A new report from the Wales Audit Office (WAO) has criticised "flawed" decisions taken by the Welsh Government in its purchase of Llangollen's River Lodge Hotel in 2007.

The devolved government paid £1.6m for the property and subsequently entered into a lease agreement with Powys Fadog to operate a local centre for health, healing and learning.

Plans included a social centre to be built around a café and hotel among other facilities, with one of the first Shaolin Martial Arts Centres located outside China also proposed.

However, River Lodge Hotel has remained vacant five years after its purchase and has since become derelict. The WAO said it was now costing the taxpayer "considerable money".

The report also found that the Welsh Government's purchase price had not been supported by a full valuation, with evidence suggesting the property cost more than it was worth.

Gillian Body, assistant auditor general for Wales, said: "There are important lessons to be learned from the way the Welsh Government handled the purchase and subsequent use of the former River Lodge Hotel in Llangollen."

Details: www.wao.gov.uk