IDB chairman Dr Alan Gillespie has admitted that the agency's strategy during the early 1990s, when it spent millions of pounds of taxpayers' money in a bid to attract inward investment, was flawed.

Dr Gillespie's comments followed the publication of the Department of Finance and Personnel's memorandum of reply to last month's scathing report from the Public Accounts Committee on the agency's performance between 1988 and 1997. The report said the IDB had to do more to ensure taxpayers would get value for money from the large sums it spends funding new investment projects.

The PAC report was compiled after hearing evidence from IDB chief executive Mr Bruce Robinson. Mr Robinson was called to Westminster to respond to a Northern Ireland Audit Office report of two years ago which found shortcomings in the agency's procedures.

It criticised the agency, which has an annual budget of more than £150 million sterling, for failing to meet stated job creation targets. It also highlighted the need for more accountability, improved targeting of investment to areas of greatest need, stricter adherence to investment criteria, and the introduction of performance indicators for its overseas offices.

"A number of weaknesses in procedures, which IDB accepts existed in this period, were subsequently identified and rectified," Dr Gillespie said. He said that the IDB board regretted that some decisions were "not the best".

"The IDB fully appreciates the responsibilities it carries on behalf of the taxpayer," he said, "in respect of the sums of public money it administers."

But while admitting that there had been deficiencies in some of the agency's procedures in the past, he said that they had now been addressed. He said the PAC criticisms were "very specific", and on those issues where the agency had been found wanting, it had already acted to improve its performance. One of the biggest criticisms was that the IDB spent millions of pounds with the promise of thousands of jobs, but created only a handful of them. In a sample of 37 projects surveyed up to March 1997, the companies had promised to create almost 4,000 jobs in return for IDB grant aid. The number which actually materialised was 646 - just 17 per cent of the promised number.

The Department of Finance and Personnel said that the IDB now accepted it had to improve its procedures for assessing projects, but that improvements were made during the last four years which they were confident would lead to greater sustainability.

But Sinn Fein vice-president and Northern Ireland Assembly member Mr Pat Doherty, who chairs the Assembly's enterprise, trade and investment committee, said that a major overhaul of the agency was required to ensure wiser spending of taxpayers' money.

"The past has shown us that the board doesn't respond positively to criticism," Mr Doherty said. "We need to see results on the ground now."