Thursday, May 23, 2013

Ferrygate - Where Does The Buck Stop?

The sorry saga of how Thanet District Council handed over £3.3m of taxpayers' funds to a failing ferry company continues to rumble on. Let's recap the story so far, and then make some conclusions:
  • At some point in early 2011, TransEuropa Ferries started getting into trouble and were having difficulties paying their bills at the Port of Ramsgate (owned by TDC). This could not have come as a surprise, as TEF had been running down their services for years, and despite TDC spending £700,000 dredging the port for a new, larger ferry (the Ostend Spirit), the new service had failed to attract more than a few months' income. The £700,000 spent on dredging, which had been done without adequate financial safeguards in place to recoup the money from TEF, plus around £70K of bad debts owed by TEF, were written off. That's on top of the £3.3m that TDC have 'just' discovered.
  • According to TDC, around March 2011, at the same time the council effectively removed the port accountant who had successfully handled the port's financial and commercial affairs for 27 years and had raised concerns about the slowing up in payments by TransEuropa through late 2010 and early 2011, some bright spark at the then Tory-led administration decided that, rather than chasing the invoices, they would allow more debts to stack up in the forlorn hope that TEF would come good.
  • TDC's then Head of Regeneration, Brian White (who held the port in his portfolio), is reported as having demonstrated little concern about the mounting problems, and having few solutions as to where to source another major shipping line to replace the cash cow that had previously been TEF.
  • Not long after, the aforementioned Brian White was given a golden handshake of around £150,000 (including pension arrangements) and waved on his merry way. Chief Executive Richard Samuel, who also presided over this state of affairs, scarpered too, with £173K in his pocket, leaving the current Chief Exec Sue McGonigal to land the six figure job (and keep her finance officer responsibilities) after a 20 minute interview.
  • By the time the new Labour administration came into power at TDC in December 2011, TEF's debts were already standing at a staggering £1.7m. Alarmingly, there seems to be no mention of this sum in TDC's accounts for that year. Nonetheless, the Labour administration were, we assume, informed of the situation, and were complicit in the plan to allow TEF to carry on not paying their bills.
  • At the beginning of 2012, The Ramsgate Port and Marina Cabinet Advisory Group, which was set up in late 2010 to advise on the commercial development of the port, decided that neither it nor anybody else at TDC had the competence to advise on the commercial development of the port, and would therefore spend £20K of public money hiring consultants to do it for them. At which point it also decided that all future meetings would be held in secret.
  • Last month TEF finally went totally tits up, and this week we learn that the total cost to TDC is £3.3m.
  • Not only that, but the Belgians are holding all the debt recovery cards. Where are the ferries? In Ostend.
Now, thinking about this disaster, if TDC were a company, heads would roll, knighthoods would be revoked, and pensions halved. The trouble is, as the Tories set up this silly scheme, and Labour then continued it, they can both conveniently blame each other until the proverbials come home.

But what about the permanent TDC officers, TDC's employees paid for by our council tax, on stupendous stipends of £100K a year or more, who have been overseeing this mess all along? Sue McGonigal has been the Section 151 officer (or Chief Financial Officer in private sector speak), all the way through this ferry farrago. Local government guidelines state: 'The S151 Officer owes a personal duty of care to local taxpayers in managing Council resources on their behalf. In discharging this responsibility the S151 Officer must balance the needs and interests of both current and future taxpayers' and 'the responsibilities of the S151 Officer cannot be delegated'.

Doesn't that mean the buck must truly, and legally, stop with her? Could she not be prosecuted for dereliction of duty? Don't EU rules forbid public subsidies to ferry companies? And doesn't allowing unpaid debts to rack up to £3.3m before imagining that a company might be insolvent show a woeful lack of business awareness, to say the very least? She should do the decent thing and leave without passing go, without collecting a six figure payoff, and never darken our doors again.

In an interview with the Gazunder in June 2011, Ms McGonigal said: 'The flip side of risk is opportunity - and if you are overly risk-averse then you miss out on opportunity.' True. But if you take too many risks, and lose £3.3m of public money, I would suggest that the flip side is you miss out on the opportunity of keeping your job.


Anonymous said...

Well said and very useful summary. The sack for McGonigal sooner rather than later.

Where is the new Mayor Gibson with the Port closing and Ramsgate rising out on a Blue flag in her first fortnight?

Another TDC doublehatter who won't step out of the Party line from Clive in Margate.

Anonymous said...

It isn't for council officers to be "risking" public money. That's the flip-side of having secure tenure. In commerce and industry you take risks to get ahead. If you succeed you get rewarded with money or promotion. If the risk flops you lose money, career progression stalls and you may even lose your job. Those are the rules of the game.

If an unelected officer wants to gamble with public money they should be aware of the rules of the game.

Anonymous said...

The duty of care aspect in the public sector also moves jail further up the scale. It's money given - to some extent unwillingly - by the public after all.

Anonymous said...

Is the tip of the iceberg for what has been going on here for years. An area with such great potential/location/assets should be doing so much better. Who should investigate, Richard you do well, is it time for an offical who can enforce some payback to take it from here (& quickly).

Anonymous said...

Just another indictment against the well paid officers is that the head of TDC commercial services Mr Mark Seed would not or could not confirm the size of the debt to the then head of the scrutiny committee at TDC, independent and now Green Cllr Driver as late as the 26th of April. Looks like they were still trying to pull the wool over his and the public's eyes before the elections. But Cllr Driver has reported the situation to the district auditor. It is difficult to see how the new tory chairman of scrutiny will proceed.

Richard Eastcliff said...

That email exchange from 26 April onwards between TDC's Head of Commercial Services Mark Seed and Cllr Ian Driver is a must-see.

It shows a council officer obfuscating to the Chair of the Oversight and Scrutiny Panel, giving him all the Yes Minister excuses in the book. Absolute tommyrot and a complete contempt for public accountability.

I hope the District Auditor, whoever he or she is, sacks the entire, festering pile of them!

Anonymous said...

In the agenda for the extraordinary council meeting to deal with this on the 29th it says: "The council has now reviewed its outstanding debt position with Transeuropa and can confirm that the debt stands at circa £3.3m". Why is it Circa? Why is it not to the penny? Surely they know the exact amount that is owing?

Anonymous said...

The auditor is Andy Mack of the Audit Commission - the organisation is due to be disbanded as not proactive enough. Andy is feeble too refusing to request invoices, contracts etc.

Civil service covering up for the civil service. Why rock the boat: cover it up, pretend there's no problem, it's not your money, collect your salary and pension.

Anonymous said...

On the point of councillor Driver calling in the auditor, the report on this which is being looked at next week says in para 6.1.2 'Throughout the accumulation of the debt and up to the current time, officers have
shared information with the council’s external auditors to ensure proper accounting
practice has been followed.'

Presumably the auditors knew what was going on.

Anonymous said...

Calling in external auditors is a time-honoured cover-your-arse tactic. It all depends on what the auditors were shown. We already know that £1.7m of TEF debt wasn't shown in the 2011/12 TDC accounts.

No auditor would sanction racking up £3m in debts, surely? What we need are FOI requests for the ledgers so that we can see what presumably McGonigal and her chums could see - that TEF were effectively bust years ago.

Councillor Ian Driver said...

There is no doubt in my mind that withholding information about this debt from elected non-cabinet councillors is a breach of the Council's Constitution. As such there should be political resignations. I also believe that the position of the Council's Chief Executive & Section 151 officer is untenable and that she should do the right thing and resign without any compensation

Deep Throat said...

TDC also state "Following the news of the termination of business by the ferry operator Transeuropa
NV and its subsequent filing for insolvency, the council has reviewed its debt position with the company."

This is a misleading statement as there is really a list of companies owing the money, which would have been Transeuropa NV and a number of other companies, all based in Cyprus.

The debts are owed by Transeuropa NV AND each vessel owning company, as each ferry was in a different company name.

Anonymous said...

Dear Deep Throat

Lightning has struck as I read your comment, and the extra voltage through my vibrator's mains adapter spurned a thought from my old seafaring days that indeed harbour dues were charged to the individual vessels so the vessel could be arrested wherever it was for non-payment of harbor dues elsewhere. This should also be the case in your local port.

Captain slightly-singed Birds-Eye

Anonymous said...

Although there is now a loss of
£3.3 millions, the loss may have even been greater over the last two years if TDC had pulled the plug on TEF 2 years ago. At least a few hundred thousands appears to have been paid in that period.
And look on the bright side, over the last 15 or so years since the port has been owned by TDC it must have put quite a lot into TDC's coffers.
So where does TDC now go with the Port as it looks like there is a hole of about £1.5 to £2 millions in its income?

OBO110X said...

Don't worry Euroferries will come to the rescue.

Anonymous said...

That sounds like accountant doublespeak. You can't 'lose' money that you would never have had in the first place.

If Tescos were handing out tins of baked beans for nothing in the hope that their penniless customers might pay them one day, somebody somewhere would be sacked.

John Hamilton - talking sense and cutting through bullshit said...

Councillor Driver, as you are a man who has lied to the electorate, and changed allegencies at least 4 times, do yu think you are in a position to comment on the competence and hoensty of officers?

You have NO mandate from the electorate for the position you hold, and indeed in the last council elections the electorate completely rejected you.

Is that why you refuse to seek a new electorial mandate from the electorate that you lied to, the fact you are CERTAIN to lose?

Perhaps you should resign with immediate effect, with no compensation, as that is clearly the eletorate's wish.

Anonymous said...

John Hamilton,

Out of all of the councillors, which one is likely to ask difficult questions next week?

Ian Driver has his value. You might not like his flip flopping from party to issue to disaster, but at least he as some backbone, and more front than Blackpool.

I think next weeks meeting will be spent with blue and red blaming each other, and only driver trying to get to the bottom of things.

RossM said...

Think we could do with a template letter that we can all send to our respective councillors demanding the removal of the CEO from her post.

Anonymous said...

John Hamilton. To summarize. Your argument is that elected Cllr Driver has no mandate to represent the electorate. Whereas you purport to write on behalf of the electorate.

What is your mandate ?

It is clear to me that John Hamilton does not entirely see what is going on.

Imagine JH, if you will, the feudal England you advocate. The Baron in his castle is silent. He has been silent for weeks.

One day a peasant walks to the edge of the castle moat and shouts "Baron you parasitic rascal be silent today"

And the Baron was silent.

But the Baron was seen riding out to meet with the Sheriff (Shire Reeve).

Next day the peasant went to the Baron's castle and told him be silent. Then went to the Sheriff's castle and told him be silent.

And they were silent.

Next day the Baron and the Sheriff sent out a jester, Simon the Jester, to entertain the peasants. He told tales of the peasant who tells the Baron be silent. And the peasants laugh and egg the jester on.

And this is the psychology of dominating the minds of the Baron and the Sheriff. It is they who end up playing to the peasants.

Then one day an oaf like peasant, John, announced "At least jester shows have survived the loud mouth peasant"

John the Oaf never had a clue. But he was ubiquitous announcing that he "Cut through bullshit"

Poor deluded John (Whose given name was George)

Anonymous said...

George who?

Deep Throat said...

I think the nub of this crisis is business and commercial acumen. TDC have ably demonstrated that they possess none.

It may be perfectly reasonable to put in place some kind of debt restructuring scheme with your largest customer, as TDC say they did. What is not reasonable is to have no idea of the limits of that scheme. It would appear that nobody at TDC placed a sensible cap on the debts of say £1m. In fact they allowed them to balloon way out of control, and now we are faced with £3.3m.

The very fact that it appears that other debtors, not TDC, sensibly pulled the plug on TEF demonstrates the council's woeful lack of control in this situation. If the other debtors had not filed for administration, would TDC have allowed TEF to go on its merry way? How much more debt were they thinking of hiding from us? The answer is they didn't have a clue.

Anonymous said...

A relative of mine worked in Kent County council and one day objected to the council's use of an internal department for a job rather than an external one. The reason for this objection being that the inter-department charge was £40k and the external company £2k. After receiving a ticking off he was told "it's not real money anyway".

I suspect us tax payers may differ on that opinion. Working for the council in the main means no accountability for negligence or simple stupidity.

Anonymous said...

TDC, both it's officers and councillors have been up to this kind of bad practice for years. The question is what retribution and redress can the citizens of Thanet hope to get for this gross wasting of mainly poor people's taxes. (Yes poor people pay taxes too!)

Barry James said...

At least it takes their collective minds off Pleasurama and dont forget Dreamland is still going on. I wonder which ball they will drop next?

Anonymous said...

Have they got any balls left to drop? Seriously though, what other secret subsidies are they hiding from us? If they only feel it's necessary to tell us once mind-boggling sums like £3.3m have been racked up, how can we ever trust them again? Surely TDC must now be classified as a failing authority and external controls brought in immediately to stop another disaster on this scale?

Anonymous said...

9:14 there are several forms of redress: Public/Police/Council inquiry with fines/P45's/jail etc. Plus reductions in future council tax.

A block on payoffs and future civil service jobs is viable too.

Plus prompter FOI.

It's clear that it's in the main parties and civil servants interests not to expose these problems but rather cover them over.

A strange reworking of the roles of public representatives.