on not hedging the Euro

As we all know, the Treasurer of the States failed to hedge the Euro. Only that is not quite true.

 A key part of the case “against” the Treasurer was that Terry le Sueur, Treasury Minister at the time, did not know that there was a problem with the Euro. Therefore it must have been down to the Treasurer who should have been looking after everything (and by implication, wasn’t).

 On July 3rd 2010 Terry Le Sueur, then Treasury Minister, told the Public Accounts Committee the following:

Senator B.E. Shenton:

When Senator Ozouf appeared before the panel he said that he was aware of the hedging problem within a few hours of taking office and that it was one of the most serious things he had to deal with.  When did you first become aware that there was a problem with regard to the currency hedging issue?

Senator T.A. Le Sueur:

Some time early in December. (my emphasis)  I cannot give you an exact date but certainly early in December.

Senator B.E. Shenton:

So it would be around about the time that Senator Ozouf was aware and not before that?

Senator T.A. Le Sueur:

Probably before because I was speaking to the Treasurer from time to time on a variety of things, so while equally Senator Ozouf would have been aware when he became Treasury Minister, I was aware probably slightly before he was Treasury Minister but I made him aware when he took over from me.

source: Public Accounts Committee hearing transcript

However the statement made by Terry in that exchange about December is simply untrue.  Or, to be more precise, it is almost impossible to explain within the normal meaning of English. On Sunday May 18th a senior official of the Treasury sent to his Minister, Terry le Sueur, a draft report and proposition for the funding of the plant, and he set out in the accompanying briefing paper the overall costs of the project. 

He also discusses in full the currency risks ending with the words: “The cost of the risk being c.£1.97 million now(the price of the option) and a worse case scenario being £6 to 7 million with no option in place for the entire period to 31 October 2008 (based on the Hewitt exchange rate advice).

That day, Sunday 18th May, was 2 days before the Report and Proposition for funding the incinerator were lodged. So Terry was checking the final version of the report and proposition for the largest capital project, etc. etc. It is inconceivable that Terry did not read what was in that particular envelope very carefully indeed.

And yet Terry “first became aware that there was a problem with regard to the currency hedging issue”  “some time early in December.”

You can see the extent of the “forgotten” briefing sent by the Treasury official  at paragraphs 101 to 103 of the CAG’s (Comptroller and Auditor General’s) report into the Euro fiasco. see here

AND no information about the potential sums of money at risk (up to £7 million), nor the cost of hedging that risk up to the contract signing date (around £ 2million) found its way into the report published for States members.

AND the man who wrote the report resigned just 2 days after the day of the debate. (see the CAG’s report, paragraph 110).

For John Richardson’s role in the dreadful error, see here

So, what is the lesson for voters? Same as for another page: 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. Some other States members are now also suspicious about the claims about the Treasurer, but how many went after the truth? Me.

I claim no special virtue, other members dig in other areas. But it is true that you need States members like terriers. 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.’

You have been warned.

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