Role of senior council officials in luxury hotel land deals exposed in hard-hitting new audit report

The role played by senior council officers in deals that saw sought-after land rights granted for rock-bottom prices has been exposed in a hard-hitting new audit report.

The council officials are now facing calls for their sacking and it has been suggested by the local government auditor that Stormont should step in if the council fails to take action

An “extraordinary audit” of the way land deals were handled by the Causeway Coast and Glens Council has been completed by the Northern Ireland Audit Office.

The audit report, published today, reveals the “unusual” extent of the council chief executive David Jackson’s personal involvement in deals amid what the local government auditor described as a culture of “bypassing best practice and guidance to get land ‘deals done’”. The auditor also noted there were “perceived conflicts of interest”.

Causeway Coast and Glens Borough Council chief executive David Jackson. KEVIN MCAULEY/MCAULEY MULTIMEDIA

The audit, led by local government auditor Colette Kane, was ordered in November 2020 by the communities minister after it emerged the council had granted property rights to a developer for a plot of land at the Ballyreagh Road in Portstewart for just £1 in 2016 — without a proper valuation having been completed beforehand. The land right – known as an easement – was sought after by the developer to provide access to a proposed hotel development worth £20 million.

Alongside this deal, the legality of which has now been called into question by the auditor, the report highlights another, entirely separate 2015 transaction for a different luxury hotel project – this time for land at Castleroe Road in Coleraine, overlooking the River Bann.

In this case, the land was disposed of by the council for just £5,000 – a value that had been challenged by both elected members and council officials before being pushed through anyway, in spite of legal advice warning explicitly of the need to follow rules and regulations to get the best price for ratepayers. The lawfulness of this deal has also been called into question by the auditor.

The chief executive of the council is described as having been “directly involved” in the transaction.

In the case of the Castleroe Road land deal, the land was sold to the charitable Honourable Irish Society — an organisation based in the City of London whose links with County Londonderry stretch back to the Plantation of Ulster, and which still manages notable properties throughout the area.

The Honourable Irish had been in contact with a property developer who was seeking to develop the hotel at a disused laboratory site held by the society in Coleraine.

The audit report notes that discussions took place in mid-2015 between the Chief Executive David Jackson, the private developer and his business partner, and a registered charity — the Honourable Irish Society — that were seeking to purchase the Council land for the hotel project.

It also notes that the council sought a valuation of its land from a local surveyor — one who had been in contact with both the prospective purchasers, the Honourable Irish Society, and the council.

The report also states that the land valuation given to the council, which has been seen by the News Letter, makes no mention of any proposal for a hotel — despite the surveyor having been fully aware of the hotel project when putting together the valuation.

It also notes how a solicitor warned, in writing, of the need to follow rules designed to obtain best price in selling public land which was not followed by the council.

And the report highlights — in a section outlining “perceived conflicts of interest”, how the Honourable Irish Society awarded the council chief executive with the Freedom of the City of London in August 2016, having nominated Mr Jackson for the prestigious honour after making initial contact with him but before completion of the land transaction.

The conduct of several other senior officials was sharply criticised by the auditor.

In the report, Ms Kane states: “The behaviour of some Senior Council Officers has fallen short of the standards expected in a public body.”

She called for action to be taken, and for Stormont to step in.

“The Council should refer Senior Council Officers to the relevant professional bodies where it has been demonstrated from this report that the behaviour of those Officers has fallen short of the standards and behaviours expected by those bodies,” she wrote.

“The Department should carry out a detailed consideration of its responsibilities for this Council in light of the significant failings identified by this audit and take the required appropriate action and use its powers to intervene if necessary.”

Communities Minister Deirdre Hargey, whose department is responsible for overseeing the work of local councils, said: “I welcome the publication of this report and thank the Local Government Auditor, Colette Kane and her team for their diligent work.

“I had concerns, that despite a series of requests to the Council for information in relation to its land transactions, it did not provide me with the necessary assurances.”

She continued: “This extraordinary audit has demonstrated those concerns were very real. The detailed report has highlighted a range of serious issues that now need to be accepted and addressed by the Council’s elected representatives, Chief Executive and senior management. All eight of the recommendations should be implemented in full as a matter of urgency. My Department will support the Council as it works to address the issues raised.

“I am engaging with my legal team to ensure that all appropriate steps are taken should the Council fail in its duties to implement the changes required in a timely way.”

A spokesperson for the council, meanwhile, said time would be required to assess the report and consider the next steps.

The spokesperson added: “Work on this report began in late 2020, and throughout that time council co-operated fully with the Northern Ireland Audit Office

“Council has already made changes to its Land and Property procedures and intends to comply with its obligations to ratepayers and stakeholders.

“The council will meet to discuss the report, its recommendations and further action to be taken, at the next full council meeting.”