States members were not told the truth about the cost of the incinerator when they debated whether or not to go ahead with the project. And yet this was the biggest capital project ever, AND there was the little matter of it being partly priced in Euros.
(NOTE The winning bidder, CNIM, had offered, from the start, to put forward a price in sterling only, in other words they would take on the hedging risk. This was not taken up by TTS. For more on that see here (only not just yet!))
States members were not told on July 9th – the day of the debate – that the price they were approving, of £106.31 million, had already risen since May 20th – the date the proposition had been lodged just 7 weeks earlier – by £3.57 million to £109.93 million, due to movements in the exchange rate.
And they were not told that there was a risk of losing up to a further £3.5 million between the date of the debate and the date of signing of the contract in late October/early November. The cost of hedging the entire risk of £7 million would have been around £2 million.
Instead they were given these words:
“The …………. contract is partially subject to currency risk” which is correct. Then members were told: “This exchange risk will be eliminated upon the signing of the contract with the preferred bidder at which time the Euro/Sterling rate will be deemed to freeze.”
DON’T FRIGHTEN THE CHICKENS ! Instead tell them “will be eliminated,” and “deemed to freeze” – and everything will turn out alright.
And 2 paragraphs above this, the section headed “Funding requirement” begins with these words:
“Having conducted a tendering process the Minister for Transport and Technical Services has proposed, with the support of the Council of Ministers, to purchase a 105,000 tonne capacity EfW from that department’s preferred bidder, a consortium headed by CNIM (‘the CNIM consortium’), for a fixed price of £93.35 million.”
“Fixed price“!! And don’t forget that the price was already wrong by £3.57 million. So States members had vital information kept from them and were told porkies about a “fixed price” by Ministers desperate that their pet project might fall at the last hurdle. And it is you the taxpayer who pays the price for such deception.
So, what is the lesson for voters? Well integrity is pretty important, isn’t it? Having an instinct for telling the truth. And it might pay you to check the candidates for brains. Not one States member at the time spotted that anything was dodgy about these statements. But brains are not enough. You have to have the attitude that goes with it, the determination not to be fobbed off, to get to the truth. At the hustings in St. John one candidate, Lyndon Farnham, criticised the hundreds of questions which are now asked and which are ‘a waste of time.’
Taxpayers lost over £8 million because no one asked the right questions about this deal.