AN INVESTIGATION has been launched into how taxpayers’ money was handed to the company developing the £425m Circuit of Wales project.

Auditor general for Wales Huw Vaughan Thomas is reportedly looking into the Welsh Government’s decision to award of a £2m grant and guarantee a £7.35m bank loan to the Heads of the Valleys Development Company, which is behind the scheme in Ebbw Vale, which is currently on hold while more private investment is found.

The investigation has been launched after a whistleblower handed a file of information to Monmouth MP David Davies.

The Tory MP said the information was ‘very serious’.

“I’ve had several meetings with the auditor general’s office and I have handed over a series of documents,” he said.

“I have said there should be no further public money put into this scheme while this is looked at.”  A spokesman for the auditor general said Mr Thomas had “taken an interest” in the project for some time.  “Following recent correspondence from a member of Parliament, he is currently examining certain aspects of the Welsh Government’s support for the project,” he said.

“His work to date has identified some further aspects that will be reviewed in greater depth, including the £7.35m bank guarantee provided by the Welsh Government."

In July Wales’ economy and infrastructure secretary Ken Skates said the Welsh Government would not commit any further public support to the project until at least 50 per cent of it was funded by the private sector.

A Welsh Government spokeswoman said: “This £7.35m loan guarantee was granted to enable the Heads of the Valleys Development Company to further develop its project so they could take it to market with a view to securing necessary private investment.

“It was granted in line with Welsh Government processes and procedures and agreed on the understanding that if the loan was defaulted on, we would be able to take steps to recall our investment from the company.  “The Welsh Government has not guaranteed any further loans for HOVDC (Heads of the Valleys Development Company).”

A Circuit of Wales spokesman said all bank loans supported by the Welsh Government would be paid back with interest, as usual.

“It is important to emphasise that the Welsh Government has a very robust process in place for monitoring this support,” he said.

“The auditor general for Wales has not made contact with the Circuit of Wales team and we will work closely with him and his officers if required to do so.”

He added the organisation was “disappointed” Mr Davies had raised concerns around the project.

“More disappointingly, he seems to be totally out of touch with the majority of his own constituents who stand to benefit from the exposure, awareness, business potential and crucially jobs that the Circuit of Wales will bring to the region,” he said.  "We have encouraged him to focus on the positive nature of the project and to assist us in encouraging and supporting the private investment into this region but to date he has chosen to ignore this.”

The development includes a 3.5-mile racetrack just north of the Rassau Industrial Estate in Ebbw Vale, which is expected to create 6,000 new jobs.

In July the scheme was rejected by the Welsh Government for a second time after they were asked to underwrite around 75 per cent of the project.