The Welsh Government's decisions to buy the former River Lodge Hotel in Llangollen for £1.6 million, and subsequently to enter into a lease agreement with an organisation known as Powys Fadog, were flawed and did not represent good value for money. That is the conclusion of a report, published today by the Auditor General for Wales.
The Welsh Government bought the former hotel in March 2007 for the sole purpose of facilitating the Powys Fadog community development initiative - which was to create a local centre for health, healing and learning and would provide an estimated 15 sustainable full-time and part-time jobs within three years.
However, today's report found that the purchase price of £1.6 million was not supported by a full valuation and the available evidence suggests that the Welsh Government paid more than the property was worth. At the time of purchase, the Welsh Government had no agreement with Powys Fadog in place and had not undertaken a robust assessment of risk. The problems were compounded by a significant conflict of interest and insufficient action was taken by the Welsh Government to mitigate this conflict or establish strong governance around the issue.
View a video interview on the report with Paul Dimblebee, Wales Audit Office Group Director.