GOVERNMENT grants worth £30 million were paid to LG Semicon, at Newport, for jobs that were never created, an AM has claimed.

Now the European Commission is investigating the deal, with the member states, to see if there has been a violation of State Aid Rules.

LG came to Gwent a few years ago in Europe's biggest inward investment plan, promising 6,000 jobs on the Imperial Park site at Duffryn at two factories - LG Electronics and LG Semicon.

But, following a slump in the microchip industry and a slide in the Far East economy, the LG Semicon factory never opened and no jobs were created.

Wales's Economic Development Minister Andrew Davies was questioned about grants to the company by Alun Cairns AM, the Conservative's economic spokesman.

Mr Davies said Regional Selective Assistance (RSA) grants worth £69.5 million were offered as a package to fund job creation at both LG Electronics and LG Semicon, in 1997, by the then Welsh Office.

But he said details of dates and amounts of any actual payments were confidential.

Mr Cairns slammed the Minister for "hiding behind commercial confidentiality" and for refusing a request from the economic development committee to provide a paper on the matter.

"This is an enormous sum of money that has been paid in error. It's nothing short of a scandal," he said.

"There are issues of confidentiality, but they wouldn't relate to a payment made in error.

"All I am trying to do is scrutinise the Assembly Government, and the Minister has an obligation to the public to state whether such a payment was made.

"European State Aid rules will have been broken and I have written to Commissioner Barnier asking for him to intervene."

A spokesman for the European Commission said: "The UK government has contacted the Commission on the matter and if a project does not work out as was initially planned, and fewer jobs are created as a consequence, that does not necessarily mean an automatic violation of State Aid Rules.

"At the moment the Commission and Member States are assessing the issue together."

A spokesman for LG Electronics said they were not in a position to comment at this time.