A £4m Commonwealth Games legacy project was put into administration after failing to pay a VAT bill worth around £250,000, the Herald on Sunday can reveal.
The People’s Development Trust (PDT), the charity behind the Dalmarnock hub, asked funders to pick up the tab but the request was turned down.
Launched at a high profile event in 2015 which featured football legend Kenny Dalglish, the Hub was meant to symbolise the tangible benefits of the Commonwealth Games for locals in the east end of Glasgow.
The Hub employed over 20 staff and provided services such as a pharmacy, dental surgery, cafe and nursery.
The project also attracted large sums of public money, with the Scottish Government ploughing in £2m and the Big Lottery Fund (BLF) providing around £1.6m.
Glasgow City Council, which gave the PDT the land on which to build the Hub for £1, also handed over £80,000 a year in every year from 2014. Clyde Gateway was another contributor.
However, despite receiving over £4m of public money, the project was mired in claims of cronyism, nepotism and poor financial management from the beginning.
The BLF, which is now called the National Lottery Community Fund (NLCF), called in auditors to examine some of the Hub’s spending decisions, but the PDT continued to struggle and was put into administration last month.
Around 25 jobs have been lost and many of the community services have stopped.
It is understood a key problem was a £250,000 VAT bill which related to the initial construction of the Hub.
A spokeswoman on behalf of all the funders - the council, Government, Clyde Gateway and the NLCM - said: “In recent months the main funders of the PDT worked closely with its Board and provided them with a significant level of support to explore ways that would resolve the persistent financial, operational and governance issues faced by this community facility. However, following careful consideration, including reports from external consultants, the funders were unable to agree a package of further financial support.”
A NLCF spokesperson, said: “Along with other public bodies, we worked with the People’s Development Trust (PDT) which owned and operated The Legacy Hub to offer support and explore ways that might have improved the outstanding financial issues that it faced, but ultimately this proved unsuccessful. The emergence of a tax demand was one of the financial issues PDT could not overcome.”
In late 2016, the lottery funders appointed Social Investment Business (SIB) to deliver business and governance support to the PDT.
It was then broadened to include crisis management, support for the voluntary board, specific support for the chair, “day to day support and advice” to the Hub’s operational manager, and advice on planning for sustainability.
It is understood the council has a right over the Hub property that kicks in when any land is sold or disposed of by the owner, meaning the local authority has the first right of refusal on whether to buy it for a nominal sum.
A council spokesperson said: “Following the administration of the PDT that owned and ran the facility, Council officers are looking at exercising our right and at a range of options that could make it a viable operation in the future.
“At this stage there is a clear legal process for the administrators to go through and we are pleased that they have stated their intention to work with key stakeholders, particularly the local community, to determine the future of the Legacy Hub. The council too wants the Legacy Hub to remain as an asset to the community and is engaging with administrators on that basis.”
The Hub’s future was raised with First Minister Nicola Sturgeon last week in the chamber by SNP MSP John Mason
She said: "The council is, rightly, leading on engagement with the administrator with the aim of ensuring that the hub can remain an important asset for the community in the future. That is fundamentally a matter for the administrator and Glasgow City Council.
“However, we absolutely recognise the importance of the legacy hub to the people of Glasgow, so the Government will remain in close contact with the council and with interested parties as the situation evolves and we will offer any support that it is appropriate for us to offer.”
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