Government criticised for allowing digital village to remain in private company's hands

The Comptroller and Auditor General has criticised the Government for continuing to have a multi-million pound digital village project in Dublin managed by a private company.

In his annual report for 2000, the C&AG said it was "unsatisfactory" that Digital Media Developments Ltd (DMDL), which was incorporated last year, had yet to be put on a statutory basis.

The company was set up to manage the Digital Hub, a multimedia village. Its main element is MediaLab Europe (MLE), a college in the old Guinness hopstore by the Massachusetts Institute of Technology with £28 million of Exchequer funding.

The report said the incorporation of DMDL was seen as an interim measure pending the preparation of legislation to make it a public entity. However, it noted, "the legislation has not yet been introduced."

The report said that "while there might be circumstances, such as this, when it was opportune for Government Departments to set up private companies to administer Exchequer moneys, it is unsatisfactory that this would continue in the long term without statutory authority being obtained for the arrangement."

It added the legal powers of Ministers to set up private companies should be clarified.

Regarding the operation of DMDL, the C&AG questioned its decision to enter into an initial five-month £505,000 deal with another company for the provision of an executive management team, comprising people from the private and public sectors.

The C&AG said he shared concerns expressed by the Department of Finance that the proposal made by the team that its fee after March 2001 should be a percentage of the development cost was unacceptable "because it would not give the team any incentive to minimise the cost and time-frame of the development."

The C&AG said "it is desirable that fixed price contracts be used for the supply of executive services" to avoid excessive fees.

He said the project suffered because three bodies - the Department of the Taoiseach, a Government liaison committee and DMDL - had overlapping functions, which "could have given rise to some dilution of responsibility and lack of focus".

In response, the Department accepted there was "little formal demarcation of responsibilities" between the various parties but said there was "constant communication between them."

The Department added that it still intended for DMDL to be put on a statutory footing.