FMQs: RIFW Redux, Tuition Fees & Parking Fines

The final FMQs of the 2016-17 Assembly term took place this afternoon and it's also the final FMQs covered on this site.

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Dirty Deeds Done Dirt Cheap VI : The Debate

Apart from recently announced legal action, the curtain comes down on
the RIFW scandal on the last day the Fourth Assembly met in plenary.
(Pic : BBC Wales)

Yesterday, I covered some of the failures over the course of the term, as well as a last-minute "special performance" by Cirque du Plaid. I couldn't let the Assembly go without revisiting one of the Welsh Government's biggest "whoopsies" - the RIFW scandal - one last time.

Most of the time AMs are capable of acting like grown-ups, and a debate was held on the findings of the Public Accounts Committee (PAC) report into the scandal (Part V). Some credit has to go to the Business Committee for squeezing in a debate before the election – they could've easily let it slide.

Jac o' the North wrote more on this a few days ago and it's well worth a read as always, while in the last few days the Welsh Government announced they'll start legal action against one of the key protagonists in the saga, Lambert Smith Hampton (which was actually one of the recommendations of the committee's report).

Starting off, the Chair of the Committee, Darren Millar AM (Con, Clwyd West) described it as one of the most significant and deeply concerning inquiries undertaken by his committee (clip). He said it was "inexcusable" and subsequently outlined the findings of the report (which I've already covered in detail).

Although the idea behind RIFW was innovative, it was poorly executed due to flaws in Welsh Government's oversight, as well as the fact RIFW was poorly-served by the professionals who were supposed to offer expertise. It exposed numerous flaws in government procedures, line accountability, record-keeping and data retention.

Darren welcomed the First Minister's apology and the Welsh Government's positive response to the report. It was vital that future Welsh governments recognise all of the recommendations to ensure necessary improvements are made to their handling of arms-length bodies, and to ensure such losses to the public purse are never repeated.

Nick Ramsay AM (Con, Monmouth) said the tragedy for him was the number of different parts of Wales affected by the scandal (clip). When it emerged land in Monmouth which was earmarked for a controversial housing development was sold for fraction of market value, the local reaction "bordered on disbelief". The legacy could undermine trust constituents have in government's ability to handle large financial issues – particularly in light of future tax devolution - as ownership and management of land is a key responsibility of government.

Alun Ffred Jones AM (Plaid, Arfon) said it was a damaging chapter for government and people's perceptions of the Assembly (clip), particularly the perception that government isn't careful with its own money and not worried about getting the best value. He found it difficult to believe that no minister was aware of what was happening and was disappointed that nobody's taken responsibility for the fiasco.

Alun said nothing summarised the scandal more succinctly than the 180 degree turn the board made – one moment they agreed to sell the land separately, the next they agreed to sell them in one package. Alun said if even a community council did this "it would raise chuckles" (Oh, the irony! Coincidentally, this appeared to take place at the same time as Plaid's emergency meeting on the Public Health Bill.). He believed it was a cock-up rather than a conspiracy, but it leaves a nasty taste in the mouth.

Jenny Rathbone AM (Lab, Cardiff Central) accepted it was a great idea to invest in urban regeneration during recession (clip). However, she felt sorry for the RIFW board members who were like "lambs to the slaughter" and knew nothing about how to handle land sales. Instead, the Welsh Government should've disposed of the own land then handed the proceeds to RIFW.

It was "unfortunate" that the Welsh Government wasn't tracking what was going on, which meant that the whole thing was out of sight and out of mind. The decision over the land parcel should've been made by ministers, particularly as the "jewel in the crown" Lisvane site would obviously be used for housing as Cardiff expands. In closing, Jenny believed the Welsh Government had learned their lesson.

Aled Roberts AM (Lib Dem, North Wales) was disappointed that the debate was scheduled for the last day, but it was an eye-opener regardless (clip); he doubted whether even a community council would've done some of the things outlined in the report. There was no criticism of the idea, but everything after that was poor, with Aled expressing surprise that the Welsh Government thought just four people meeting for four days a year could discuss these sorts of issues and make decisions – he could only come to the conclusion that board members had been let down.

However, he believed the main weakness was that a civil servant was put in as an observer when it wasn't clear what his role was, with no guidance issued by ministers. Also, the issue of poor record-keeping appears time and time again in these inquiries. This is unacceptable and he wasn't hopeful that the Welsh Government had learned any lessons.

Leader of the Opposition, Andrew Davies (Con, South Wales Central), said the whole situation unfolded from a genuinely sincere attempt to unlock assets (clip), but it was "incomprehensible" that nobody would've realised that some of the land would've increased in value, particularly in Lisvane – it's "not rocket science". Lack of communication appeared time and time again and board members had been cast adrift. The suggestion that the recession meant there needed to be a rush to raise funds for projects was a "red herring" as there was clear evidence that land was already being sold for more than the RIFW valuations at the time.

Responding for the Welsh Government, Communities & Tackling Poverty Minister, Lesley Griffiths (Lab, Wrexham) shared frustrations with AMs and the Committee (clip). RIFW was much needed in 2010, and funding regeneration through recyclable loans was worthwhile during a recession. She shared frustrations that projects weren't brought forward and apologised for that, reiterating the First Minister's apology too.

The delivery was flawed despite the good concept. The government outlined a range and measures to improve oversight of arms-length bodies, though the valuable work and contributions of independent experts on boards and working groups should be acknowledged. The fund was brought under direct ministerial control in 2013 and in January 2016 the Minister said the remaining funds from RIFW would be made available for regeneration projects.

Lesley confirmed that legal proceedings have started against Lambert Smith Hampton, and further legal steps are being kept under review. The Welsh Government accepted all the Committee's recommendations, and said the government will continue to learn lessons and improve policies.

Summing up, Darren Millar repeated that the scandal reflects on the Welsh Government and Assembly as a whole (clip). Due to the significant sums of money involved it was important to rebuild trust – though he appreciated the government's positive response to the recommendation and said their overall response was appropriate. Ministers should've been informed of significant decisions, particularly those involving public assets, and the fact there was no feedback on decisions being made on ministers behalf was "absolutely astonishing".

He shared the opinion that there should be sympathy with board members. He also said the overage clauses were inadequate. However, he spared his ire for the poor record keeping, saying that the fact diaries were deleted after 12 months, so nobody had any idea where key people where and at what meetings, was "appalling and disgusting".

The findings of this report had been echoed in many other PAC reports down the years - AWEMA, grants management and Betsi Cadwaladr board arrangements were mentioned. Something's wrong if lessons aren't learned and he hinted that some of these issues have appeared in their ongoing Life Science Fund inquiry.

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Dirty Deeds Done Dirt Cheap V : The Inquiry

(Pic : BBC Wales)

Yesterday, the Public Accounts Committee published their forensic report into the failed Regeneration Investment Fund for Wales (RIFW)....and it makes really, really grim reading for the Welsh Government (pdf).

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Dirty Deeds Done Dirt Cheap IV : Endgame?

After a wait of years, the Wales Audit Office has finally
delivered its verdict on the RIFW land sale scandal.
(Pic : BBC Wales)

It's been three years in the making, but at long last the Wales Audit Office have delivered their verdict on the Regeneration Investment Fund for Wales (RIFW) and the sale of land parcels to an offshore company, South Wales Land Developments (pdf).

It doesn't make good reading for the Welsh Government. At all.

It's so serious it warranted a special episode of Week In, Week Out : The Big Welsh Land Scandal? which will be broadcast tonight at 10:35 (iPlayer link).

A Brief Recap

The core issue is how or why RIFW sold widely-known lucrative development
land (like Lisvane, above) for significantly less than its proper value.
(Pic : Wales Online)

• Dirty deeds done dirt cheap (18.9.12)
• Digging deep into dirty deals done dirt cheap (11.2.13)
• Dirty deeds done dirt cheap – Round III (17.7.13)

RIFW was established as an arms-length public body by former Deputy First Minister, Ieuan Wyn Jones. Its primary goal was to sell Welsh Government-owned land to raise match funds for regeneration projects in the EU Objective One area (West Wales & The Valleys).

In 2012, RIFW sold a parcel of 15 pieces of land to South Wales Land Developments (SWLD), which was based in the tax haven of Guernsey. This includes land in Bridgend (Pyle and Brackla Industrial Estate), Lisvane in Cardiff (now being developed as Churchlands), Wrexham and Llandudno Junction.

Former police officer and Conservative AM for South Wales West - now MP for Gower - Byron Davies, referred the sale to the Wales Audit Office (WAO). It was understood the land was sold for a total of just £20.6million.

There's nothing controversial about that in itself; however, because the land was certain to be developed for housing – particularly the Cardiff plot – the actual value of the land would've risen considerably, meaning RIFW (effectively the Welsh Government) sold lucrative land for significantly less than it was worth. From the Cardiff land alone, at the time it was estimated the Welsh Government will have missed out on a potential ~£120million.

There were "claw back clauses" inserted into the deal to ensure that if the value of the land rose, the Welsh Government would get some extra money back, but the exact details were unclear. The implication was that the land was deliberately or accidentally undervalued, the sale was rushed unnecessarily or that someone passed insider information to SWLD.

The Welsh Government suspended RIFW projects in February 2013 (except one in Neath town centre) and ordered two internal investigations. The Wales Audit Office also referred the deal to the Serious Fraud Office (SFO).

The WAO Report Key Findings

1. The RIFW Concept

• The RIFW concept was "innovative", but the requirement to sell property distracted RIFW from its core purpose. There's no criticism of the concept, and WAO actually praise it – particularly providing regeneration funding in a period when accessing finance was difficult. Because there were (supposed) deadlines on the EU component of funding, the need to generate funding from land sales should've been acknowledged as a risk and perhaps distracted officials from the task of working on regeneration projects themselves.
• Progress was slower than expected. The Welsh Government underestimated how long it would take to establish the fund, many projects were not deemed "investment ready", and there were delays as officials worked with interested developers to develop more robust plans – compounded by the economic conditions at the time.

2. Welsh Government Oversight

• The Welsh Government failed to set out the oversight mechanisms for RIFW as an "arms-length body". RIFW was established as a limited liability partnership (LLP), wholly owned by the Welsh Government, with Welsh Ministers and officials as board members – having obtained legal advice to ensure it complied with EU law.
• Amber Infrastructure Limited and Lambert Smith Hampton acted as independent fund and investment managers respectively. But because RIFW didn't have a chief executive, it was unclear who was accountable as all executive functions were carried out by Amber. This is described as a "complicated contractual arrangement" which hampered oversight.
• RIFW would've appeared in the Welsh Government accounts and should've subsequently been subject to scrutiny from the Welsh Government's Corporate Governance Committees – but it never featured at committee meetings.
• It was unclear where legal responsibility stopped because RIFW crossed a boundary between the Welsh Government and an entirely private company – this should've been cleared up in unambiguous guidance which was never issued.
• The Welsh Government were represented at board meetings by an "observer", who expressed no concerns over the land sales. This involvement in itself would've compromised the "arms-length" nature of RIFW and could be interpreted as tacit Welsh Government approval of the sales.
• Further oversight was hindered by departmental reorganisations between 2011-2012 following the 2011 Assembly elections, where responsibility for regeneration shifted and officials who were familiar with RIFW's work were moved. Vital information wasn't transferred with them.
• RIFW's board was too small, meaning absences impacted performance and the large amount of work the board needed to get through placed burdens on all board members, many of whom were unpaid. An independent board member rarely participated due to a conflict of interest.
• These weaknesses aren't contained to RIFW, as the Welsh Government internal investigation findings (Lloyd report) are relevant to other "arms-length" bodies.
• Actions undertaken by the Welsh Government since the issue was raised (i.e. internal investigations and taking direct control of the fund) are described as "appropriate".

3. Value for Money

• 23 plots were drawn up to be transferred to RIFW in 2009, it was estimated their total value was between £29.8-£35.6million (the higher figure being optimistic/"hope value").
• The plots were transferred in 2010, however many of them were said to be unready for marketing and sale, plus information was inaccurate with "unresolved issues" at some sites.
• It's acknowledged that many of the sites had "long-term development potential" if included in Local Development Plans, so a quick sale would minimise returns. RIFW weren't advised to keep hold of high-value land (like Lisvane) and were pressured to sell quickly because of various deadlines (explained later).
• The Welsh Government published information that became known within the Welsh property industry (i.e. land values, cash requirements) and subsequently weakened their negotiating hand. This information was circulated to six unnamed property companies with interests in Wales, or clients with interests in Wales.
• There was no December 2015 deadline to sell the land to meet EU match-funding requirements. Some high-value assets could've been held back for the second phase of RIFW beyond 2015. RIFW only had to raise ~£6million to meet the requirement because it was established with £9.4million in cash and had to meet a match-funding target of £15.4million. They were also wrong to assume they needed to invest £55million in the first phase by 2015.
• The plan for a phased sales was abandoned when they received a written £23million offer from Guernsey-based GST Investments for all of the land. GST were operated by Barclays on behalf of Peter's Foods Sir Stanley Thomas, and were represented in negotiations by Langley Davies. Rightacres also submitted a bid of £17.7million.
• After torturous negotiations, the sale was agreed for £20.65million, which didn't reflect the market value. Only two voting board members were present at the meeting which accepted the deal. In 2012, the purchaser changed from GST Investments to newly-registered South Wales Land Developments, also in Guernsey - the sale value increasing to £21.75million. These changes weren't properly reported to the RIFW board.
• There was no independent valuation or open marketing as well as weak professional advice. Phased disposals (instead of selling the sites in one swoop) could've yielded at least an extra £9.2million (£30.9million in total based on District Valuer estimates).
• The sales agreement didn't allow RIFW to benefit from increases in value. Only sites in Lisvane and Monmouth had "claw back" clauses which entitled the Welsh Government to a share of future profits – potentially worth £20.7million at 2013 prices. It's unclear how much they could've clawed back from other sites which are now being developed, like Pyle and Brackla.
• The sale of public assets at significantly below market value could be interpreted as unlawful "state aid". The Welsh Government should discuss whether the EU Commission should be informed by the UK Government.

4. Conflicts of Interest

• Lambert Smith Hampton (Investment Manager) – After the sale in March 2012, LSH were appointed as managing agents for SWLD at some sites, including Brackla Industrial Estate (though that sale was conducted after they were appointed). There's no evidence of improper conduct, but there was a clear conflict of interest which breached their investment manager agreement.
• Jonathan Geen (Independent Board Member) – As a solicitor he had undertaken work for one of the potential purchasers. He immediately notified the board and left the meeting, though later got permission from the board to act for the purchaser. Again, there was no improper conduct and he took no part in any sales decisions. However, the WAO say it would've been more appropriate to turn down Mr Geen's request to act for a purchaser due to the board's small size.

What does this mean?

If any crime's been committed here it's criminal incompetence.
(Pic : Wales Online)

There were two main scenarios as to what this constitutes : fraud, or incompetence. According to the report, the SFO have decided it's not something which "falls within their remit for investigation" unless further information is brought to South Wales Police or the SFO themselves.

That leaves one other scenario, doesn't it?

I suspect it boils down to the misinterpretation of the December 2015 EU match-funding deadline – the deadline that never really existed in the WAO's verdict. That's presumably why quick sales were pushed so hard and why a sale of all of the sites in one package looked tempting.

RIFW was clearly a good idea which was rendered dysfunctional by its own governance arrangements. SWLD saw an open goal to make money and took it – you can't blame them either. From their end, apart from moral questions that surround being based in a tax haven, everything they've done sounds above board.

The WAO say the value of the Lisvane land, originally estimated by King Sturge, may not be as high as the often-quoted £120million figure because not all of the land can be developed – only about 58-63% can (a proportional £69.6-£75.6million).

The only hard figure of how much the Welsh Government "lost" is in the region of £9-15million (the difference between the sale price and the most optimistic actual values); but when you factor in all the parcels of land without "claw back" agreements, plus the potential value of the workable land in Lisvane alone, you're looking at something approaching £90-100million.

The National Assembly's Public Accounts Committee have also announced today they'll hold an inquiry into RIFW, so it's not quite over yet. The current Natural Resources Minister, Carl Sargeant (Lab, Alyn & Deeside), will be in the firing line as the last minister in charge of RIFW, but due to reshuffles he can argue this is something he inherited from others.

Politicians and civil servants are human and will err from time to time - sometimes at great cost. The price we pay for democracy is that the right person for the job won't necessarily be the one elected or appointed.

Is this the worst blunder involving public funds in the devolution era? It's got to be up there.

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Dirty deeds done dirt cheap - Round III

Did the "local property boys and girls" simply run rings around the agents?
Or is something fishy going on?
(Pic : BBC Wales)

I'm loath to end the Assembly year on a bad news story, but this constitutes a bubbling scandal that's worth following closely due to its potential impact.

It's escalated further, with BBC Wales reporting on Monday that the EU-backed Regeneration Investment Fund for Wales (RIFW) handling of a deal with South Wales Land Developments (SWLD) has been referred to the Serious Fraud Office (SFO) by the Wales Audit Office (WAO). That's a lot of acronyms. It hasn't been confirmed yet, but hasn't been denied either.

It's worth pointing out that, at this stage, it doesn't mean anything's wrong, just that the auditors must've had information significant enough to be sent to the highest fraud authority in EnglandandWales. Not looking good, is it?

A recap of the story so far

• Dirty deeds done dirt cheap? (18.9.12)
• Digging deep into deals done dirt cheap (11.2.13)

• A parcel of WDA-owned land was sold by RIFW to Guernsey-based South Wales Land Developments for £20.6million in March 2012.
• The value of some of that land – especially around Cardiff – will have sky-rocketed due to (at the time undisclosed) housing development plans. It's estimated from under £2million to £120million in Cardiff alone.
• This was an obvious business opportunity. The parcel should've have loads of interested parties, but it seemed RIFW, or their agents, approached developers directly rather than selling the land on the open market, which is odd in itself.
• Byron Davies AM (Con, South Wales West) referred the deal to the Wales Audit Office in September 2012 after the deal raised his suspicions.
• The Wales Audit Office widened the scope of their inquiry after a preliminary investigation in late 2012.
• In February 2013, the then Deputy Minister for Social Justice and Regeneration, Huw Lewis (Lab, Merthyr Tydfil & Rhymney), suspended RIFW projects (except Neath town centre) and launched a double internal Welsh Government investigation into both RIFW itself, and the deal.
• On Monday, after the best part of a year, the WAO (apparently) referred the deal to the Serious Fraud Office. The Welsh Government are yet to comment, and Carl Sargeant (Lab, Alyn & Deeside) became the minister in charge in March.

Update 19/07/2013 : Carl Sargeant released a written statement on the 17th July, which was linked to by an anonymous contributor further down. You can read it here.

The statement is pretty much what you would've expected. He confirms that the double Welsh Government investigation into RIFW ordered by Huw Lewis is still ongoing, but says that no further details will be released until after he's discussed it with the agents (Amber) and the RIFW board. There's no mention of Lambert Smith Hampton.

He also confirms that RIFW will remain suspended (but he doesn't mention the Neath town project, which is still going ahead AFAIK), and hints that it's likely that RIFW will be wound up, subject to alternative arrangements being found. Understandable, but a bit "deckchairs and Titanic". He says all this will be completed "by the end of August", and of course I'll come back to it.

Needless to say, the fact that this was a written statement, released on the last day of the Assembly term, denying AMs the opportunity to question the minister on this until September, hasn't gone down well. Byron Davies AM raised a point of order during the last Assembly debate on the 17th, and Deputy Llywydd David Melding (Con, South Wales Central) gave Carl Sargeant, and other ministers, a sedate ticking off for constantly pulling stunts like this.

They're getting twitchy about it, and so they should be.
The key issues

The land valuation process – It's been hinted that the land was sold at a 2009 value, rather than its value at the point of sale in 2012. That could be because the agents thought it would be hard to shift – which would make them pretty silly in the case of the Cardiff land. Was it under-valued deliberately?

Cardiff's LDP – The BBC report says the Cardiff land alone was sold to SWLD at an "agricultural rate" of ~£15,000 per acre. This is land that anyone with even a casual interest in planning/development would've known was being eyed up for housing, despite no formal plans being put forward. So it had huge potential value, yet was sold for practically peanuts. A few months after the sale, Cardiff Council revealed that it was going to be used for housing, and SWLD – who were directly courted by the agents - were sitting on a goldmine. That hints at either inside knowledge (fraud?), a stitch up, or incompetence by RIFW.

The claw back agreements – The Welsh Government had, sensibly, included clauses where they would benefit from land value rises after sale. However, as Nick Servini says, it appears some plots didn't have these agreements, whilst the claw back agreements might've been set too low. In the case of the Cardiff land alone, it could cost the Welsh Government tens of millions of pounds.

South Wales Land Developments Ltd – Who are they? What are they up to? Why Guernsey? All valid questions with no answers at the moment. On the surface, it looks like they're a legitimate property company and are currently seeking outline planning permission for housing developments on the land they bought – including Pyle and Brackla in Bridgend county. Getting planning permission raises the value of the land when selling to potential developers – a "land bank". The Brackla application agent is RIFW's Investment Manager – Lambert Smith Hampton – the other applications have been dealt by other agencies.

What the Welsh Government knew – Technically, RIFW is "arms length" of the Welsh Government, but ultimately under its control. The fund was managed on the ground by various managers/boards etc. But how much of a leash did the Welsh Government have? Were they monitoring it properly? What are the backgrounds of the people on the management board? Did they have any interests themselves?

Why might've this been referred to the SFO?

How about "Economically Responsible?"

The overriding issue as I understand it is that if RIFW had kept hold of the land until  Cardiff Council revealed their draft LDP, they could've sold the Cardiff land - alone - for something approaching £120million, and doing so directly to the flock of housing developers who would've come knocking on their door.

They sold it instead, along with loads of other bits of land, for £20.6million to a mysterious offshore company. To add insult to injury, the Welsh Government might've had embarrassingly-low claw back clauses, and might've lost out on significant sums of money.

And it all might've been done deliberately and with prior knowledge.

We (or rather, the Welsh Government on our behalf) are the ones who could've been defrauded – by potentially tens of millions - sums literally 500,000 (perhaps upwards of a million) times greater than the average night in a Cardiff hotel.

That money could've been match-funded for significant regeneration projects in our Objective One towns and cities during sluggish economic conditions. Instead, at the moment it looks like it's heading for an offshore bank account.

That's why this is serious, and why heads should roll. This is not only potentially corrupt, but possibly an example of gross incompetence by the Welsh Government, or more likely people working on their behalf.
It's unclear at the moment precisely why this has been referred to the SFO. But I suspect - as I said in my second post on this - that it's because of a "failure to disclose information".

That information being something like prior knowledge of Cardiff's (or others) Local Development Plan – and subsequently, the fact that this "cheap" RIFW land was going to be worth a fortune. Or, it could be a business relationship/interest between parties that wasn't disclosed when it should've been. Both might count as fraud, and there are other possibilities too.

I said this had the potential to be one of the biggest scandals of the devolution era, and I doubt I'll be far off. If the SFO are getting involved, this could be heading towards a criminal investigation. It's unclear how far up this is going to go, or where.

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Digging deep into deals done dirt cheap

A brief recap

Back in March 2012, the Regeneration Investment Fund for Wales (RIFW) – an "arms-length" Welsh Government body - sold a bundle of 18 plots of publicly-owned land across Wales to a Guernsey-based company called South Wales Land Developments (SWLD) for £20.6million. RIFW's aim is to raise money through land sales to match fund/loan to companies working on urban regeneration projects in West Wales & The Valleys.

One of those parcels of land, in the Lisvane area of Cardiff, was earmarked – something of an open secret - by the incoming Labour Cardiff Council administration for housing as part of their changed Local Development Plan.

If you had the money, and were involved in property development, you would've had to have been brain dead not to show interest. It appears as though potential buyers - including SWLD - were "canvassed" directly rather than the sites going out on open sale, which is rather strange. In short, it wasn't a completely open tendering process.

As everyone knows, land values are based on a number of factors including planning consent or strategic land use plans. In this case, the value of the Cardiff land sold to SWLD will have risen from just under £2million to ~£120million because of Cardiff Council's outline proposals for housing.

Former police officer Byron Davies AM (Con, South Wales West) noticed that this was "odd" and referred the matter to the Wales Audit Office for investigation last September. Things began to steamroll, and eventually the WAO expanded the scope of the investigation.

Nearly five months on, Minister for Housing, Regeneration and Heritage, Huw Lewis (Lab, Merthyr Tydfil & Rhymney) ordered a double internal investigation into both the handling of the sales and how RIFW operates. Eight RIFW projects (except one in Neath town centre) have now been suspended.

Who's diddled who?

"Claw back clauses" were inserted into the deal to ensure that if land values rose, some money could be claimed back by the Welsh Government (or "taxpayers" i.e you and me). That's perfectly sensible.

However, as BBC Wales' Nick Servini pointed out, we don't know much about these claw back arrangements, which parcels of land they apply to, or how much the Welsh Government could expect to make back.

There's the possibility that, from the Lisvane land alone, if there wasn't some significant claw back agreement then RIFW (and by extension, the rest of us) could've missed out on up to £100million, possibly on purpose due to the "closed" tender.

An anonymous commentator on my last visit to this linked to a European Investment Bank presentation on RIFW. Some of RIFW's goals (slides 13-14) included :

• A seemingly immediate need to "meet cash flow requirements for (their) investment profile".
• Targeting up to "£55million of private sector investment in 2011/12".
• "Securing planning consents to add value to (RIFW's assets)".

Securing planning consents? How about insecure ones like several thousand houses on the outskirts of Cardiff? That would certainly "add value to assets" - whether houses actually get built or not.

We all know how finicky the EU are about tendering processes. This might come close to falling under the definitions of some sort of fraud – perhaps "failure to disclose information when required to". That's before mentioning all the other unanswered questions about SWLD, RIFW projects themselves (or lack of) and the fund managers' handling of this.

As the anonymous commentator also pointed out, there didn't seem to be any requirement to get the best possible price. That's probably so regeneration projects can get started immediately – even if RIFW weren't doing very much at the time. I'm not business-minded, but although that might make political sense, it doesn't make much business sense.

They also claimed that the land was marketed at a 2009 valuation, not a March 2012 (point of sale) valuation - which is more than a little "odd".

If you have an asset - unless you don't have the option of negotiation (i.e liquidation) or you want a quick sale - you sell it for the best price you can get. And sometimes to get the best price you need as many people bidding as possible. Neither of those things appears to have happened - and this is, essentially, many millions of pounds of public money at stake.

Even if SWLD were in negotiations for up to a year before the sale, it would've been blindingly obvious to anyone with half a brain that ANY open land around Cardiff was going to be worth a fortune because of housing requirements. So why were RIFW so keen to sell it for such a "low" price, bundled in with so many other pieces of land (some of which equally valuable), to a company based in a tax haven, that was set up rather quickly and quietly, with more than a few "local connections"?

Land bank, anyone?

Even if they're not directly responsible for RIFW, the Welsh Government are certainly accountable. These "internal reviews" tend to mean answers are slow to come by. There's plenty of questions to answer for all involved. Especially :

• Who valued the sites?
• What were those valuations based on?
• How was the land marketed?
• Why the urgency to generate cash flows despite RIFW being practically dormant?
• The details of alternative tenders.
• What prior knowledge did anyone involved have about things like Cardiff's LDP?

Both Inside Out and Glyn Beddau have pointed out other possible talking points – too many to go into here. These things usually turn out to be less suspicious than first presumed, but I think this one's smelling rather ripe.

This could've been the case of rushed, lazy sale that's potentially lost millions of pounds in match funds for regeneration (gross incompetence). Or, it could've been a knowingly bad sale to benefit "someone" ("market abuse"/insider dealing, possibly fraud). It could even be a combination of the two – which could potentially make it one of the worst scandals of the devolution era.

Beth yw "cute hoor" yn Gymraeg?

Ha! Ha! Ha! Ha! Ha! Oh, please! Make it stop!
(Pic : BBC Wales)

There've been other questionable, but unrelated, planning and development proposals in Wales over the last few years too. More recently - in Gwynedd - the sale of a failed arts centre to private owners. That's also been referred to the auditors.

But in the Powys, Neath Port Talbot and Bridgend area, you can point to developments involving open cast mines. They were actually quite "impressive" proposals. Impressive in a "yeah, right" way.

One involved a "resort" in the Amman Valley. The second involved building some sort of Smurf village/Teletubbyland in a big hole on the outskirts of Kenfig Hill on the Bridgend-NPT border.

Gwenda Thomas AM (Lab, Neath) asked for the Amman scheme to be called in because of the scale/impact. Bethan Jenkins AM (Plaid, South Wales West) has often warned that these schemes are a "front" to smooth through extensions to mining licences - which are due to run out over the next few years. AMs have campaigned for more robust exclusion zones around open cast sites since the Assembly was founded. So the mines have a PR problem then.

Local councillors' responses were mixed. Some (understandably, but somewhat hastily) welcomed the prospect of jobs and investment, while others shared similar concerns to the AMs.

When the Kenfig/Margam scheme was revealed, first of all I had to check the date. Second, when I tried to blog on it I couldn't write as it was so funny. The thought of council cabinet members smiling, wearing Bob the Builder hard hats, as they looked over these plans was too much. It may as well have been a base on the Moon.

I wouldn't object to spending quality time with Christina Hendricks and Salma Hayek on a sweltering tropical paradise island. So sweltering, that it would mean they walk around in tight, but revealing clothing, while I occasionally get diverted with fruit, monkey butlers and grilled seafood.

Someone could offer me that, and bring me some flattering artist's impressions of what such a glorious undertaking would look like. But in order to obtain that dream, I would have to wash jock straps by hand at their Central Asian salt mine for 30 years. Also, they can't guarantee the desired outcome – more a loose promise/I.O.U.

"But look at the artist's impressions!" they'll say. "Look what you could have! Just sign here!" If you were a dopey guy easily mesmerised, you might ignore the fact that by the time you're free, Christina and Salma will have free bus passes.

A similar thing almost happened with these open cast mine projects, which would've prevented them being returned to their natural state. That's not so funny.

It's lucky some people still have their heads screwed on, because several people leading these open cast schemes, also involved in the sale of them – involving offshore-registered companies - were recently put on trial for conspiracy to defraud.

Hmm. Sounds familiar.

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Dirty deeds done dirt cheap?

A number of land sales by an arms-length Welsh
Government body have raised concerns about transparency.
Is this an innocent business deal?  Or something sneakier?
(Pic : BBC Wales)

The backstory

The Regeneration Investment Fund for Wales (RIFW) was set up by previous Economy Minister, Ieuan Wyn Jones (Plaid, Ynys Mon). Its goal is to market and sell Welsh Government owned property to match European Union funds used for regeneration projects in the Objective One area. It's an "arms-length" public body, but is ultimately responsible to the Welsh Government. To date it hasn't done very much.

16 parcels of land across Wales were sold recently by RIFW - total value of approximately £20.6million. The parcels include land in Wrexham, Llandudno Junction, Pyle in Bridgend and land around Cardiff.

Byron Davies AM (Con, South Wales West) referred the sales to the Wales Audit Office a few weeks ago. More on this at Inside Out,  Daily Post, and BBC Wales.

So RIFW is doing its job?

By the look of things, yes. Land has been sold, and presumably the money will be used in regeneration projects in the future, though as I said RIFW don't appear to have done much with it so far.

The controversy surrounds land price speculation, lack of transparency and tax avoidance. Byron Davies is an ex-detective, and might've picked up the scent of something more serious too.

What's Cardiff's LDP got to do with it?

Before May's local elections, the ruling Lib Dem-Plaid Cardiff Council coalition ruled out developing "greenfield land" for housing - instead wanting to build all houses on urban "brownfield" land. This got them into trouble with the Welsh Government, as population projections showed that there was a need for signifcant housing development in Cardiff. The council were told to rip up their Local Development Plan (LDP) and start again.

The incoming Labour administration didn't mention plans to build on greenfield sites in their local election manifesto. That's probably sensible - they wanted to wait and see. However, Labour vehemently denied they had any plans to "concrete over greenfields" and accused those who suggested such of lying.

Within months of winning back control of Cardiff Council, the Labour administration leaked plans (Carwynisation of Cardiff's LDP) for concreting over greenfields 40,000+ new homes in the pre-proposals for the new LDP.

As you might expect, the value of the land set aside for these housing developments will have risen dramatically. Those who bought the land will be sitting on a nice little earner once the developers come knocking.

One of those lucky buyers was South Wales Land Developments (SWLD) - who were sold land in the Lisvane area by RIFW (as well as all the other parcels mentioned above) before Cardiff Council's "leak". The value of land sold to SWLD in Cardiff alone will have risen from (using quoted figures from the BBC) £1.8million to around £120million.

To avoid accusations of hyprocrisy, I've said on several occasions that opening up some greenfield land for housing in and around Cardiff is the right thing to do – I still think it is - but not under questionable circumstances like this.

Why is this "dodgy"?

SWLD (despite the name) are based in Guernsey, which has low business taxes. In these times of austerity, you have to question why a Welsh Government body will have sold land to them knowing how it would look.

There might be a reason.

The only information that has come out of SWLD so far has been from a former director and company secretary of Cardiff Hub Ltd – Langley Davies – who's involved in other property-related businesses too. That's not to single him out. Considering the company name, I imagine many of the other people involved will have similar business interests. However, there are scant details on SWLD, who appear to have been set up suspiciously quickly and quietly.

Cardiff Hub have/had ambitious plans for a business park and transport interchange in the St Mellons area. At the time, the plans were trumpeted by the Welsh Government and Cardiff councillors, including Lib Dem ward members and current Cardiff Council cabinet member for planning and transport, Ralph Cook.

It's not a big stretch of the imagination that a notional £100million+ could go some way towards funding Cardiff Hub or different projects.

It suggests someone - whether in local government, Welsh Government or RFIW's fund managers - might've "tipped off" SWLD - and SWLD alone - about the land and Cardiff's LDP revisions.

That might qualify as a form of market abuse ("insider dealing"). In extreme cases, it's punishable by up to seven years in prison or an unlimited fine. It might not be illegal when it comes to land sales as far as I know, but it certainly stinks, as land should be sold on the open-market to developers directly.

You also have to question why so many parcels of land were bundled into one deal with one company.

Overvalued land:

• Could lead to more houses being built than expected
• Could create an "asset bubble" where house prices are set artificially higher to recoup building costs
• Could result in communities being planned "on the cheap" with a lack of proper facilities (i.e green space)
• Impacts a developer's ability to deliver things like affordable housing

What happens next?

The Wales Audit Office will probe what Byron Davies has brought to them and issue their own assessment.

The most likely proposition is that this was a poor (or knowingly poor) sale by RIFW. SWLD could be acting as a legitimate "land bank" and couldn't believe their luck when they saw the parcels on sale for a low price, knowing "instinctively" that Cardiff Council would need the land for housing as soon as they changed the LDP. That still doesn't explain how only SWLD seemed to be interested in such an obvious opportunity.

My hunch is that the Welsh Government are in the clear. There's claw back arrangements should land values rise. But the heart of the matter is that RIFW/Welsh Government (and by extension, the Welsh public) may well have been diddled out of a potential £100million windfall deliberately.

When you look at it like that, you have to wonder why the Welsh Government have been so coy? Is it embarrassment at having "overseen" a really bad deal? That's my guess. Or is it plausible deniability?

Here's a more outlandish tin-foil-hat suggestion. The Welsh Government - in cahoots with someone with a keen interest in RIFW funds, or a friendly Labour-run Cardiff Council - saw an opportunity to raise money for RIFW projects in Wales – Swansea for instance - while at the same time helping a private company raise funds to invest in Cardiff or elsewhere (because some EU funds can't be used outside the Objective One area).

That's still sleazy, but admittedly it's clever too. There's plenty of opportunities there for Welsh Government ministers and council cabinet members to be photographed in hard hats "saving the economy", plenty of new houses would be built in Cardiff and they can pat the backs of company directors "investing in Wales". Just don't mention the tax-dodging. Perhaps I'm giving them too much credit and going down the route of Machiavellian conjecture there.

Whichever way, someone should be in hot water, and my guess is it's someone at the local government end – whether that's Cardiff or somewhere else.

I wonder who they could be?

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