A Tynwald inquiry into the government’s bail-out of the Sefton Group found no evidence of preferential treatment.
Controversy surrounded the bail-out deal announced in April, in which government approved a £1.3m loan repayable over five years and a £3.2m sale and lease back agreement for the Middlemarch site. At the time, Chief Minister Allan Bell said it was designed to prevent the debt-ridden group from going under.
Now the Economic Policy Review Committee has published its report into the affair – and has concluded the government was right to act as it did.
It states: ‘We have not found any evidence of preferential treatment connected with the support by the government.’
It concludes it would be fruitless to speculate what would have happened without the bail-out – but that government was reasonable to assume that its support was needed to guarantee that the Sefton Group was saved.
Its report into the affair states: ‘It is quite clear the Sefton Group was in serious difficulties. The Sefton Group found it necessary to approach the government for support.
‘Based on the evidence we have seen, we find it quite reasonable the government should assume that without its support the future for the Sefton Group was limited.’
The committee conclude there was a substantial risk of considerable job losses if the Sefton Group had failed which would have been a serious blow to the island’s economy at a difficult time.
‘There is no doubt in our mind that the collapse of all or part of the Sefton Group would have had significant effects on many local businesses throughout the island – many of them small businesses which might well not have survived,’ it added.
It accepted the acting Attorney General John Quinn, a former legal counsel and company secretary for the group, played no role in the negotiations and there was no evidence of special treatment because the Sefton Group’s chairman is former Chief Minister Sir Miles Walker.
The committee said a matter of concern had been the buy-back option on the Middlemarch site but concluded this arrange had made sense as it would not have been to the benefit of the economy if plans to develop the site had been undermined.
But it found the government stretched its authority in using the Land and Property Acquisition Fund to acquire the Middlemarch site – a use which it said was ‘well beyond’ the fund’s fundamental purpose.
Its report outlines a series of recommendations including a review of the law to government to support a company which falls foul of the Enterprise Act 2008 over payment of income tax and national insurance, but, where there is no suggestion of dishonesty.
