Auditor complaint lodged over £105m St Modwen project

Tony Dixon and Roger Thomas have questioned why Arun District Council did not pursue compensation for money spent on the key regeneration project before breaking ties with St Modwen in 2014.

Both have formally complained to the Public Sector Audit Appointments body, claiming their pleas to Ernst and Young to fully investigate their concerns were not acted upon.

Arun argues it never had a right to compensation as it jointly broke ties with St Modwen.

Mr Dixon, who also raised the issue with Bognor Town Council, said: “St Modwen failed to deliver, so why did Arun waive our right to compensation?”

The duo lodged a freedom of information request in an attempt to uncover the amount spent on the scheme, which included a multiplex cinema, flats and a food store at Hothamton in Queensway.

Information was provided after months of delay and a ruling by the Information Commissioner’s Office. Arun had initially declined the request.

Arun claims the scheme cost taxpayers just £76,000, due to St Modwen covering the early costs.

This was significantly lower than Mr Dixon’s estimate of £1.2million.

Arun chief executive Nigel Lynn, in a letter to the town council, pointed to numerous changes in circumstances which contributed to the downfall of the St Modwen scheme.

He wrote: “As we all know, hindsight is a wonderful thing and I doubt that the questioner equally knew that these changes in circumstances were going to happen after 2007. All councils must invest in order to secure a better financial position for the future but all investments can go down as well as up.”

A statement from Arun said it was aware of the complaints. A spokesman said its development agreement with St Modwen never left the conditional stage, meaning the council had ‘no legal grounds’ to force the scheme to be built. The decision not to take the project forward was made jointly, agreed by full council in September 2014, on the basis of no compensation to either party.

Ernst and Young’s spokesman said it could not comment further due to client confidentiality.

The issue was addressed in its 2014/15 audit. It noted full costs could not be attributed but would not expect the council to identify them. It concluded the council ‘should have responded more quickly to factors which caused delays’ to minimise costs incurred.