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Condor’s purchase of a new boat has raised several pressing questions, especially since it came after a meeting of the Civil Contingencies Authority.
The long-mooted boat was originally meant to be bought through the Guernsey Investment Fund (GIF) after Policy & Resources committed to plugging £5million into a new infrastructure cell. It was even discussed as recently as 21 March, during a Scrutiny hearing where the Committee announced that the sale hadn’t actually gone through yet and the £5million hadn’t been transferred to the Fund.
This was a sign of things to come, as only two days after this hearing – 23 March – the Civil Contingencies Authority was convened to consider a “critical matter”.
The President of P&R, Deputy Peter Ferbrache, said the group was pulled together to secure Condor’s purchase of a new ferry “to mitigate potential risks to our supply chain”.
The CCA then directed P&R to enter a joint venture with Condor to buy the MV Straitsman - £3million in public money, coupled with £3million from Condor, bolstered by a £26million States loan to Condor, pulled from the States bond. No more GIF.
The decision and its process has led to questions being raised by the public and our own elected officials.
“In my experience, apart from COVID, the CCA meets extremely infrequently,” said Deputy Gavin St Pier, who had been invited to grill P&R during the recent Scrutiny hearing.
“Having said that, the very essence of the CCA is that it meets when it needs to and that need is almost by definition unplanned. It is very difficult for anyone outside the CCA to speculate as to the reasons for its engagement and the apparent threat to the supply chain, but the situation does beg a whole host of questions that I hope will be answered in due course.
“The CCA will have had to satisfy themselves that the legal tests set out in the law had been met. Given the deal was announced as having completed several weeks ago and then it turned out it hadn’t, it’s not too hard to imagine circumstances where the ‘emergency’ became that the deal – and so the ship - was going to be lost if it wasn’t expedited.”
He posited several questions when commenting on the deal: “Did the board of the GIF conclude that this was not a deal they would be willing to do? If so, why?” These would be questions for GIF, who operate the Fund under a cloak of secrecy due to the very nature of it.
Similarly, he said “it was implied at the recent Scrutiny panel hearing that the debt funding for the deal would come from a commercial lender rather than the States. That’s now changed. Why?”
He has also queried the status of Condor, suggesting that Condor relies heavily on borrowings and “like many others struggled to meet some of its banking covenants as a result of the stress on its trading caused by Covid”.
“Did it meet its covenants at the end of March?
“What rate is the States lending at? We know it is fixed for 10 years but on what terms? How soft are they? Are they above or below the States’ own cost of borrowing at 3.375% through the States of Guernsey bond? Presumably the States will have recourse to the ship as security for the loan?”
He concluded by wondering what kind of ‘commercial return’ the public should reasonably expect.
The President of Scrutiny has also weighed in with a couple of queries of her own, including what kind of interest rate has been applied to the loan.
These questions, and more, could be posed directly to P&R if a future Scrutiny hearing is called. Which, according to Deputy Yvonne Burford, is possible.
“I think the CCA/P&R are ultimately going to have to provide more details and explanations for the involvement of the CCA beyond what has already been given,” she said.
“Had this occurred before our recent hearing with P&R we would have asked questions during the hearing, but of course my Committee and individual deputies are at liberty to ask questions of P&R at any time and my Committee will likely consider this issue at its next meeting.”
The former Vice-President of P&R took to Twitter to air her own concerns about the announcement:
Excellent analysis. All capital spending put on hold by P&R who then spend £26m on a second hand boat. Why CCA involved and why Jersey not? Why GIF involved at one point and not now? All very strange.
— Deputy Heidi Soulsby MBE (@HeidiSoulsby) April 4, 2023
Express has reached out with several questions of its own. Last year the States of Guernsey tweeted that ‘our supply chains are strong’ and so Express has queried what exactly the current critical risk is.
Express has also asked about any conversations that may or may not have been had with Jersey about the purchase. While Deputy Ferbrache did say ‘the objective for the States of Guernsey remains to conclude a new operating agreement with Condor and the government of Jersey, and this has been the subject of numerous recent discussions with Jersey Ministers’ it isn’t clear why Jersey wasn’t involved in the purchase of Condor’s fifth boat.
The Minister for Economic Development in Jersey, Deputy Kirsten Morel, said: “I remain committed to working with our States of Guernsey counterparts as we have shared objectives to secure high-quality, resilient sea connectivity. Both islands depend upon - and benefit hugely from - our sea links and I am confident that we can meet our shared Channel Island objectives in any new arrangement. This vessel acquisition does not change our outlook or approach.”
Since the boat has no longer been bought through a financial vehicle like GIF, Express has also asked about a service level agreement outlining the exact returns the public can expect and when it might be disclosed.
More to come...
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