The Wales Audit Office and the Welsh government’s internal audit team are to investigate an investment of public funds made by the £50 million Wales Life Science Investment Fund chaired by Sir Chris Evans, the former chairman of BioMalta who recently had his contract terminated by the government, into a company in which Evans is a shareholder and founder.
The investigation comes after the chairman of the Welsh Public Accounts Committee rang the alarm bell over the £5 million investment.
According to BBC Wales, the controversy revolves around a £5 million investment by the Wales Life Science Investment Fund, which Evans chairs, into a British stem cell company, ReNeuron, in which Evans is a founder and shareholder.
After the Wales Life Science Investment Fund decided to inject the cash into the company back in June, Evans personally purchased an additional 24 million shares in the company. The 24 million shares had cost around £600,000 and the acquisition funds came from two family trusts – Excalibur Malta Ventures Limited and Hookstone Limited.
In November 2011, Evans was appointed chairman of the BioMalta Foundation, which is responsible for establishing and managing the blueprint for the Life Sciences Industry in Malta, as well as overseeing the successful development of the BioMalta Campus - the €30 million San Gwann life sciences park - and establishing an Angel Investor Network to secure private funding for local companies who are or will be doing research and development in biotechnology, medical, health and pharmaceutical industry.
But on Sunday, the Maltese media reported that Evans’ €750,000 contract had been terminated in April, 2013 on the ground of non-performance.
Speaking to BBC Wales, a spokesperson for Evans said that the multimillionaire life sciences entrepreneur’s shareholding in ReNeuron, which is currently conducting research into a number of stem cell products, had been fully declared to and was approved by the Welsh government and that he had made the additional investment into the company at the request of other institutional investors.
Moreover, Evans’ spokesperson said he had abstained from the Fund’s final vote on whether to invest public money into ReNeuron, as had three other board members who had connections with the company.
But it was Darren Millar, the chair of the Welsh public accounts committee who referred the deal to the Wales Audit Office, as he believed the manoeuvre would “raise eyebrows”.
Mr Millar added, “I think this arrangement will certainly raise a few eyebrows in terms of the way this cash has been awarded and people will want to be satisfied that there's been nothing irregular in the awarding of this cash to this particular company.”
A spokesperson for the Wales Audit Office told BBC Wales, “I can confirm that concerns have recently been raised with the Auditor General for Wales about the operation of the Wales Life Sciences Investment Fund and we are currently liaising with the Welsh government's Internal Audit Service on the matter.”
The Welsh government has also confirmed they are working with auditors to review the issue.
The spokesman added: “In the meantime we have received assurances from Finance Wales that it is entirely satisfied there has been no breach of procedures and actions have been taken in line with industry norms.”
According to the company's release when the investment package was announced on 22 July, Sir Chris orchestrated the deal for the Wales Life Sciences Investment Fund to put money into ReNeuron, which was followed by several other big institutional investors, raising a total of £25 million in the process.
The Welsh government had also given the company a non-repayable £7.8 million grant to move its manufacturing and research facilities to Wales in the coming years.
When the Wales Life Science Investment Fund was formed, Evans had formed a new company, Arthurian, which then bid for and won the tender to manage the Wales Life Sciences Investment Fund which was launched in March this year.
Its second investment was in ReNeuron, which Evans says he has been “intimately involved with” over the past decade as one of the company's founders.
A spokesman for Arthurian told BBC Wales, “It is difficult to fathom why there should be any examination of this matter as both the Welsh government and Finance Wales have told us that are very comfortable that proper procedures were followed. We will of course give the Audit Office every assistance they require.
“All interests were declared in full. Sir Chris was not party to the final investment decision by the board of Arthurian to invest and in fact was not even on the meeting. After the final decision was made, the matter was referred to Finance Wales for ratification, which it received.
“Separately, the Welsh Grants Committee took its own decision on ReNeuron grants. This was a major win for Wales and Sir Chris invested personally after the Fund's investment. He paid full placing price and has received no advantage. If the company does well the Welsh Fund and other investors will do well too.”
A Welsh government spokesman said, “Finance Wales acts as the Holding Fund for the Wales Life Sciences Investment Fund on behalf of the Welsh Government. Arthurian Life Sciences Limited was appointed as the Fund Manager following a procurement process and there is a Fund Management Agreement that requires Arthurian to follow appropriate governance arrangements in line with normal market practice.
“Sir Chris Evans disclosed an interest as an existing ReNeuron shareholder and recused himself from all discussions at Arthurian Board and did not attend the meeting or vote on the matter.”