The Golden Casket Art Union Office has officially forgiven loans of $2.2 million to a subsidiary company The Sunday Mail reported last year as grossly wasting public money, and involved in unlawfully constituted attempts to sell Casket equipment and systems overseas.

In its newly released 1994/95 annual report, Golden Casket said it had also forgiven loans totalling $460,000 for developing its international lottery ventures, and a further $1.1 million loan in 1993/94 for developing its ill-fated MAID ScratchIt terminal.

The terminal would have allowed on-line banking, bill payment, and EFTPOS facilities as well as gaming in Casket agencies.

But it was Golden Casket's entrepreneurial subsidiary, G.C. Systems Ltd, which attracted most concern.

The company, established in 1991, was charged with promoting the sale of Queensland lottery technology overseas. It sought to corner the lucrative Eastern European lottery market opened up after the collapse of communism.

When it began, the company estimated potential sales of $A1,000,000,000 in terminals and lottery equipment in the European Lotto/Toto systems. It especially targeted the Ukraine and Hungary, where some 22 million lottery coupons were processed manually each week. The company also sought markets in Ireland, the UK, the Canary Islands, and Spain.

But G.C. Systems ran into heavy trouble.

First, Auditor-General Barry Rollason found the company's activities in 1991/93 and allied spending of $1.54 million were technically unlawful. The state government was forced to enact retrospective legislation to fix this late last year.

Secondly, some employees were involved in the extravagant use of public funds. A typical example was when one employee flew to and from Europe for nothing other than one 15-minute meeting.

However the worst aspect was that some of those connected with G.C. Systems had simultaneously been involved in the formation of a private company to compete directly with the Golden Casket subsidiary they were working for.

The private company, Transaction Technology International P/L, lasted only a few months, but long-enough for a major United Kingdom lottery conglomerate to offer one government employee attached to the private company a shareholding and a seat on its board in October 1991.

Leaked documents from Transaction Technology International noted its "distinctive edge is its 'association' with GC [Golden Casket] -- this is a competitive advantage", a claim Golden Casket itself has always strenuously rebuked.

But neither the private or government company achieved anything. G.C. Systems won no international contracts; its best effort was to come second in a tender for the Irish lottery system.

In the scheme of things, the $2.6 million 'forgiven' is comparatively small in Golden Caskets' overall budget. This year, the Office's total income increased $5 million to $614 million, and the profits available to government also went up by $5 million to $163 million.

But the failure of G.C. Systems P/L to capitalise on this unique period and gain potentially billion dollar markets left some local gaming equipment manufacturers with a sour taste in their mouths.

The annual report said the deregistration of the now-inactive G.C. Systems will be completed during the 1995/96 financial year.