Welsh agency Tesco deal in audit probe

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AUDITORS are investigating whether an agency under the control of Gwyn Jones, one of the most powerful 'quangocrats' in Wales, gave the Tesco supermarket chain favourable treatment in a land deal which led to more than 100 jobs being lost.

The Welsh Development Agency (WDA) in conjunction with Cynon Valley Borough Council allowed Tesco to put in two bids for a superstore to be built on factory land in Aberdare, South Wales, after the deadline for tenders passed.

At the time of the deal in October 1992, Dr Jones was the chairman of the WDA, an organisation whose activities have been severely criticised by the Public Accounts Committee. He was also a non-executive board member of Tesco. Tesco's managing director, David Malpas, was also on the WDA board.

As well as being in charge of the WDA's pounds 170m budget, Dr Jones became chairman of the BBC Broadcasting Council for Wales and a member of the BBC's national Board of Governors.

When a BBC documentary on the land sale - Week In, Week Out - appeared in May 1994, Dr Jones complained about the programme at the next meeting of the Broadcasting Council of Wales. So too did Tony Roberts, the chief executive of Cynon Valley Borough Council, also on the BBC quango. Neither, according to a Commons motion put down by Welsh Labour MPs on 21 July, declared an interest.

Auditors were called in to examine the Aberdare deal by the new management of the WDA which took over after Dr Jones left last year.

They are investigating the development of land originally covered by factories in Aberdare. The scheme was created by developers Landmark Projects Ltd, which took its ideas to Cynon Valley council and the WDA. But the public bodies took over the project themselves, the developers allege.

Landmark is now planning to sue them for pounds 1.5m and will claim that confidential plans and information were used by the WDA and the council.

'I've been a developer 30 years and you win some and lose some,' said Alan Hedley, joint managing director of Landmark. 'But I've never seen anything like this. Jobs have been lost and public money wasted. I'm not saying that Tesco did anything wrong, it's the behaviour of the WDA and council that needs to be investigated.'

The Landmark plan involved saving the council-controlled Cynon Valley Transport company, which was on the proposed site, and moving it to new buildings with the help of money from the Co-op, which wanted to build its own supermarket on the site. But the council prevented a management buy-out of the bus company by liquidating the firm, because, it said, it was not a viable business, and 120 jobs were lost.

Information supplied to the auditors by the new management of the WDA shows that when the bids came in, the Co-op offered pounds 2,145,000 for the supermarket site. Tesco missed the deadline but was allowed by the WDA and council joint venture to bid late. Its offer was pounds 2m. Tesco then put in a second bid and raised its offer to pounds 2.2m.

The council and the WDA also decided to prevent work on a second site in Aberdare, where 1,000 jobs were to be created in a rival supermarket and factory development.

Welsh Labour MPs were shocked by the intervention of Dr Jones and Mr Roberts. One said BBC journalists were 'being intimidated by senior management on reporting on the agency - the biggest scandal in Wales'.

The BBC has tacitly admitted that something has gone wrong. It first responded to the allegation from MPs that the two government-appointed Broadcasting Council members had behaved improperly by saying 'there was no need for members to declare an interest because their backgrounds are well known'.

But in a later message to staff, Michael Stephenson, secretary to the national BBC Board of Governors, admitted: 'It is traditional among governors to declare an interest when it relates to a subject under discussion.'

Senior civil service sources said last week that the WDA report, by auditors Grant Thornton, would be released in a fortnight and would be critical of Dr Jones's role. It may also spark fresh interest in the agency from the Commons Public Accounts Committee. Dr Jones said in a statement he had not taken part in decision-making involving Tesco and had followed WDA procedures to prevent a conflict of interest.

The WDA has been plagued with scandals and accusations that Tory supporters have been given senior jobs.

In a report last year, the Public Accounts Committee said that the agency had appointed a convicted fraudster, who was subsequently jailed, as marketing manager, had handed out unapproved redundancy payments, attempted to buy the silence of a director with a lavish early retirement package and given free petrol to managers for their personal use. Management practices were 'well below' what Parliament had a right to expect.

Ron Davies, Labour's Welsh spokesman, said the Opposition would be campaigning to get Dr Jones removed from the BBC Board of Governors.