part of a business park in Newport.

But the area with the greatest value was 120 acres (nearly 50 hectares) of farmland near the village of Lisvane on the northern edge of Cardiff which had been in public ownership for many years.

The land was sold for an agricultural rate of around £15,000 an acre but four months later it was included in Cardiff council's planning blueprint for new housing.

This paved the way for part of that land to become some of the most valuable in Wales with a potential price of around £1m an acre.

There is a claw back mechanism which means the taxpayer will be able to share in any increase in its value.

Claw back

That figure has not been revealed but BBC Wales understands that it is not more than 50% of the increase.

Another valuable site is 16 acres of land (six hectares) on the outskirts of Monmouth which was valued by the Welsh government at around £1m.

Since the sale, a joint planning application has been made to Monmouthshire council by South Wales Land Developments for 370 homes.

And in the Bridgend area, a stretch of land was valued at £100,000 near Pyle. Since then, an application has been made to Bridgend council by South Wales Land Developments for 94 homes.

While there are claw back mechanisms in place for Lisvane and Monmouth, there are none applying to the other pieces of land.

Concerns over the method of the sale were first referred to the auditors by the Conservative assembly member Byron Davies.

The land had been in public ownership for many years having been bought by the Land Authority for Wales and the Welsh Development Agency before coming under the control of the Welsh government.

It was transferred by the Welsh government to RIFW in 2010, which operates at arms length but was still ultimately controlled by the Welsh government.

Commercial activity

RIFW had been set up to invest in the regeneration of town centres and was funded by European and Welsh government money.

Instead of providing cash directly, the Welsh government funds were generated by RIFW selling off those 16 parcels of land for around £21m.

The Welsh government had already suspended the regeneration investment fund and launched two internal investigations before Friday's decision.

In the past the Welsh government defended the sale, saying it was in excess of the independent market valuation and the land was bundled up to avoid developers cherry picking the best sites.

South Wales Land Developments has said the deal has led to much needed commercial activity on the sites after years in which there was little activity.

Both claimed the use of claw back arrangements would reflect any significant uplift in the value of the land.

BBC Wales tried to get hold of the spokesman for the wound-up body but has not had a response.