THE British Government has been unable to recover any portion of a £10 million sterling grant it paid towards developing the prestigious Castle Court shopping centre in Belfast.

The Government's investment will now have to be written off completely, according to the Northern Ireland Audit Office which investigated the matter. It lays the blame squarely on the Department of the Environment for Northern Ireland (DoE).

The DoE made an agreement with the developer, Laing, which meant that, after two years, Laing did not have to pay any of the monies back. The formula for clawing back the grant aid is complex, but depending on when the centre was sold, the DoE could have recovered between £400,000 and £1.5 million of its £10 million grant.

Built in 1990, the Castle Court complex comprises 25,400 sq m of retail space and 21,000 sq m of office space and parking for 1,600 cars and is one of the largest developments of its kind in the UK.

The development was sold in 1994 in a deal estimated to be worth at least £80.5 million.

Initial drafts of the DoE's agreement with Laing included provision for clawback for a full five year period, but the final version effectively reduced this to two years, according to the Audit Office.

The Office said it noted that the DoE files contained no explanation as to why this line was pursued, despite the serious misgivings expressed by the consultants who were retained to advise on the clawback arrangements.

The DoE is due to be questioned by the Parliamentary Select Committee on Public Accounts on February 28th. A DoE spokesman said "The Department will be differing in several respects."