Auditor General probes £20m South Wales Land Developments deal
Spending watchdog the Wales Audit Office is investigating the sale of public land worth more than £20m to a firm in the tax haven of Guernsey.
Land near Cardiff was sold weeks before a council report on potential housing sites which could boost its value.
In all 16 parcels of land were bought for around £21m by South Wales Land Developments Ltd in March.
The Welsh government said the sale included 'claw back' arrangements in case the land rose in value.
The claw back contracts mean that the taxpayer will share in any large increase in the price of the land due to planning decisions.
The Welsh government is refusing to say what those claw backs are. However industry sources say with deals like this it is not normally higher than 50%.
The parcels of land had been transferred from the Welsh government to a public body called the Regeneration Investment Fund for Wales in 2010.
The intention from the start was for the investment fund to sell the sites to raise cash for urban regeneration schemes. The fund operates at arms length but is ultimately controlled by the Welsh government.
Conservative AM Byron Davies - who referred the matter to the Wales Audit Office - says he believes the sale process could have been more transparent, and also that significant public assets should not have been sold to a business registered in a tax haven.
He says he is particularly concerned about the lack of transparency in the process as the parcels of land were bundled up and sold off together in one deal. He says he's also concerned that there was no open tendering process.
"I'd like to have seen a far more transparent open auction of the properties," said Mr Davies.
"Bearing in mind people have been after this land for a long time and all of a sudden we find it's only open to certain people.
"I would have liked to have seen an open market and getting the best value for money."
Little is known about South Wales Land Developments Ltd, the company which has acquired the land.
The land, which was sold to raise money for the Regeneration Investment Fund, varies in size and value from a former industrial site in the Cynon Valley to offices in a business park in Newport to farmland in Gwynedd.
It has been in public ownership for many years, having been bought by the Land Authority for Wales and the Welsh Development Agency before coming under the control of the Welsh government.
The value of some of the sites could rise dramatically as a result of planning approval for new homes, leading to concerns that more money could have been generated for the taxpayer.
One of the areas of land was a cluster of farms covering 120 acres near Lisvane on the northern edge of Cardiff. Part of it was bought by the South Wales Land Authority 27 years ago.
It was sold four months before the new Labour-run administration at Cardiff council published its planning blueprint for the next 14 years.
Although it is at an early stage in the planning process, the preferred strategy from the council has paved the way for the farms to become part of a wider stretch of land that could be developed for 6,000 new homes.
It means that the farmland could jump from around its current value of £15,000 an acre to about £1m an acre, making it some of the most valuable in Wales.
Another parcel of land where 400 homes could be built, off Wonastow Road on the outskirts of Monmouth, is on the verge of being adopted by the local council in its planning blueprint, which could see the site rise in value.
In another example, a farm in Pyle near Bridgend, was sold to South Wales Land Developments as part of the portfolio. It was valued at £100,000. There are now plans to seek planning permission for around 100 new homes on the site.
Mr Davies says the Welsh government should have held on to these sites for a few years longer until planning permission had been secured and then they could have been sold directly to the house builders.
In this way he says the taxpayer would have benefited entirely from the increase in the value of the sites, instead of having to share the benefits with developers.
A spokesman for the Wales Audit Office said: "The matter raised with us by Byron Davies AM concerning aspects of the transfer of publicly owned land from the Welsh government to the Regeneration Investment Fund for Wales and its subsequent sale is currently being investigated by the Auditor General as part of his ongoing audit of the Welsh government.
"We anticipate that a response will be issued once we have concluded our audit work later in the autumn."
A spokesman for Welsh government said: "The Regeneration Investment Fund for Wales is independent of the Welsh government, and commercial decisions are taken by the investment managers - Amber Infrastructure and Lambert Smith Hampton.
"The sale of the portfolio of land to South Wales Developments Ltd was in excess of the independent market valuation.
"Due to the mixed nature of the land, a portfolio sale was evaluated to provide the best return to the fund, rather than allowing potential developers to cherry pick the best sites.
"Twelve potential developers and six commercial agents were approached by RIFW Investment Managers to secure the best return on the sale.
"Decisions taken by RIFW are regulated by the FSA, and are based on sound commercial principles to ensure the best return to the Welsh taxpayer.
"The disposal of this land to the private sector provides a significant initial return to the fund for future investment opportunities, and enables the development of largely underused land which will bring economic and employment benefits to Wales.
'Significant claw back'
"The terms reflected the current planning status of the land, and included 'claw back' arrangements should there be a significant increase in the value of the land sold."
Langley Davies, who is managing the property portfolio on behalf of South Wales Land Developments Ltd, said there is significant claw back but he would not say how much or which sites they apply to.
In reference to the timing of the sale of the Lisvane land, he said that talks had begun around a year before the sale was completed and at that stage the intentions of the council about future building projects was unclear.
Langley Davies added: "This is a long term project and ought to bring much needed commercial activity within the property sector in Wales.
"A number of these sites have been owned for many years by the Welsh government (or prior by the Land Authority) and there has been little activity to date in terms of the sites being utilised to create employment and commerce.
"For this reason, I view the recent purchase by South Wales Land Developments Limited as a positive for business in Wales as the company appears committed to the regeneration of some of the assets within the portfolio and bringing other currently redundant assets into the development process.
"To this end, South Wales Land Developments Limited has already embarked upon spending in excess of £1.5m across the portfolio, all of which is being expended within the Welsh economy."