GSD: Savings Bank Investment in £100M Stadium “Opaque And Not Clear Value for Money”
The GSD is calling on Government to publish the terms of any agreement reached between it or the Savings Bank with the GFA on the financing of the proposed £100M stadium.
A statement continued: “The statement made by Government which purports to provide answers to questions raised by the Opposition avoids key questions and is less than forthcoming about the details of the scheme.
“In answer to press questions the Government had already stated on Monday that the Savings Bank investment would generate a “small” interest rate return for the Savings Bank. People will be surprised that the Savings Bank is providing all (or most) of the money and only making a small return. From the explanations provided the residential and commercial aspects of the development will not be for the benefit of the Savings Bank. Why?
“The Government has accepted that when the land was sold to GFA for £16.5M in 2016 the price did not factor in that the land would be developed for residential or commercial purposes. If someone is sold public land and then wants to develop it for commercial or residential purposes they would always have to negotiate and pay an additional sum of money (a premium) to develop it because the development of land is a valuable public asset.
“Rather than now revalue the land and seek a premium for the residential and commercial development the Savings Bank are apparently providing a “loan” to GFA that will be repaid from the profits of the development that the GFA never paid a premium for. In practice this is the Government (through the Savings Bank) stumping up the cash for the development, not charging the right value for the land and allowing another entity to keep the profits. Who those entities are remains deeply unclear after the Government’s statement. Rather than this being a good investment it is free cash being given away by the Government to others.”
Leader of the Opposition, Keith Azopardi said: “The effect of the Government explanation of the investment scheme is that the land was sold at an undervalue in 2016 and now that GFA want to develop a high-value/high-profit scheme which contains residential, commercial units and a hotel the Savings Bank will fund it for only a “small” interest rate return and with the Government not extracting a premium for development of this public asset and allowing someone else to pocket the profits to which the Government or Savings Bank should have been entitled to anyway. That is an outcome that is clearly not value for money and amounts to taxpayers and savers not getting a proper return for their investment. It is unacceptable if that is what is happening as the public are entitled to get better value for their money. This is public or savers monies and not the Government’s.”
The statement continued: “Additionally, the Government should be transparent about how it is structuring this scheme, who is precisely pocketing the profits of the scheme and why. It also needs to be open about who is pulling the strings at Community Supplies and Services Limited. It seems plain now that it is the Government itself behind this structure in one guise or another.
“The GSD had issued its first reaction on the stadium before the Government had confirmed that the cost of the stadium is £100M. This is a staggering amount of money for an 8000-seater stadium. Clearly there may be local and unique factors that affect most constructions but the public (and savers holding accounts in the Savings Bank) are entitled to know why it is necessary to make an investment of that size to produce an 8000-seater stadium.
“The costs of other comparative European stadia some of which combine commercial development are available online. There are many clear examples of recent construction of stadia of comparative size of a far lower cost. Indeed you would be hard pressed to find an 8000 seater football stadium of such a high cost. We list some of these below:
1. AFC Wimbledon - 9000 spectators - £33Million
2. Stadion Dubocica – Serbia – 8000 spectators $25Million
3. Stadion Wisly Plock – Poland – 15,000 spectators - $44Million
4. Stadion Arcul de Triumf - Romania – 8000 spectators -37 Million EUROS
“Indeed even in La Linea itself which is seeing the construction of an 8,000 seater stadium it has been reported that the Ayuntamiento’s contribution to the construction is only 7 Million EUROS.”
Mr Azopardi added: “Major questions that go to the root of value for money and who is benefitting from the scheme also arise because of this. People are entitled to know when public assets are sold at an undervalue and savings bank money is used in this way.”
The Shadow Minister for Public Finance and the Gibraltar Savings Bank, Roy Clinton said:
“The amount of money needed for this project is staggering. If this is such a great project I don’t understand why the GFA hasn’t obtained funding directly from an external bank and not had to rely on money taken from public savings. The Government or Savings Bank should publish the business plan for the proposed new stadium project and financial feasibility projections and payback period that underpin the loan notes that will be issued. This needs to be commercially sound and at arms-length with no conflicts of interest, political or otherwise. The answers provided so far are light on detail and have made depositors in the Gibraltar Savings Bank uneasy despite Government’s assurances.”