An internal audit of a proposal by Shannon Development to sell a factory and 47-acre industrial site in Co Clare was dropped following concerns of a legal challenge to the audit, the Dáil Public Accounts Committee was told yesterday.
The audit was commissioned by the board of Shannon Development into its own property department after the regional development agency had uncovered difficulties in relation to the sale of a different site on the Ennis Road, Limerick.
In a value-for-money report last August, Comptroller and Auditor General John Purcell criticised Shannon Development's handling of both property deals.
He said errors in transferring the Ennis Road property, from the IDA to Shannon Development, had resulted in Shannon Development controlling only half of the six-acre site, which it later sold.
When the error was discovered and the transfer of the second three acres was completed, the site had become land-locked. It was subsequently offered to a neighbouring landowner in 1998 for €254,000, being the amount suggested by an independent valuer.
However, Mr Purcell discovered this valuer had significantly underestimated the value of Shannon Development land in the past.
In addition the valuer had been contracted to provide the valuation "informally" via a telephone call from Shannon Development's property department.
The site was offered to the neighbouring landowner without seeking bids from others who had expressed an interest in the land.
In the second case Mr Purcell said Shannon Development took preliminary steps to sell a factory and 47 acres at Gilloge.
The factory and 47 acres were part of a 116-acre holding, acquired in 1994 by Forfás for €6.35 million (£5 million). But Mr Purcell found that 10 years later Shannon Development had proposed selling the 47 acres and the factory for about €3 million.
Shannon Development then offered the entire lot for sale for €3.3 million.
Mr Purcell expressed amazement that land might be sold for about half the original purchase price, after 10 years. He said: "I would like to bet on getting more than that on the market."
Ultimately, Shannon Development withdrew from that sale.