Spending watchdog criticises Welsh Government over handling of failed maritime centre project

Wales auditor-general Adrian Crompton’s report said: “Clear warning signs and opportunities to prevent or reduce the likely loss to the public purse were missed.”

The Welsh Government is unlikely to recover any money lost, it concluded.

In 2016-17, the Welsh Government approved £2.7m of potential funding towards the project, which was intended to be a tourist attraction.

It was led by a charity named Credu, which worked closely with Bridgend County Borough Council. The auditor did not examine the council’s role.

Mr Crompton said initial audit findings about the project and Credu’s involvement were referred to South Wales Police.

This investigation ended in late 2024, with no charges, allowing auditors to conclude their work.

In November 2020 Credu went into voluntary liquidation and the Maritime Centre was not constructed, but by that time the Welsh Government had paid £1.6m to Credu and said it intended to recover all related grant payments “amid concerns about rising project costs and progress with the project and its wider financing”.

Mr Crompton’s report said: "In our view, the Welsh Government did not put proper arrangements in place to manage the risks associated with the Maritime Centre.

“If it had, it might have decided not to fund the project or, once funded, it would have identified that the project was failing far sooner. The liquidation of Credu is ongoing, but it looks unlikely that the Welsh Government will recover any of its claim.”

The auditor said there had been a lack of clarity over roles and responsibilities between the Welsh European Funding Office and Visit Wales – even though both were part of the Welsh Government - and this “contributed to ineffective monitoring and oversight”.

Auditors found this mixed model of management responsibilities “led to a failure to implement an effective control environment [and] certain key checks were not undertaken properly”.

Credu received payments for some expenditure that did not appear to relate to the Maritime Centre.

This led auditors to have “significant doubt whether certain items within the £121,000 in ‘other costs’ that Credu claimed reimbursement for related specifically to the development and construction of the Maritime Centre”.

Visit Wales officials admitted with hindsight they too had doubts about whether some items were eligible items for reimbursement, including day-to-day expenditure related to Credu’s marine education services, fees for preparation of annual financial statements and rent and rates for a kiosk.

Due diligence was insufficiently rigorous and there were weak controls around the processing of expenditure claims.

Mr Crompton said: “All grant funded projects involve an element of risk. But this is not the first time I, or my predecessors, have reported on weaknesses in the Welsh Government’s management of its support to charities or private companies. While time has passed since the events described in this report, there were basic failings in this case and the lessons from it remain relevant today.”

A Welsh Government statement said: “Though the ultimate reasons for the Maritime Centre’s failure were complicated and outside the scope of this report, we accept the conclusion from Audit Wales. 

“Since the shortcomings in this case, some of which date back to 2016, we have introduced several wider changes to strengthen grant management.”

These changes have included additional checks on funding pre-conditions prior to payment, further monitoring aimed at identifying any potential risks earlier and strengthened expenditure controls.

Two new bodies have been established. The Grants Assurance Panel provides advice, challenge and assurance for new grant schemes, while the Central Due Diligence team carries out financial health checks on grant recipients. 

Mark Smulian