Politicians on Economic Development "expect" that the majority of funds incurred by the Public Trustee in "extremely serious", multi-million pound legal action will be recovered eventually.
The States covers the liabilities incurred by the Office of the Public Trustee in the form of an annual grant, with any money recovered then repayable to the public purse.
However, the latest official documents show that the Office recovered only £52,835 in 2018 - around 7% of the £708,652 initially forecast - compared to an outlay of £1,499,332 in public money.
The annual grant increased further to £2,306,115 in 2019 to cover potential liabilities, as legal proceedings ramped up against the trustees of the collapsed Guernsey-based IXG Scheme.
Pictured: The now-retired Bailiff, Sir Richard Collas, issued judgment in favour of the PT in proceedings brought against the former trustees, associated companies and a named individual last year. That judgment - which can be read HERE - ordered the transfer of ownership of a UK-based property from Red River Properties & Others to the Public Trustee.
Deputy Gavin St Pier has asked why the Public Trustee’s submission for 2019 did not take place in 2020, and wanted to know when the accounts for 2020 would be published, in accordance with the Office’s formal requirements to the States.
Economic Development President Neil Inder attributed the delay to lockdown, saying his Committee had only last week been presented with the 2020 accounts, which will be submitted to the States before the year is out.
Deputy St Pier also sought an update from Deputy Inder on the current expectation for how much of that £2.3m would be recovered.
“The Public Trustee had to take on a complex and difficult case in 2017 that is the subject of ongoing legal proceedings and is not yet resolved,” the Economic Development President replied.
Pictured: The Office of the Public Trustee originally expected to recover more than £700,000 in 2018. It ultimately ended up recouping just over £50,000 and needed a £1.5m grant from the States.
“Given the complexity of the scheme recoveries work, it was always expected to span multiple years which means the substantial costs outlaid to progress matters was expected to accumulate over this period.
“This work, and the related costs incurred, continues to be regularly reviewed and the continuing expectation is that the vast majority of these costs will be recovered, which is consistent with the debt provisioning approach being adopted.”
It was agreed during the previous States term that political responsibility for the Public Trustee would transfer from Economic Development to Policy & Resources.
“I would personally do it tomorrow,” said Deputy Inder. “But what I think and what can happen are often two different things - these things are embedded in law.”
He said the Committee will revisit an internal review – undertaken in the previous term - on how to move the financial risk of the Office of the Public Trustee away from the taxpayer.
Deputy Inder said that could mean moving the function of the PT to an industry body.
Pictured: The Office of the Public Trustee received £2.3m in public money in 2019 in order to cover any potential liabilities.
Guernsey’s Public Trustee is currently a civil service post and any legal costs and liabilities incurred are funded by the States.
“As soon as you get a very extreme version of a very serious case the figures become really scary,” Deputy Inder said.
“As Deputy St Pier will know, we will not be able to give an end date to it at all, or how long our exposure will be. We can only listen to the advice given to us. Right now we are right in the wheel of it and hope that the costs being expended by the taxpayer can be got through the assets within the trust."
Public Trustee Luis Gonzalez confirmed that matters relating to the IXG Schemes “have continued to constitute the vast majority of the OPT’s case management activities.”
Mr Gonzalez, an experienced lawyer, was appointed as Public Trustee in May 2018, replacing Catherine Rowe, who resigned from the position in November 2017 following the confirmation that the Office of the Public Trustee had paid Ferbrache and Farrell £300,000 out of public funds.
Deputy Peter Ferbrache, a consultant for the law firm which bears his name, was President of the Committee at the time, however he was cleared of any knowledge or wrongdoing of the payment following an internal review.
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