BALFOUR BEATTY - the company building the Pergau dam - has admitted putting pounds 125,000 into a joint venture with a Lancashire councillor who was involved in awarding the firm a pounds 50m development contract.
The pounds 125,000 was paid to a company set up by Frank McGrath, former deputy leader of Preston council, to build a block of flats in nearby Blackpool. The flats were not completed and repayment has not been sought.
Mr McGrath previously sat on the council's sub-committee responsible for redeveloping Preston docks. That contract went to a consortium led by Balfour Beatty, despite years of groundwork by a rival builder, John Mowlem.
Last month it was reported that the Crown Prosecution Service, advised by Sir Nicholas Lyell, the Attorney General, had angered Lancashire police by deciding not to bring charges over the Balfour Beatty payment.
A three-year inquiry into alleged corruption, Operation Angel, had led to charges being brought against Mr McGrath, council officials and businessmen in Preston. However, possible charges against him relating to Balfour Beatty were rejected by Sir Nicholas.
At the time, Balfour Beatty refused to comment. But yesterday, following a report in Construction Weekly, the trade magazine, the company confirmed the payment was made.
Tim Sharp, a spokesman for Balfour Beatty, said yesterday that after Mr McGrath left the council, 'he was involved in trying to get a number of schemes off the ground. He approached us and we set up a joint venture.'
Mr Sharp said pounds 125,000 was paid to the project - to build a block of flats in Clifton Drive, Blackpool - but 'it ceased to be viable. That was the beginning and the end of the matter.' The money was written off, he said.
Audrey Wise, Labour MP for Preston, said last night: 'I was disquieted when I read the original article in the Independent. I made inquiries with the Attorney General and I've just had a reply. It told me the law officers had decided not to press a prosecution but it did not address the substantive points raised in the article or my letter.'
The Crown Prosecution Service has confirmed that none of the charges brought against Mr McGrath concerned Balfour Beatty. A CPS spokeswoman said the police had referred the Balfour Beatty file to the CPS. 'In one case involving Operation Angel, the Attorney General's office refused their consent,' she said. Asked why, she replied: 'It is a matter for them.'
Mr McGrath has said that he was interviewed by police but maintained: 'I offered no comment to the police when they questioned me and I understand the company did the same.'