§ Mr. Gristasked the Secretary of State for Wales if he will report the outcome of Mr. Douglas Baker's internal investigation into the Welsh Development Agency's handling of its investment in the Parrot Corporation.
§ Mr. Nicholas EdwardsI announced on 28 October, at columns 313–14, that I had invited Mr. Douglas Baker, chairman of Touche Ross and Co., to examine the Welsh Development agency's handling of its investment in the Parrot Corporation and the agency's supervision of its investment, having special regard to the provisions of the WDA Act 1975, the investment guidelines laid down by the Welsh Office and the WDA's own investment manual; and to report to me.
Mr. Baker has now completed his investigation. I have expressed my gratitude to him for the thoroughness with which he has undertaken this task.
As I earlier informed the House, Mr. Baker was asked to undertake an internal investigation. His report contains material that is of a commercially confidential nature. In view of this and the continuing police investigation into the cirumstances of the original investment and the 616W conduct of individuals it would not be appropriate to publish his internal advice to me. I undertook to report further to the House.
Mr. Baker found that the transaction between the Parrot Corporation and Northern Trust involving a collateralised deposit was most unusual from a commercial viewpoint and that it could not reasonably have been anticipated by the agency. I have no reason to dispute that finding. Mr. Baker also found that the WDA Act 1975 and the investment guidelines had been followed. However, although Mr. Baker also concluded that even the most elaborate procedures may not have been sufficient to prevent the circumstances that arose, he did find that certain of the procedures followed by the WDA in its handling of the investment and in its subsequent monitoring were deficient.
I have discussed these findings with the chairman of the WDA. It is clear that for the future there must be arrangements to ensure that the deficiencies identified are not repeated. The chairman has informed me that a number of measures have already been taken by the agency: in particular, arrangements with respect to the appointment of non-executive directors and their responsibilities have been substantially clarified and a new system to improve the monitoring of investments has been established within the agency. In the light of Mr. Baker's findings, the chairman has also informed me that steps will be taken to ensure that the agency obtains reports from outside accountants in all appropriate investment cases and to allow closer supervision of the legal aspects of completion deals. By these means the agency has taken or is in the process of taking steps to ensure that the deficiencies identified by Mr. Baker have been dealt with.