COMMUNITY groups could be forced to repay EU grants worth hundreds of thousands of euro due to concerns about how the money was awarded.
Confidential documents obtained by the Irish Independent reveal failures at senior management level, including an allegation that an attempt was made to create an audit trail to show that money was correctly disbursed in one project.
The concerns have resulted in the Mayo North East Leader development company (MNELP) being barred from processing grant applications.
The Department of the Environment is seeking the repayment of some money, while the Standards in Public Office Commission and European Commission have been made aware of the concerns.
MNELP is one of 36 companies across the State charged with disbursing money under the Leader programme, a EU project which provides funding for schemes which help promote rural development, for example establishing new businesses or funding cultural projects.
Some €2.7m has been paid out by the Mayo group since 2007, but the company was barred in March last year from approving any new projects after complaints were made about how it was run.
While there is no allegation of fraud, investigators from the department have examined more than 50 projects in receipt of funding and said that some money will have to be repaid.
The company's chief executive, Monica O'Malley, has been suspended on full pay for the past five months, and an acting chief executive is in place. She could not be reached for comment.
Documents obtained by the Irish Independent reveal that attempts were made to create a false audit trail in relation to one project after the money was drawn down.
A departmental inspector was also told a key file was not available, but a staff member later informed them they had been instructed not to produce it.
"In the course of the investigation at MNELP, an email was discovered from Monica O'Malley to Margaret McHale, committee member of Killala Community Council Ltd and a member of the MNELP board," the records say.
"The communication contains instructions on the requirement to secure three quotations and details the dates which should be on these quotations. It also contains instructions on securing an engineer report, the date of the report and the details etc which should be contained in this report.
"The quotations and the engineer's report found on the file comply with the instructions on the email. The email communication is dated January 10/2012, while the project application was received on August 16/2010 and the project was paid on December 14/2010."
Ms McHale told inspectors she took "no action" on foot of the email, but the department said: "The communication clearly indicates that the procurement on this project was completed retrospectively – this renders this project ineligible for grant aid."
Accounts filed with the Companies Office show MNELP has set aside almost €84,000 "for repayment of grants" arising from the investigation, but sources said the amount sought could be far higher. The department has raised concerns about grants of almost €185,000.
Company chairman Susan Kellett said: "We have been through a very long and exhausting process. The board, as it stands, has a clean bill of health and if it didn't, the company would be gone.
"The appeals process is not finished."