Jul 08 - GSD Says Picardo “Misled Parliament And People Of Gibraltar”
A statement from the GSD on the Sunborn project investment debate:
The GSD Opposition is appalled at the way the Government attempted to keep secret the existence of Credit Finance Company Ltd, the £289 million investment of savers’ money, made by the Gibraltar Savings Bank, to that company and the £30 million loan made by that company to Sunborn (Gibraltar) Limited.
It is equally appalled by the extent to which the Chief Minister of Gibraltar has been prepared to mislead both Parliament and the people of Gibraltar to avoid disclosing these facts in the middle of a by-election.
It will be recalled that Credit Finance Co Ltd is owned by a wholly owned Government company and the Gibraltar Savings Bank. The directors of Credit Finance Co Ltd include the Chief Secretary and the Financial Secretary of the Government of Gibraltar. The Gibraltar Savings Bank is also under the management and control of the Financial Secretary.
At the last session of Parliament, the Leader of the Opposition asked the Chief Minister to: “State whether the owners of the Sunborn Floating Hotel have had the benefit, EITHER DIRECTLY OR INDIRECTLY, of financial assistance from the Government?” The Chief Minister answered that: “No financial assistance has been provided by the Government to the owners of the Sunborn Floating Hotel”. We now know from an interview given by the Chief Minister to Dominique Searle of the Gibraltar Chronicle, published the day after the by-election, that Credit Finance Co Ltd had provided Sunborn (Gibraltar) Limited with a £30 million loan secured by way of a mortgage over the vessel, in order to help the owners pay for the refitting of the vessel. If that is not financial assistance, what is? To suggest that the Chief Secretary or the Financial Secretary made the decision to loan that money to the owners of the Sunborn Vessel independent of Government, must be one of the most dishonest statements anyone who follows politics is ever likely to encounter.
In any event, this was not the only question asked either in Parliament or outside Parliament.
On 23 May 2013, the Leader of the Opposition asked in Parliament: “Will the Chief Minister please provide a breakdown showing how the proceeds from the Gibraltar Savings Bank Debentures, or other debt security outstanding as at 1st May 2013, is invested or has been used by the Gibraltar Savings Bank?” and the Government provided a list of investments as at 31 March 2012, over a year earlier. If that question had been answered truthfully, it would have shown the investment made by the Gibraltar Savings Bank in Credit Finance Co Limited.
Further, during his budget speech, the Leader of the Opposition had questioned whether the Government would use savers’ money deposited with the Gibraltar Savings Bank to fund their projects and that if it did so, it would blow a huge hole in the duty of the Government to account to Parliament for Government expenditure at the time of the Budget. He noted that the Gibraltar Savings Bank Act had been amended by the Government in March 2012, in order to do away with the requirement that savers’ money had to be invested in cash deposits, or their equivalent (i.e. very safe investments), and that it was now possible for Government to use that money to fund its projects, which was (in our view) wrong in principle. Indeed, it is all very well for the Government to claim that it is bringing public debt down, when it is simply transferring that debt to the Gibraltar Savings Bank and then using that money to fund its projects via a web of companies it chooses to keep secret from the Opposition and the public! It is noteworthy that in a search at Companies House conducted today (in other words, a week after our previous company search), the investment of the Gibraltar Savings Bank in Credit Finance Co Ltd has gone up from £289 million to £303,757,500!
The Opposition wants to make it absolutely clear that it only found out about Credit Finance Co Ltd on Monday 2 July 2013 (three days before the by-election) and in our first press release, asked the Government to explain the situation because we could not believe that the Chief Minister had so brazenly misled Parliament.
Even when we were asking very specific questions on the last week of the by-election about Credit Finance Co Ltd, the investment of the Gibraltar Savings Bank in it, the mortgage over the Sunborn vessel and the loan made to Sunborn (Gibraltar) Ltd, the Government and the Gibraltar Savings Bank issued statements repeating that neither the Government nor the Gibraltar Savings Bank had loaned the owners of the Sunborn any money or made any investment in it. In other words, they stuck to that line despite the fact that by then, we knew and were asking about Credit Finance Co Ltd and its loan to the owners of the Sunborn! That line was clearly calculated to create the impression that no loan had been provided when it was obvious that a loan had been provided via Credit Finance Co Ltd.
This places Senior Civil Servants in a very difficult position indeed. The Gibraltar Savings Bank is under the management control of the Financial Secretary who is also a director of its subsidiary, Credit Finance Company Ltd. He, therefore, must have known about the loan to Sunborn (Gibraltar) Ltd. We cannot for one moment believe that he approved the press release issued by the Gibraltar Savings Bank on the day of the by-election, which was highly misleading given the questions we were by then asking.
These are serious good governance issues and come on the back of the Opposition exposing the private companies registered at No 6, some of which were run by GSLP supporters, which the Government attempted to explain away as “incubator companies”.
Finally, we are seeing a very worrying trend in the way the Government is trying to politicise and hide behind either senior civil servants or public institutions. We have seen it with the press release issued by Gibelec and the Gibraltar Savings Bank on the day of the election, the selective quoting and misuse of the Principal Auditors' report the day before the by-election and the misuse/misrepresentation of the Memo from the Financial Secretary a week before the by-election.
The recent events not only make a mockery of Parliament and the democratic process itself, but also raise very serious concerns about the management of Government finances.
