A breakdown in the Northern Ireland Housing Executive's internal controls led to its involvement in controversial deals that triggered an investigation of the body, a new report says.
The executive’s involvement in a row over planning for a site at Nelson Street in Belfast, and the sale of properties it owned in the city to developers, raised concerns over the way the organisation was run between 2004 and 2010.
Police subsequently investigated some of the transactions, although nobody was prosecuted, while the organisation’s auditors and counter-fraud unit carried out their own inquiries.
In a report published today, the North's Comptroller and Auditor General, Kieran Donnelly, says the executive's internal controls broke down when it became involved in a number of deals between 2004 and 2010.
“The cumulative effect of the weakness in governance and control was to allow the housing and regeneration division to operate with a minimum of oversight and challenge,” Mr Donnelly’s report says.
Organisation’s interests
It adds that the executive’s own investigators found that the organisation’s interests were not seen as paramount in a number of sales. “We concur with this view,” the document states.
The executive is responsible for social housing in the North and is the region’s biggest landowner, managing 87,200 homes. A buoyant market in the early part of the period covered by the report led to developers offering to buy some its sites.
Between 2007 and 2010 its director of housing and regeneration, Colm McCaughley, declared that a close family member worked for a developer that invested in Northern Ireland. Despite this, he aided connected property companies in land deals with the executive, the report says.
The executive suspended Mr McCaughley in September 2010 following an investigation of his intervention in a planning row over the Nelson Street site. Developer Barry Gilligan’s Big Picture Developments bought this site in 2006 and sought planning for apartments and commercial buildings.
A local group and the executive’s Belfast office maintained that part of the site was earmarked for social housing. Mr McCaughley emailed the office saying its objection to private housing on the site was unreasonable. He had a clear conflict of interest, according to the report, as a close relative invested in Big Picture through another company.
Criminal investigation
The
Police Service of Northern Ireland
carried out a criminal investigation and submitted a file to the Public Prosecution Service, which found there was not enough evidence to ensure a reasonable prospect of a conviction.
The police also investigated a proposed off-market sale of land at Glenalpin Street in Belfast to Mr Gilligan that Mr McCaughley approved in late 2007. As the site was subsequently valued at £8 million, it would have required board approval. The executive did not sell the site and the investigation found there was no fraud.
Another off-market sale of a site on Hardcastle Street for £98,000 to one developer in 2000 resulted in the executive paying £72,500 to another who said he was also interested in bidding for the property.
