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It’s an important question to ask: What is the GIF? The financial vehicle created to grow public money while simultaneously benefiting ‘directly, or indirectly, the development of the Bailiwick’. The purposely opaque fund recently made headlines – as a potential investor in Condor’s new ferry – and its transparency has once again been called into question.
The privacy of the fund remains absolute, with the managers of the Guernsey Investment Fund – Ravenscroft – committing the interior of the fund to secrecy to protect its private investors, but with millions of pounds of public money being poured into it, should the taxpayer be offered more insight into how it operates, how it invests and why it makes the decisions it does?
The Guernsey Investment Fund was launched in 2018 with seed money - £25million of public cash - from the States of Guernsey. It was hailed as Guernsey proving itself ‘open for business’ and the Fund immediately attracted several private investors, including – at the time – a company called MXC Guernsey Ltd and Pula Investments (MXC Capital Ltd has since pulled its investment out of the fund).
The then President of P&R, Deputy Gavin St Pier, spoke highly of the Fund and how it would benefit the island and the taxpayer. He said it should achieve a significant return on the island’s investments and serve as an economic enabler.
Importantly – and something to remember - he emphasised that the Fund was built with Ravenscroft as an entity at ‘arm’s length’ from government. Neither politicians nor civil servants would be able to guide the decisions being made by an independent three-person board regarding what the Fund invested in. And due to the inclusion of private investors, the secrecy of its operation was and is paramount. As with all general investment funds not listed on the stock exchange, its investors and investments remain private. The only information forthcoming is that which is provided.
Jersey made movements to try and set up its own Jersey Investment Fund once, promoted at the time by former-CEO Charlie Parker. This, however, failed to materialise.
The three men who comprise the GIF Board – and influence the direction of the fund under the eye of Ravenscroft (independent to the States) – are Mel Carvill, John Hollis and Simon Thornton. Mr Carvill is a business heavyweight and Chartered Accountant, having recently been appointed as the Chairman of the Board of Directors to the Bank of Georgia Group. Mr Hollis is equally well established, with a long international business career and is also the Knight Commander of St John in Guernsey. Finally, Mr Thornton was the CEO of Praxis IFM for 16 years and currently sits as a non-States member on STSB and chairs the property firm, Watts. All well connected, influential individuals with decades of financial experience between them.
The GIF is split up into cells which hold money earmarked for specific investments. The States of Guernsey initially invested £25million into a Technology & Innovation Cell within the Fund. The States have since dropped another £40million into the Fund and it has been allocated into the Property Cell. P&R announced last month that a further £5million lump sum would be invested into an Infrastructure Cell as part of a move to buy Condor a new ferry through GIF. However, GIF is no longer involved in the States’ fractious attempts at buying Condor a ferry and it’s understood that the £5million earmarked for the fund was never transferred. In total, that equates to £65million of public money invested into GIF to date.
In its annual accounts the States of Guernsey have not specifically broken down the returns the government has received from its investment in GIF. However, the States instead reveal the full returns from the Consolidated Investment Fund – which incorporates all States investments overseen by the States Investment Board. When Express asked for the exact return to the States from GIF P&R chose not to answer.
The decision to create the Guernsey Investment Fund came from the Bond & Investment Sub-Committee of P&R, which is now known as the States’ Investment Board. SIB is also meant to operate discretionally and divorced from P&R. It is comprised of three independent board members and the States Treasurer, is chaired by a man called Richard Crowder and advised by a UK investment advisory group called Cambridge Associates.
SIB is responsible for the entire States of Guernsey portfolio and has oversight of GIF. The appointment of Ravenscroft was “made following a review of possible managers by the States’ investment advisors at the time” according to P&R. SIB is responsible for overseeing more than 300 collective investment schemes that total £3.4billion.
Hundreds of applications have been made to the GIF for funding and by its second year the Fund had invested in 11 projects, working toward a plan to invest in three cornerstone investments and several others. The cells are named for the types of investments they’ll be funnelling money towards, but beyond this, it’s quite often unknown. To maintain the confidentiality of investees, Ravenscroft rarely discloses details about each investment.
A couple of the larger 'cornerstone' investments have been publicised, however. GIF announced a "significant" investment in Next Generation IT in 2019 and a potential investment into Condor was announced earlier this year. The plan was for Condor’s new boat to be bought through the Guernsey Investment Fund and P&R would be dropping another £5million into a long-mooted Infrastructure Cell within the Fund. This, however, wasn’t to be and the deal collapsed shortly after being announced, forcing the Civil Contingencies Authority to meet and direct P&R to lend £26million from the States’ bond to Condor. It’s understood that the ‘asset’ - the MV Straitsman – would be lost if this unusual turn of events hadn’t happened.
The two questions that keep bringing Express back to the Fund are: “Does the States of Guernsey have influence over GIF?" and “Should the public know exactly where public money is invested?” The answer to the first question should be obvious, it should be a resounding ‘no’, but it is an unbelievable example of parallel thinking that both P&R and the Fund intended to buy a boat at the same time. When asked about this coincidence – after spending more than a year touting his intention to ‘buy a boat’ - Deputy Ferbrache said: “It's an investment fund, it must have concluded independently that the purchase or lease of a boat, whatever arrangements it was going to do, was a good investment for the money expended. Because if you're an investment fund, you tend to invest your monies in things that are going to earn you an income and things that are going to be safe."
When pushed on whether there had been any conversation between P&R, himself or the managers of the Fund, Deputy Ferbrache said “I don't recollect any conversations. Certainly none recently on this”.
It’s unclear how the agreement to put £5million into a new cell prior to GIF’s original purchase of the ferry came about and what kind of conversations were had in the run up to it. However, if we take this all at face value, it still leaves the question – should the public know where their money is going?
£65million of taxpayer’s money has been funnelled into the Fund, nearly the same as the island’s looming financial deficit. Without knowing the exact ROI we’re getting from the Fund - a third question? - it could be argued that the public deserves a better understanding as to how their money is being spent...
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