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Legal loophole threatens millions in EU PEACE funding

31 July, 2005

Sinn Féin Dungannon Mayor, Francie Molloy MLA, the current President of
NILGA has warned of a total breakdown in the operation of local bodies
responsible for distributing EU PEACE funding because of a legal loophole.

Following concerns raised by the auditor about the legal cover for council
appointees to certain outside bodies that are companies, legal advice has
been issued by the Department of Environment that means that local
government councillors are not legally entitled to represent their council
on outside bodies such as the Local Strategic Partnerships and LEADER
companies that distribute the bulk of EU Peace monies.

Local government representatives play a significant role as directors on the
Boards of LSP and LEADER companies.

EU regulations require specific representatives on the boards of the
companies that distribute EU funds including community and business
representatives, statutory agencies representatives and elected local
government representatives.

Commenting on the situation Cllr Molloy said:

"The legal advice indicates that councils have no power to set up or
participate in a limited company such as those set up to deliver EU Peace

"Literally millions and millions of pounds are at stake. Unless the
situation is rectified and rectified immediately, LSP and LEADER companies
will have to be wound up. There will be total breakdown in the allocation of
EU PEACE funding.

"The impact on the ground will be devastating. Jobs will be lost and much of
the work in building peace and reconciliation, in regeneration and in
fostering better educational and work opportunities will just be thrown

"The fact that there is no legal cover for councillors to discharge their
democratic duties by providing representation on outside bodies is a
scandal. It is made worse when the rules governing the distribution of EU
funding demand it.

"Whether it is incompetence in drafting the legislation or a more direct
attempt to undermine democratic accountability the fact is that if
councillors are forced off these companies then they will be forced to close
because they will not be able to operate legally.

"The direct rule minister with responsibility for this, Jeff Rooker, needs
to take immediate steps to rectify this legislative gap.

"For decades there has been a democratic deficit created by the over
dependence on quangoes. The role that councillors have played in
regeneration and reconciliation through these companies has been vital. This
is a step backwards. It is an attack on democratic participation in decision
making and on democratic accountability.

"The swift drafting and implementation of adequate statutory provision can
remedy the situation. In the first instance, the government departments that
are responsible for this situation should be instructed to issue councils
with letters of cover that will enable them to legally appoint
representatives to outside bodies." ENDS

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