Jersey's Attorney General has confirmed that an investigation has been launched into some of the loans made by the ill-fated Innovation Fund.
So far it's not clear exactly which loans are to come under scrutiny, or in what way - but in her recent damning report into the Fund's activities, the States' spending watchdog Karen McConnell did warn that about the "conduct of third parties."
She has now referred those concerns to the Attorney General, which has prompted the police investigation.
The Law Officers Department issued the following statement:
“The Attorney General confirms that a referral has been received by the Comptroller and Auditor General and the matter is now under investigation by the States of Jersey Police. In accordance with the usual policy, there will be no further comment from the Attorney General while the matter is under investigation.”
Earlier this year the Comptroller and Auditor-General published an exceptionally damning report on the Fund, listing a catalogue of errors, poor oversight and the potential loss of up to £1.4million of public money, made up of loan repayments which have fallen overdue.
In the report she commented:
"The weaknesses in governance and internal control create an environment in which any conduct of loan applicants and recipients that falls below expected standards is less likely to be detected. From my work I have identified concerns about the conduct of third parties that I am considering reporting to the Attorney General."
The Fund was set up by the States in 2013, with £5million of taxpayers' money, in a bid to help diversify and grow the economy after a deep global recession, with a Board made up of private sector individuals and States officers.
But problems were revealed last year when it emerged that a software development company, Logfiller, which had received a large loan from the Fund, appeared not to be actually operating, and subsequently went into liquidation, with a potential loss to taxpayers of hundreds of thousands of pounds.
The CAG's report set out exactly what she believed had happened:
"...seven loans totaling over £2 million have been made to six borrowers. At the end of December 2016 only 26% of payments due had been received and one borrower was the subject of a winding up order. The provision for doubtful debts was £692,000 at 31 December 2015 increasing to £1,383,000 at 31 December 2016."
She listed the governance problems with the way the Fund and went on to criticise the role of the Advisory Board, and the actions of the Treasury and Resources Department.
Her report led to the resignation of Senator Philip Ozouf as an Assistant Minister, since he was politically responsible for the Fund from at least January 2016.
The Chief Minister's Department has now also launched three reviews into different aspects of why the Fund went wrong.
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