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WELSH GOVERNMENT'S MANAGEMENT OF AWEMA FUNDING 'OFTEN WEAK'
18/10/2012
But no evidence of inappropriate political influence over funding decisions
The Wales Audit Office's report into the relationship between the Welsh Government and the All Wales Ethnic Minority Association (AWEMA) concludes that the management and coordination of grant funding to the charity was 'often weak'.
The review considered whether the Welsh Government, including the Welsh European Funding Office (WEFO), managed its relationship with AWEMA appropriately to protect and make good use of public funds. The full history of the relationship was scrutinised from the creation of AWEMA in 1999 to the actions taken by the Welsh Government in relation to its decision to terminate its funding for the charity.
Assistant Auditor General Anthony Barrett, said today:
'We have established that the Welsh Government's payments to AWEMA totalled £7.15 million, with a further £3.01 million having been committed in principle before the Welsh Government announced the termination of its funding on 9 February 2012'.
'The Welsh Government's management and coordination of its grant funding to AWEMA was often weak and its responses to historical concerns about AWEMA were too narrowly focused. By contrast, the Welsh Government responded robustly to the concerns that emerged about AWEMA in December 2011, but dealing with the consequences has been time-consuming.
'While the outcome of the liquidation process is not yet known, it is clear that the Welsh Government will not recover most of the £545,966 debt it now believes it is owed by AWEMA,as this far exceeds the amounts available to reimburse creditors.'
Anthony Barrett continued: 'Importantly, our audit work found no evidence of inappropriate political influence on the part of any current or former Ministers or Assembly Members. However, several of the issues raised by our report reflect wider issues of concern in relation to the Welsh Government's overall management of grant funding and the full basis of some of the Welsh Government's funding decisions is not clear'.
'The history of the Welsh Government's management of its relationship with AWEMA raises a more general question about how the Welsh Government can best exercise due diligence to satisfy itself that organisations it funds operate in accordance with principles of good governance. Its monitoring activity must be proportionate and effectively targeted.'
The report recognises that, in response to the situation with AWEMA, the Welsh Government has already taken forward a range of actions relating to due diligence in its funding to other organisations. It also acknowledges that the Welsh Government had already introduced new arrangements in an effort to improve its management of grant funding. Among the report's recommendations to Welsh Government are the need for clear protocols for due diligence work to be built into grant funding and monitoring activity. The report emphasises that such due diligence work should consider all risks relating to the overall financial viability of organisations that the Welsh Government is funding (which in turn should inform any decisions on the need for advance payments).
Notes to Editors:
- Between 25 July 2000 and 20 December 2011, the Welsh Government's payments to AWEMA totalled £7.15 million, with the highest annual expenditure in 2006-07 of £1.24 million.All but £351,000 of this funding has related to grants approved by:
- the Welsh Government's equalities unit - £1.13 million paid;
- the Welsh Government's Communities First programme - £1.09 million paid; and
- the Welsh European Funding Office (WEFO) - £4.58 million paid
While paid initially to AWEMA, much of the Welsh Government's funding in relation to the Communities First programme and WEFO-funded projects was passed on to cover costs claimed by AWEMA's project partners. - The report also describes other sources of public funding to AWEMA, totalling around £577,000 since 2000-01. The report notes that AWEMA had identified ambitious plans to diversify its income streams and reduce its reliance on public funding. However, key elements, notably establishing multi-cultural community centre facilities as a means of generating income, never came to fruition.
- For consistency, we refer throughout our report to the Welsh Government's equalities unit. However, the unit responsible for equality policy has existed under different names since May 1999 following various restructuring exercises. The names given to the unit have been: Equality Policy Unit (May 1999 to early February 2006); Strategic Equality and Diversity Unit (early February 2006 to the end of December 2007); Equality and Human Rights Division (January 2008 to April 2009); and the Equality Diversity and Inclusion Division (since April 2009).
- The report does not examine the internal workings of AWEMA in terms of its governance, staffing matters or financial management. The responsibility for any further examination of AWEMA's governance, in particular the trustees' actions and decision making in managing the charity, rests with the Charity Commission which has been taking forward its own inquiry. We have also been careful not to encroach on matters that have been under investigation by South Wales Police.
- On 9 February 2012, the Auditor General informed the then Permanent Secretarythat he had decided to undertake an independent value for money examination - using his statutory powers - to examine the Welsh Government's management of its relationship with AWEMA. However, the Auditor General disclosed to his review team matters predating his appointment to the office of Auditor General - in relation to his previous role as a board member of the Big Lottery Fund and Chair of the Big Lottery Funds Committee for Wales - that might be construed as him having a potential conflict of interest. In order to avoid any challenges that his independence or objectivity might be impaired, the Auditor General authorised Anthony Barrett, Assistant Auditor General, to act on his behalf in relation to this examination.
- The Auditor General and the auditors he appoints in local government are the independent statutory external auditors of most of the Welsh public sector. They are responsible for the annual audit of the majority of public money spent in Wales, including the £14 billion of funds that are voted to Wales annually by the Westminster Parliament. Elements of this funding are passed by the Welsh Government to the NHS in Wales (over £5 billion) and to local government (nearly £4 billion).
- The Wales Audit Office mission is to promote improvement, so that people in Wales benefit from accountable, well-managed public services that offer the best possible value for money. It is also committed to identify and spreading good practice across the Welsh public sector.