The National Assembly’s Public Accounts Committee is keeping an open mind about the causes of serious failures in governance at Natural Resources Wales (NRW).
The Committee concluded that incompetence alone cannot explain the actions of NRW in the awarding of a series of multi-million pounds timber contracts to a single logging company, that led to the qualification of NRW’s accounts qualified for three consecutive years.
The Committee stresses it doesn’t have enough evidence to reach a full conclusion but says it struggles to comprehend how an organisation led by highly experienced, knowledgeable and skilled individuals could repeatedly make the same mistakes despite previous warnings.
For the third year in a row, NRW’s accounts have been qualified by the Wales Audit Office, meaning the Auditor General for Wales was unable to sign them off as above board and correct.
In 2014, NRW awarded contracts to a sawmill operator directly without going out to competitive tender. The contracts were awarded on the basis that the timber was diseased and had little value and that the company would build a new sawmill in Wales, creating new jobs.
The Auditor General for Wales judged NRW’s actions could be in breach of state aid rules, did not follow the organisation’s own procedures and were not referred to the Welsh Government as required by its own governance measures.
NRW was also unable to update the Committee on progress for the building of the new mill, even though the deadline for doing so passed around the same time senior managers were giving evidence. The sawmill still has not been built.
Despite this failure, NRW has awarded further contracts worth millions of pounds to the same company claiming it did not want to disrupt the market.
Senior managers also told the Committee they weren’t aware of the Auditor General’s concerns about the previous awards despite lengthy discussions between the two organisations before the contracts were awarded.
Giving evidence as part of the inquiry, David Sulman, Executive Director of the UK Forest Products Association told the Committee:
“I certainly wouldn't call these actions mistakes or oversights, as has been claimed. And it seems to us that these actions were premeditated, deliberate, and made in the full knowledge of the facts and the existence of long-standing and well-understood official procedures around timber marketing. Talking to people in industry, some might even go so far as to say that, in view of the very serious concerns that the Auditor General and his staff—and, indeed, this committee had expressed about NRW's behaviour, their action might amount to almost being contemptuous.”
NRW has committed to setting up an independent review of its governance and practices around timber sales and marketing, the findings of which will be used to ensure the issues are not repeated in the future.
“We are extremely disappointed that, despite the findings of previous reports by the Auditor General for Wales and this Committee regarding their approach to timber transactions, NRW have had their accounts qualified for a third consecutive year,” said Nick Ramsay AM, Chair of the Pubic Accounts Committee.
“It seems the concerns raised previously around the awarding of lucrative contracts were disregarded and the subsequent actions of NRW appear to defy logic.
“The decisions made by experienced staff at NRW are inexplicable and it is difficult to view these actions a result of incompetence.
“We can only conclude that we will never fully understand or have an explanation for what happened.”
The Committee makes three recommendations in its report:
- that Natural Resources Wales (NRW) share with the Committee the findings of the independent review following its completion, scheduled for the autumn of 2018;
- that the independent review includes an examination of whether events relating to the awarding of timber contracts by NRW were a matter of incompetence or professional negligence; and,
- that NRW produces an action plans setting out the changes required to its operation arising from the independent review.
The Committee has also decided to schedule a further evidence session with NRW early next year to examine the recommendations and actions arising out the independent review.
Read the full report:
Natural Resources Wales: Scrutiny of Annual Report and Accounts 2017-18 (PDF, 570 KB)