Conflict of interest fears threaten fund backing for road project

A potential conflict of interest threatens the State pension fund's backing of a group bidding for a €500 million road project.

In what could be the first investment of its kind in the Republic, the National Pension Reserve Fund (NPRF) has joined the Celtic Roads Group, which is is bidding to upgrade a section of the M50 motorway in Dublin. The project will be a public-private partnership.

Celtic Roads, which also includes National Toll Roads (NTR), Spanish civil engineering group, Dragados, and HBG Ascon, is one of two shortlisted bidders for the project. The second is Eurolink, made up of Irish group, SIAC, and another Spanish operator, Cintra.

However, it emerged at the weekend that a possible conflict of interest endangers the NPRF's participation, because the State agency of which it is a part acts as financial adviser to the National Roads Authority (NRA), the body responsible for awarding the contract.

The pension fund is part of the National Treasury Management Agency (NTMA), which is in turn responsible for the National Development Finance Agency (NDFA), which is advising the roads authority on a number of projects, including the M50.

Speaking at the weekend, the agency's chief executive, Dr Michael Somers, said there was a potential conflict of interest between the roles that its two divisions were playing in the M50 bid.

"Our concern is that we could end up facing allegations that we had a vested interest in the Celtic Roads consortium winning the contract," he said.

Dr Somers stressed that the NDFA's role was to scrutinise the financing of the project and said it had no part in awarding the contract. He indicated that the NTMA wanted to find a solution to the difficulty, and suggested that it could step back from advising on the M50.

The NPRF had a total of €11.7 billion under management at the end of 2004, compared with €9.5 billion a year earlier. According to NTMA figures, 76 per cent was in equities.

The fund invests and manages money to pay for the State's future pension liabilities. The Government invests 1 per cent of gross national product (GNP) in it every year.

The M50 project is its first venture in investing in developing the State's infrastructure.

Since it emerged that projects like this were running well behind the schedule laid down in the National Development Plan, there has been pressure on the NPRF to invest in building the State's infrastructure.