Mr. Pat Colgan:

During the EU Structural Funds period 2000 to 2006, the SEUPB acted as managing authority and paying authority for the INTERREG IIIA programme and the PEACE II programme. A total of 420 projects were funded under the INTERREG programme and 7,500 under the PEACE programme. The joint value of both programmes was in excess of €1 billion. The Bytel project was a cross-Border broadband development initiative funded under the INTERREG programme.

The arrangements for the implementation of programmes during the EU funding period 2000 to 2006 relied on the use of implementing agents. There were 56 implementing agents for the PEACE programme and 25 for the INTERREG programme. Implementing agents acted under a service level agreement, SLA, with the SEUPB. Under the terms of this agreement, the implementing agents were responsible for the management of a part of the programme and for the provision of funding to eligible projects. Responsibility for the Bytel project came under the control of two government departments - one in Belfast, the Department of Enterprise, Trade and Investment, and one in Dublin, the Department of Communications, Energy and Natural Resources. Responsibility for the assessment, approval, monitoring and funding of this project came under their responsibility. The implementing agents were also required to inform the SEUPB of any changes in the nature of the project and to report any irregularities.

In May 2010, as the formal process of programme closure was drawing to a conclusion, the SEUPB was made aware by DETI of a potential irregularity with the Bytel project. No details of this irregularity were provided at the time. The SEUPB signalled this potential irregularity to the European Commission as part of the closure process, indicating that further details would be provided when they became available to the SEUPB.

In February 2011, the SEUPB was made aware of the extent of the irregularity involved with the Bytel project. On foot of the information that became evident at that time, the SEUPB initiated a full review of the project. This review was concluded in March 2012. It was evident from the conclusions of the review that the Bytel project was not eligible for funding under the INTERREG programme. The SEUPB informed the relevant accounting officers in the government departments concerned that it intended to withdraw the project from the programme and from the final claim for drawdown of funding from the European Commission. The European Commission was informed accordingly.

The withdrawal of the project from the programme resulted in a loss to the Irish Exchequer and the Northern Ireland Executive of €4.3 million. The SEUPB has co-operated fully with the Comptroller and Auditor General in Ireland and the Northern Ireland Audit Office in the review of this project. The reports represent a fair summary of the facts associated with this project. The SEUPB is happy to answer any queries the committee may have and to provide any additional explanations of clarifications that may be required.