The STEPS (strategic transfer of the estate to the private sector) PFI deal saw £220m worth of Revenue property being sold to Bermuda-registered Mapeley Steps.
Just seven months after the the 20 year deal was signed, the Revenue had to bail the company out financially.
‘We were equally disturbed to learn that only seven months after a twenty year contract was signed the Departments were asked by Mapeley for a substantial cash settlement to alleviate its cash flow problems,’ said Michael Fallon MP, chairman of the Treasury Sub-Committee which undertook the inquiry, in his report.
‘This must cast doubts on the robustness of Mapeley’s bid and the standard of due diligence work undertaken by the Departments and their advisers before the contracts were signed.’
The report goes on to say that aspects of the deal were ‘serious failures’.
Fallon added: ‘We believe these to have been serious lapses, well below the standards expected, by all the officials concerned.
‘We reject the proposition put forward by the chairman of the Inland Revenue that at worst the charge against the project team is one of naivety, a view we believe is complacent.’
The Committee now expects the National Audit Office to take the matter further and examine the aspects as part of its PFI value-for-money study.
‘We consider these to be serious lapses in the standards required from officials and we expect the Departments to have identified exactly where and how things went so seriously wrong,’ said Fallon. ‘We expect them also to have taken all necessary steps to prevent a recurrence.’
The Revenue was unable to comment at the time AccountancyAge.com went to press saying it needed time to go through the report before responding.
A spokesman for the Inland Revenue said that the report revealed nothing new, and that Sir Nick ‘is not going to resign’.
‘The project was about value for money,’ he said. ‘Mistakes were made and we have apologised for that.’
When asked how it could sign off a contract with a company that was seemingly financially insecure, he said: ‘These things sometimes emerge in the early stages of contracts.’
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