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'Why weren’t we warned about Dawnus?'

Created on 10/05/2019 @ 10:46
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Powys County Council should have been warned about the problems at collapsed construction firm Dawnus by the Welsh Government before handing them the multi-million pound Welshpool primary schools contract.

The issue was raised at a Powys County Council Audit Committee after vice-chairman, John Brautigam, had forensically researched the issues and produced a report on the failure of the Swansea-based construction company.

Dawnus Construction, which went into receivership in March, had been given the contracts to build the 360-pupil English-medium primary school on Salop Road and the Welsh school on Maesydre.

It had been expected that the staff and pupils would move to the Salop Road school in September.

Mr John Brautigam, who is a lay member of the committee, said: “At a briefing we heard that the Welsh Government had given Dawnus a (£3.5m) loan, I had suspicions that more might have been known than has been admitted.

“We are talking about Dawnus Construction, there are 20 in the group and not all are in administration and that’s significant.”

Mr Brautigam went through the company’s accounts and also pointed to debentures – a type of mortgage taken out with banks and also the Welsh Government.

This was on the company’s assets including equipment of all sorts used in the construction industry.

He said: “When PCC signed the contract on July 18, 2017, Dawnus equipment was either in hock or being sold off, together with much of their other assets.”

He passed the information on to Russell George AM (Montgomeryshire) who made further inquiries.

Mr Brautigam continued: “They (Welsh Government) admit that no information was passed to local authorities. Their rationale was commercial confidentiality.

“In my view the rights or needs of the taxpayer trump any commercial confidentiality. The result of this collapse is that Dawnus have 1,500 creditors and quite significantly some of the larger ones are plant hire companies.”

Mr Brautigam finished by adding that the Senedd’s Public Accounts Committee would be asked to look into the issue.

Audit Committee chairman, Cllr John Morris, said: “Half of the money is the Welsh Government’s (21st Century schools programme).

“They have been lending to this company money and spending it through the local authority, who, by the sound of things, were not told of their concerns at the time.

“If we did not do due diligence on the contract we need to look into that, however it’s more likely we based it (schools contract) on the information they had at the time.”

Cllr Gwynfor Thomas added: “The perception is that Powys failed to build a school. It beggars belief, it has an effect on our costs and risk and reputation.”

Finance portfolio holder, Cllr Aled Daves, said: “Powys has only paid for the work up to date. I know that’s cold comfort to the sub-contractors who are probably owed money by Dawnus. The chances are the main contract will be more expensive.”

Jane Thomas, head of finance, added that there are weekly update meetings between the finance and education departments to discuss Dawnus.

“We are in conversations with Welsh Government and the cost of the project overall will increase, we are having those discussions as it was jointly funded 50-50 up to now,” said Ms Thomas.

Cllr Morris added: “This is costing money and time that could be spent on other projects. Someone needs to be held to account.”

By Elgan Hearn, Local Democracy Reporter  

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