A CARMARTHENSHIRE Councillor has made a formal complaint to the European Commission that an alleged £20m of funding provided by Carmarthenshire County Council to Llanelli Scarlets was an unlawful state subsidy.
Independent Cllr Sian Caiach took the step in the teeth of a statement by Carmarthenshire County Council that said it had provided no money to the cash-strapped rugby region. It is understood part of the complaint relates to the favourable terms of a loan given by the County Council to the regional side and an agreement that the Scarlets do not have to pay rent in respect of the land upon which Parc-y-Scarlets is built.
If the European Commission takes the view that the funding given by the County Council amounts to West Wales’ rugby region is state aid, the Scarlets could be forced to repay any monies received that the Commission rules are unlawful. Such a move would be devastating for the regional rugby team, widely followed across Pembrokeshire, which has struggled financially for some time.
Carmarthenshire Council has relied on legal advice dated 2007 to support its claim that support given by the Council to Scarlets Regional Rugby Ltd amounts to unlawful state aid. Scrutiny of that advice has been denied to councillors on the basis that it is legally privileged document. The Council has not revealed whether or not it sought advice on any funding or assistance given to the Scarlets after 2007.
An expert interviewed for BBC Wales, Martin Stephens, said “If there isn’t an audit trail then they’re in a position of non-compliance and the aid is therefore in breach of the regulations.”
The complex saga has also taken in the sale of a car park to the Marston’s chain of pubs. Carmarthenshire Council were the freeholders of the property while the Scarlets held a 150 years’ leasehold on it granted by the Council.
The car park was originally ear-marked for a retail development, but instead was transferred to Marston’s for £850,000.
Controversy has arisen in relation to the division of the sale proceeds between the Council and the Scarlets. The Council received £200,000 for its interests and the Scarlets £200,000. Questions have been raised, however, about approximately £280,000 being given to the Scarlets for what are described as “allowable expenses”.
The “expenses” were allegedly used for paying off a commercial loan the Scarlets had taken out to fit out its shop and restaurant within Carmarthenshire County Council’s Eastgate development.
It is believed a reference has been made to the Wales Audit Office in respect of the sale of the land.
Carmarthenshire County Council continues to deny that rules on state aid apply to the funding and assistance they have given the Scarlets.