The British Foreign Office lost out on a potential profit of at least 5.86 million after reversing its decision to move the United Kingdom's ambassadorial residence in Ireland from the prestigious Glencairn estate, writes Frank Millar London Editor.
This emerged yesterday as the influential House of Commons Foreign Affairs Committee recorded its "grave concerns" about the "asset recycling programme" instituted by the Treasury with the intention of saving money, but which resulted instead in the loss of millions of pounds to the British taxpayer.
"Serious mistakes" were made in the sale and re-purchase of Glencairn, and in a similar move affecting the British Consul General in New York, the Committee reported yesterday, as it condemned "utterly indefensible" efforts made by the Foreign and Commonwealth Office (FCO) to prevent it scrutinising its property deals on the grounds of commercial confidentiality.
The FCO decided to sell Glencairn and its 34 acre grounds for security and operational reasons in 1997.
The estate was sold two years after the initial decision in 1999 for €35.6 million and a residence called Marlay Grange was purchased the following year for 9.1 million, requiring refurbishing and security upgrading estimated at a further cost of 4.1 million which rose further to €5.4 million.
At the same time, security became a less pressing concern in respect of Glencairn as a result of the improved security climate following the signing of the Belfast Agreement, and it was decided to buy it back without its grounds at a cost of 10.2 million. Marlay Grange by this point had dropped in value to €6.3 million, while €995,000 had already been spent on renovations.
The Foreign Affairs Select Committee was told by Permanent Secretary Sir Michael Jay that the two Dublin deals resulted in a net gain to the FCO of 19 million. However the Committee found that the FCO could have sold the grounds alone for €24.9 million in 1999.
And it concluded: "The FCO's claimed 'net gain' of €19 million should more accurately have been described as a potential net gain of at least €24.9 million being reduced by €5.86 million as a result of the Department's mistaken decision to sell, only to reacquire, the Glencairn residence and to purchase, only to sell, Marlay Grange."
Concluding that "serious mistakes" were made as a result of the transactions in Dublin and New York - where the loss was about 556,555 - the Committee said such incidents served to underline the importance of effective scrutiny of the FCO's property transactions by Parliament.
At the same time the Committee commended the FCO on undershooting by 33.7 million the "artificial" Treasury target of selling €146.47 million worth of properties between 2001-04.
In its annual report last year, the Foreign Affairs Committee had warned that the "asset recycling programme" could encourage the FCO to sell valuable buildings cheap in order to meet targets, leaving the UK vulnerable to fluctuations in exchange rates and house prices abroad.