I am writing concerning the Treasury’s accounting practices and lack of transparency in the financing of two supposedly arm’s length government owned companies.

Namely the Steam Packet Company (SPC) and The Manx Development Corporation Ltd (MDC).

Concerningly, these companies through financing and funding arrangement are now in fact simply ‘government quangos’ (wholly owned by government with devolved powers financially reliant on government funding).

These companies were politically intended to remain arms-length companies operating within their own financial scope.

The Manx Development Corporation projects were intended to be financed by attracting inward investment (PWC report).

On February 17 (through a Freedom of Information request) a variation of the shareholder agreement between the Treasury and the MDC took place.

This variation confirms fundamental changes to the financing arrangements of the company.

It is deeply concerning this variation was not publicised or consulted on.

Secondly, that as Treasury Minister with the benefit of this variation you appear to have underwritten an overdraft extending to a staggering £100million with Lloyds Bank, for this company to draw down debt, sanctioned only by an elite Council of Ministers committee of three.

This appears a totally unacceptable governance structure for creating such enormous taxpayer debt, and raises disturbing issues.

As this £100million is unlikely ever to be repaid, is it programmed to come out of government reserves?

Not only has the MDC appeared to have strayed wildly from its task set out by Tynwald in primarily developing government owned brown field sites, but has failed to attract inward investment.

Has the Treasury learned nothing from the Liverpool landing Stage financial scandal. Just how extensive does the MDC debt have to reach before the MDC manifests into the next financial calamity.

Through a Freedom of Information request on August 2, a letter from the Treasury confirms that the SPC trading accounts do not account for the capital cost of company assets such as the £80 million taxpayer funding of the new ship.

The letter confirms there is no financial agreement, or leasing agreement, that reflects the taxpayer’s investment of 80 million pounds in a new boat.

There is no corporate structure that taxpayers’ investment is to make a return, be recovered, repaid, or accounted for in the companies trading balance sheet.

This creates a most disturbing situation.

The SPC trades without servicing a mountain of debt.

Therefore, the SPC balance sheet is demonstrably inaccurate and misleading.

Further disturbing, confirmed by the Freedom of Information request is the fact that any dividend, if the company makes a trading profit, is at the behest and discretion of the SPC board of directors.

This is simply outrageous.

There is no incentive whatsoever for this company to achieve profitability.

Treasury Minister, Covid excuses are over, your position has an expectancy of delivering transparent corporate financial control and protecting the island’s assets and reserves.

You as Treasury Minister should demonstrate fiscal and financial competence by example.

Be able to demonstrate to Tynwald Treasury has good corporate governance expertise and prudent financial controls systems.

If the Freedom of Information responses are correct, how can you now ask the Manx public to shoulder more cuts of front line services which will inevitably manifest from your required departmental savings, when the Treasury appear to be incompetent in ensuring financial controls surrounding taxpayers assets and reserves.

If the SPC and MDC are examples of Treasury’s corporate due diligence and understanding of commercial competence then we as an island are heading for financial disaster.

If government cannot afford homes for our old people, it appears a social injustice for you as Treasury Minister to approve multi- million sums to the MDC to create luxury accommodation for people who have not even arrived here yet?

I look forward to a reply which includes an immediate intention to inform Tynwald that failures of financial structures are being addressed.

That I am wrong, in that as MDC is a limited company Lloyds Bank will shouldered all the risk of none payment of the 100m loan and any subsequent accumulative interest payments.

Henry Kennaugh

Hillberry Green

Douglas

This letter was first published in the Isle of Man Examiner of August 8.

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