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Jane Hutt, Minister for Finance and Leader of the House

First published:
9 February 2012
Last updated:

This was published under the 2011 to 2016 administration of the Welsh Government

This afternoon I am laying in the National Assembly, a copy of the investigation report prepared by Welsh Government Internal Audit on behalf of the Welsh Government, WEFO and the Big Lottery Fund, into public funding of AWEMA.  This Written Statement sets out the action the Welsh Government is taking in the light of the report.

On 19 December 2011, the Welsh Government’s Equality Diversity and Inclusion Division and the Welsh European Funding Office (WEFO) received allegations about the management of AWEMA. AWEMA was informed the following day that public funding under the Advancing Equality Fund and from WEFO had been put on hold.  The Big Lottery also froze their funding.

The terms of reference for the investigation were agreed with the Wales Audit Office and the Big Lottery.  The Welsh Government’s relationship with AWEMA is a contractual one.  The focus of the investigation was to provide advice on the adequacy and effectiveness of the financial controls and governance processes in place within AWEMA, to allow informed decisions to be made without delay on whether public funding for AWEMA could safely continue.  It was recognised from the outset that allegations that individuals had committed potentially criminal activity, or potentially affecting AWEMA’s charitable status, were matters that should be drawn to the attention of South Wales Police and the Charity Commission.  Liaison with them has continued throughout the Welsh Government’s investigation process.

The investigation has identified significant and fundamental failures in the control and governance framework within AWEMA:

• Governance arrangements in relation to management and to the AWEMA Management Board of Trustees;
• Financial controls and processes;
• An absence of key policies and procedures; and
• An organisational structure that does not adequately support the operations of AWEMA.

In light of the current control framework the report concludes that it cannot provide any assurance that there are appropriate arrangements in place to safeguard and make proper use of the Welsh Government, WEFO and Big Lottery funds entrusted to AWEMA.

In light of this, Dr Rita Austin, Chair of AWEMA has been informed that funding for AWEMA under the Advancing Equality Fund is terminated with immediate effect. In addition Dr Austin has been informed that the three ESF Convergence agreements with AWEMA have also been terminated.  WEFO’s Project Inspection & Verification Team will carry out an immediate review of the eligibility of expenditure for EU funding under these projects and will expect the full co-operation of AWEMA in completing this work.  Action will be taken to consider whether grant funding should be reclaimed.  

The Welsh Government will continue to liaise closely with South Wales Police and the Charity Commission, and provide them with any help it can in fulfilling their responsibilities in relation to AWEMA.

In taking these decisions, very careful consideration has been given to the need to protect participants in the ESF Convergence projects as far as is possible.  WEFO has approached AWEMA’s co-sponsors to consider what alternative arrangements might be put in place.  The co-sponsors have indicated a willingness and ability to work with WEFO to make arrangements to safeguard the position of people benefitting from the AWEMA led projects. I will make match funding available to the co-sponsors to help support the continuity of programmes.

The First Minister and I, along with the Permanent Secretary, consider that there now needs to be a full and thorough independent review of the history of the funding of AWEMA by the Welsh Government.

It is appropriate that the Wales Audit Office should carry this out and I can confirm that they have agreed to undertake this review.  The Permanent Secretary is in the process of agreeing the scope of the review with the WAO.