Agency funded by taxpayers but run as a private fiefdom: Chris Blackhurst examines the practices of the Welsh Development Agency's former chairman

FROM October 1988 until his departure last week, Dr Gwyn Jones ran the Welsh Development Agency virtually as a private fiefdom.

Decisions were sometimes taken without formal Welsh Office approval, payments were made that should not have been made, senior executives were hired without checking their references and staff were fired with what, even by public sector standards, were substantial redundancy packages.

Most damaging of all, Dr Jones spent pounds 300,000 of public money on City consultants secretly hired to see whether the WDA would be better off in private hands. Following the publication of the report by the Commons Public Accounts Committee later this week, MPs are expected to query whether the consultants, BZW and Outram Cullinan, can be asked for the return of the money - on the ground that the people who stood to benefit most financially from the privatisation scheme were Dr Jones and his senior colleagues.

Code-named Operation Wizard, the payments to BZW and Outram were never spelt out in the WDA's accounts. However, the PAC was able to obtain a breakdown of BZW's fees for advising the WDA: pounds 1,920 per eight- hour day for a BZW director, pounds 1,400 for an assistant director, pounds 1,120 for a senior manager, right down to pounds 800 per day for a lowly executive.

Operation Wizard was just one example of the WDA taking on a life of its own, separate from the Welsh Office and the government machine that was supposed to be controlling it. Much of what took place stemmed from the character of Dr Jones: flamboyant, ambitious, used to the ways of the private sector.

In June 1989, together with a colleague, he flew to New York to interview candidates for the job of representing the WDA in America. They flew there on Concorde and back on PanAm, first class. Total fare: pounds 7,098. Dr Jones later wrote to the PAC and explained that he went that way 'because of heavy diary commitments and the urgent need to make an appointment'.

The man they appointed, Raymond Carignan, lasted less than two years in the job before his contract was not renewed. When he left, he took with him a whole range of office furniture and equipment. Original cost: pounds 53,288. It was later sold and the money raised has not been returned. Mr Carignan's successor was also unsuitable: staying just nine weeks before being recalled to the UK.

Dr Jones's inability to hire the right people and the suffering they caused the WDA and the taxpayer, is believed to be a recurring theme of the PAC report. In 1991, the agency appointed Neil Smith as its marketing director. Unknown to the WDA, Mr Smith had convictions for deception. When Dr Jones and Philip Head, the WDA's chief executive, interviewed him they did not have a curriculum vitae in front of them and references were not checked. Mr Smith is now serving two years' imprisonment for forging a cv and references to obtain pecuniary advantage.

Because of the agency's free-ranging hiring and firing policy, total redundancy payments were huge: more than pounds 2m in two years. Not all the golden handshakes, though, were what they seemed: MPs are known to have been outraged that one, of pounds 250,000, was an obvious attempt to buy a sacked executive's silence.