A GROUP of leading businessmen is offering to help the States fund major capital projects.
They have formed Bailiwick Investments, which has already raised £26.6m. from private investors.
And if the States decides to borrow money for work such as that needed on the runway, it would be willing to help.
‘If the States wants us to take something private or they want to go into partnership with us, we would be very pleased,’ said former CI Traders executive chairman Tom Scott (pictured), one of the men behind the company.
‘We have developed this because we perceive that the islands will want private funding for various different projects and we have a lot of money to spend,’ he said.
‘If something came up and needed £100m., we may not have that amount now, but we could raise it. We have the tools to do it. It’s a one-off.’
The company believes it offers the States in both Guernsey and Jersey an option to solve future spending challenges, although it accepts it is not guaranteed that either government will seek its input or support.
Mr Scott said that improving Guernsey Airport was one example of the type of project that could interest the company.
And with the States set to debate capital prioritisation in March and how projects such as the runway, new schools and mental health facilities will be funded, the setting up of the company has been perfectly timed.
‘We have developed this because we think it’s palatable to take something on that needs special care and to be handled in the right manner,’ said Mr Scott.
‘And we believe in light of how the world has gone and the recessionary times we are experiencing, there will be a shortage of funds.
‘To do what they are wanting to do in building schools, waste disposal and airports and for them to keep momentum we believe there will be an opportunity for investment that also allows local people in. We believe we have created the vehicle to do that.’
Comment Page 16
The men behind Bailiwick Investments - Business Page 24
Article posted on 6th January, 2009 - 2.30pm
22 Article Comments
If the offer is a staright, no starings attached loan then excellent.
However, Tom Scottt’s comment “We have developed this because we perceive that the islands will want private funding” suggests there is a wolf in sheeps clothing called PFI.
Perhaps Simon Tostevin shpuld ask Mr Scott what exactly he has in mind. A philanthropic gesture or a PFI scheme.
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I would be very careful and wary of such offers;I would be prudent and say the Island should not live above their means.
Such offers may cause higher taxes; or the right if not repaid to take over other things belonging to the people of Guernsey: Be on Guard.
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If the island goes down the PFI route extreme caution needs to be exercised. Some projects in the UK have ended up costing the public purse exhorbitant sums, and without wishing to be too cynical, I doubt whether Tom Scott and his ilk are doing this for philanthropic reasons!
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There is no need to borrow the money. Our money has written on it ‘The States Of Guernsey’. Therefore surely if ‘The States Of Guernsey’ need more money then print it.
More importantly i’ve always thought it crazy to ask prospective contractors how much they would like to receive for a particular project. By far the most economical method to get the projects completed would be for Guernsey to put a nominal price on all their outstanding unstarted projects. Then increase the price as the priority increases ultimately limited by our ability to pay. Eventually it becomes attractive to a contractor and we get the best possible price. Now who would like to fly to the moon.
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If the States is contemplating raising finance for selected projects, perhaps it should consider issuing fixed rate and dated bonds in the international money markets. Probably a better option.
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Stephen, Eric and Phil have got it right. No matter how the purveyors of this ‘money’ describe their ‘idea’, there would, of course, be strings attached, very strong strings, ’strings’ that would be detrimental to the general Guernsey population. Think about it. It’s commonsense. What group of businessmen in ‘business’ to make profit would ‘direct’ large sums of cash to Guernsey without a guaranteed assurance of great profits or……. without a guarantee of ‘property’ in lieu?
This type of thing is happening elsewhere in the ‘developed’ world. It’s called ‘privatization’. ‘Privatization’ is a dirty word as is the ‘action’ of privatization. It has been allowed to happen in the UK for instance with such necessary items as public water! Now, some low income Brits cannot afford the cost of drinking/cooking water! Who would be behind the money anyway? Would it be a ‘Sark Bartley Boys’ type of affair all over again?
Kill this offer dead. Guernsey can ‘borrow’ money from legit sources if it needs to. Keep Guernsey for Guernsey men and women.
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Of course its not philanthropic. Its an investment vehicle and investors will want and expect a return over and above risk-free capital. Its vital that the true cost of such investment is truly understood by the States, but its equally vital that everyone keeps an open mind.
Frankly the island has very few viable alternatives to funding the required capital projects and partnerships with the private sector have to be considered.
I wouldn’t use the same “shark” terminology used by Stephen but agree that the ability of the States to get their heads around the commercial pros and cons is a concern. My fear is that it will be rejected due to its local novelty and unfamiliarity, as well as fear of the unknown, but that could turn out to be either a huge mistake or a blessing.
An open mind is vital.
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Extremely suspect. No businessmen lend that sought of money without strings attached.
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Is this going to be another Sark ??
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Oh please be careful! And do check the list of people in the club…. might be worth highlighting anyone that goes by the name of Barclay!
Perhaps this group of business people would consider taking on two oil transport ships, and a fleet of buses.
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The States of Guernsey should seriously consider this opportunity. Governments are traditionally not good at stand-alone commercial ventures.
However successful public-private enterprises (PFI’s) provide significant opportunities for all parties. The secret lies in strict but appropriate, fair and well defined regulation. Minimal service level agreements must be identified and incorporated from the start.
Governments need successful private enterprise. Simiarly, commerce needs stable and successful government.
Properly managed, I can see significant advantages for Guernsey.
The Bailiwick has the opportunity to become a world leader for such partnerships. Like attracts like. Other new commercial ventures will also be attracted to “do business” in Guernsey.
With the escalating demise of the finance sector, Guernsey must urgently and seriously look to fill the void and attract new commercial opportunities. We must diversify or die.
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I’m a multimillionaire, I’ve lost a fortune on the stock markets, I’ve now liquidated my investments into cash and then the world central banks drop interest rates to literally zero. What am I to do? I know, I’ll lend it to the states of Guernsey, tie them up for years with complex legal agreements and charge them an exorbitant rate of interest. They can afford to pay through their endless supply of cash from the tax payer. Before long I can turn this into a fund and sell units to investors all over the world and I’ll make a fortune, brilliant!
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As a cynical Guernseyman, if we do loan money from this group of business men.
It maybe some of the lost income tax that under 0-10 now, we do not get.
The irony of this is that we may be loaning our “own money” back, pay interest and perhaps bonds against assets like Belle Grave Bay for example.
I do not beleive money should be loaned, we should look to rationlize States expenditure first.
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Oh no, I’ve just read the article “Investment in Island has already started” looks like I’ve missed the boat, the closed ended fund has already been set up. Oh well, I’ll just have to invest in that fund. The returns are bound to far exceed markets for the foreseeable future with all that tax payers money to extract.
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Well in response to the comment of just printing more money, this is not a solution just look at the two main culprits of this; the UK and Zimbabwe and then say that they are economically stable.
I agree anything that seems to good to be true normally is but without knowing the full terms and conditions and clauses in the proposed loan we can only speculate.
And in this current time of economic turmoil construction prices should be falling so it should be a very good time to finally get some of these much needed projects off of the ground. Such as an incinerator, sewage works and the runway to list but a few.
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Tom Scott is an exceptionaly shrewd businessman. He won’t waste any of his time unless there is a very nice little earner in it for his efforts.
He is left with surplus millions which is good for him. However it is dangerous for us as an Island to feel that he wishes to do us favours with this money.
He is just playing with our ignorance and banking on a dollop of desperaton to further his wealth and that of his shareholders.
We don’t need to borrow at all. We just need to be wiser and start to penny pinch.
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Actually, Paul, a PFI PPP arrangement would be a big earner for Tom Scott and somewhere that will get him a far better return than if it were left on deposit.
Your conclusion “He is just playing with our ignorance and banking on a dollop of desperaton to further his wealth and that of his shareholders.” is something all States memebrs should be required to understand and recite many times,every day.
Audit scotland have calculated that using PFI adds costs of between £200,000 and £300,000 per year per £10 million invested. Multiply this by the average PFI / PPP life of 25 years and you see the reason why PFI is such a favoured approach of those peddling such schemes.
Now, multiply the result above by 10 and you have an idea of the additional money costs of a £100 million PFI / PPP licence to print money scheme.
Now add in the cost of using the facility over 25 or 30 years, remembering that at the end of that time you will have to agree to (sorry, negotiate0 a new agreement.
In addition remember that if the airport runway were part of a PFI deal then a vital part of the Guernsey infrastructure will be controlled by a commercial entity.
The main problem facing the Guernsey taxpayer is that too many States members are likely to support such schemes with the lame excuse “we had no alternative”.
There are plenty of alternatives from more efficient use of public expenditure, tapping up the banks for virtually free loans in return for the £85 million a year tax savings courtesy of Zero 10 etc.
Will deputies heed the numerous warnings not to swim in shark infested seas, and think of the additional financial burdens they will leave for decades to come, if they choose the PFI / PPP soft option?
It’s a bit like selling your soul to the devil.
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To add a bit of light heartedness to this - has anyone seen the episode of the Simpsons when Homer goes to Mr Burns for a loan?
Replace Homer with States of Guernsey and Mr Burns with Tom Scott….
Homer: Uh, I’d like to borrow $5,000.
Bank Clerk: Sorry, I can’t approve a loan that size myself.
[she walks off; Mr. Burns and Smithers appear]
Mr. Burns: Hello.
Homer: Aah!
Mr. Burns: Simpson, eh? How can I help you?
Homer: Mr. Burns, you do this personally?
Mr. Burns: Oh, it’s a hobby. I’m not in this for any personal gain, heavens no! By the way, are you acquainted with our state’s stringent usury laws?
Homer: Us-ury?
Mr. Burns: Oh, silly me! I must have just made up a word that doesn’t exist. Now, what is the purpose of this loan?
Homer: I want to buy a pony.
Mr. Burns: Isn’t that cute! Smithers, he’s planning on joining the horsey set!
Mr. Burns: That is it, isn’t it? You’re not planning to eat it?
Homer: No, I need to get it for my little girl because she doesn’t love me any more…
Smithers: Shut up, Simpson.
Homer: Sorry.
Smithers: Do you have any collateral?
Mr. Burns: Oh Smithers, let’s not be so cold. His spirit is my collateral. Just sign this form, and the money will be yours.
Mr. Burns: [as Homer begins to sign, Burns starts laughing evilly]
Mr. Burns: Sorry, I was just, um, thinking of something funny Smithers did today.
Smithers: I didn’t do anything funny, sir.
Mr. Burns: [whispering] Shut up!
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Well, Bonne Année, Stephen John, and through gritted teeth thank you for saying what I would have wished to say.
I found the patter of Tom Scott’s money lenders reminiscent of that used by Charles Billson in his Belle Greve plans.
I was quite alarmed, as a door=knocking candidate in the 2008 deputies election, to find how many people thought Billson was offering to pay for the developments as opposed to the reality of his offering to very kindly arrange for Guernsey to borrow money to give him the business.
Similarly, Tom Scott et al are silent on the interest rates and other small print they envisage.
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I too see a wolf in sheeps clothing.
This is about making those that offer the money more money…
Guernsey has got to learn to stop being greedy on the developments it wants, and to rationalise on what is actually really needed.
Global greed is what is destroying the earth, we have to stop living life for own own life but to think beyond and that of future generations.
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Cenkos: Beware of greeks bearing gifts
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I have direct knowledge of PFI within the UK and believe me it does not offer value for money whatsoever.
Projects go to the cheapest tender, not the one offering best value for money and as such the service is so poor that shortly thereafter remedies, costing loads of money have to be put in place to ensure standards are met; typical projects with disasterous results include:
- hospital PFI; cleaning, building, equipment maintenance, all costing millions over original budgets
- airports
- medical services
- local housing projects
Bailiwick Investments will benefit one group of people only - the Directors and Shareholders of that organisation. Companies do not operate as a charity, unless registered as one of course.
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