Writ issued in City Grant row

The Central Manchester Development Corporation has issued a writ against British Gas Land Investments claiming the repayment of a œ4.4 million City Grant.

The Corporation accuses British Gas Land of failing to divulge financial information about the profitability of a 11,500m2 office development on the site of a former gas works.

Known as the Grand Island Project, and built by Turriff Construction, it was one of the largest schemes completed under the aegis of the Corporation.

To make the scheme viable, British Gas Land was awarded a grant of œ5.4 million of which it received œ4.4 million and the work was completed in March 1992. But during 1993 the Corporation appointed QS TPL Associates to undertake routine audits of its city grant agreements. As a result the Corporation alleges that total project costs were significantly lower than the estimates on which the city grant was based - only œ12 million, as opposed to œ17.8 million.

The Corporation claims that in these circumstances the project would have been viable without financial assistance and would not have qualified for grant.

But British Gas Land director Dru Vesty has angrily disputed the claim. She said: 'Profitability of the project was less than that provided for in the grant agreement. Any suggestion of misuse of public money is wholly unwarranted and an unacceptable slur on British Gas and its employees.'

British Gas Land alleges that the TPL audit is in error, that total project costs amounted to œ14.5 million rather than œ12 million, and that in any case the fall in costs did not lead to increased profitability.