The evaluation of the project to build the Punchestown agricultural event centre in Co Kildare was "inadequately" evaluated by the Department of Agriculture and the Department of Finance, the Public Accounts Committee has found.
The committee today published its first interim report into the funding of the centre, which became the subject of controversy last year after it emerged the Minister for Finance breached the State's own funding cap for the project.
Mr McCreevy gave the project an extra €1.5 million in grant aid in 2001 after it went over budget. Punchestown is located in the minister's Co Kildare constituency.
In total, the State funded the project to the value of €14.8 million.
The committee said today it believes the evaluation of the project was "inadequate overall" and that there was a failure to fully secure the State's interest "by way of an appropriate legal agreement" for the construction of the project and its viability.
It is critical of the Department of Finance for breaching its own 1994 guidelines on such projects. The report notes that a revised proposal from those building the centre, which effectively doubled the cost of the project from its original €6.9 million, did not appear to cause "undue concern" either in the Department of Agriculture or the Department of Finance.
According to the report, the Punchestown centre was "hardly used at all" for the first year after it was built.
It notes evidence from a Department of Agriculture official that his department believed there was a need for such a centre and that the project was "a public good in nature" and a "once-off" project. However, no business or marketing plan was sought by the department from the promoters to assist in the evaluation.
The PAC also notes that the Department of Agriculture did not advertise the availability of public funds for this type of project. The report says it might be argued that the principles of fairness and transparency underpinning public expenditure would demand that "all parties" should at least have been made aware of the "potential availability" of public money through a general call for proposals.
In its recommendations, the PAC asked the Department of Finance to clarify its role in respect of the approval of projects and, in particular, to ensure how it can ensure adherence to the guidelines by the sponsors of such projects.
Punchestown Racecourse submitted its initial proposal for the development to the Department of Agriculture in November 1999, seeking €6.9 million in funding. The funding was approved by the minister and then by the Minister for Finance. Revised proposals submitted in 2000 resulted in a request for an additional €6.4 million for the project, which was also approved.
In August 2000, an agreement was made with the developers that the funding for construction costs would be capped at €13.3 million. However, Punchestown subsequently sought an additional €1.5 million for additional work to satisfy planning requirements. This was approved by the Minister for Finance in January 2002.