Enterprise Ireland writes off €125m in bad investments

Internal documents obtained by the Sunday Independent show that €124.97m has been vapourised in grants, equity and dividend write-offs in 11 years between 1999 to 2012.

The documents show that 2012 was the worst year for write-offs in Enterprise Ireland's recent history, with the state agency taking a €19.5m hit. The previous worst year was in 1999, when the quango shipped a €16.2m write-off.

The staggering €125m write off from failed investments related to 695 companies. Over the period, some €52.1m in grants were written off, with €67.5m in equity being hosed. There was also a dividend write off of almost €5.3m. "The 2012 review has been completed and the Chief Finance Officer agreed to the closure of 61 grant and equity recovery files, and to the write-off of €19,526,647.96," according to the documents.

Enterprise Ireland, now chaired by former KPMG boss Terence O'Rourke, who replaced Hugh Cooney last year, is responsible for helping export focused businesses with grants or financial support.

"It's safe to say that we have pretty robust processes in place with regard to technical and commercial assessments for all start-up investments to the extent that a lot of Irish VC investors in Irish start-ups will only agree to invest subject to Enterprise Ireland support," according to a spokesman. "Seed investments are inherently risky."

Medical textile firm Beo Care Ltd went into liquidation in April 2009, with Enterprise Ireland taking a hit of €1.47m on its equity stake, preference shares and dividends due from the company. "Liquidator confirmed no funds," the documents note. Another investment of €1.15m in Fastnet Line Operators Ltd also soured, with a receiver appointed last February. "Receiver confirmed no funds," the documents add. Another €690,000 worth of shares in Myguidetravel was also wiped out, with other large sums written off in businesses ranging from seafood companies to advertising and software groups.

Grants were also torched by the collapse of Enterprise Ireland client companies. This included €982,473 for Shannon Minerals, which saw a liquidator appointed in October 2010. A grant of €390,000 to Ntera was written off, with another €300,000 grant to Pharma Plaz also wiped out.

The documents also note that Enterprise Ireland was unable to recover grants of €262,388 paid to a clothing firm and a textile company in the 1990s. "Following an extensive search it was not possible to locate any documentation that suggests that the company was requested to make this payment in the last six years and therefore the debt has become statute barred."

Enterprise Ireland recover- ed just €1.04m from various investments in 2012, with €666,000 being returned from medical device group Zerusa, which was bought by Nasdaq-listed Vascular Systems at the end of 2011. A grant of €251,000 was recovered from Castlemahon Food Products, which went into liquidation in 2006.

Enterprise Ireland supported companies now, directly or indirectly account for more than 300,000 jobs in the Irish economy, representing 16 percent of the entire workforce. Last year, Enterprise Ireland- supported firms created a net 5,442 new jobs, which it described as "the highest net gain for Irish companies in the last decade". Latest figures from the quango show that the cost per job was €12,597 in 2012 -- almost three times the level of 2000 to 2006.

The state body is a very expensive operation to run. It received almost €293m in exchequer funding in 2012, paying out €186m in grants and other supports to Irish companies. The quango also racked up €86.2m in costs associated with its "administration, operation and promotion". This includes over €61m in pay and €4.2m in travel expenses.