Mea Megathread

[Gladys]

There are two points: firstly, it was not the MEA that entered into the loans, it was subsidiaries who have a separate legal identity and are not necessarily caught by the provisions of the parent body's incorporating act; secondly, whether there was requirement for any interests to be disclosed. It was on this second point that I mentioned the body of case law etc. that requires persons acting in the capacity of directors to have the best interests of the entity for which they are acting uppermost and this includes disclosure etc.

 

As regards the provision effectively giving carte blanche to a statutory body and those dealing with it, I think you have to look at what is meant by "function". This would be defined in the act; some functions may be entirely at the discretion of the body concerned or some may require some higher consent. Provided the matter in question fell within the definition of the body's function (and that is a critical question), then, yes, you are probably quite right a third party would not have to make further enquiry and would be protected. But, if the matter was not within the body's "function" then, perhaps, the third party should be put on notice that further enquiry should be made.

 

For example, if a statutory body charged with, say, a function of providing sweets with blue wrappers and all the bits that go with that in order to deliver that function, then a third party who is asked to supply sweets with green wrappers should make further enquiry. If the incorporating act states that sweets may be supplied in green wrappers, but with the consent of Willy Wonka, then the third party need not take any further interest in whether the consent of Willy Wonker has been obtained under the provision you cite. However, the custodians (call them directors, board members or whatever) of that body may be in a difficult position as they may not be able to enforce the contract if they do not have the necessary consent and may also find themselves at the thick end of an inquiry! A silly analogy, I know, but I hope it explains the point.

 

The above, from what I can gather, is all a bit hypothetical as the loans were taken by ordinary companies not constrained (or so it was believed) by any restrictions of the MEA's incorporating act. As I recall the MR programme which broke the whole affair (when I was unhappily decorating my hall and stairs) it was proposed that the way the loans were taken out was a legitimate way of avoiding the provisions of the incorporating act. Whether it was or not is a matter for a court to decide, but I do still come back to my basic concern as to why did the loans so quickly become unservicable? Were they not commercially viable from the outset, or was the MEA and its subsidiaries somehow fettered in their ability to meet the business plan which substantiated them?

[Chinahand]

I would like to just check I understand all the legal stuff that is being quoted here.

 

From what I understand from the PKF report is:

 

That in 1998 MCC took out a loan for £35 million ... no one in Treasury went beserk, noone claimed it was illegal.

 

Then when Nepco went bankrupt in 2001 along with its parent Enron the MEA were worried everything would collapse leaving the Island with a £100 million hole in the ground and so they set up their own company, PGT, to take over the project. Doing this required the contracts to be transfered to PGT.

 

To check they could do this they got advice from a UK QC. She says it looks ok, but is worried about the MEA giving guarantees and said they needed to get legal advice in structuring the contracts.

 

From what I can work out the MEA did this and all the contracts with companies like GE etc (i.e. big companies taking on £million comitments and guarantees) were passed on to PGT with MEA guarantees.

 

Later when MCC is seeking to take out the loans at the centre of all this Mike Proffitt declares he's got a conflict of interest as he's the non executive chairman of Barlcays and so can't be invovled, so the MEA set up a special committee to sort out the loans ... they go off to HSBC, Isle of Man Bank, Barclays ... Barclays come back with the cheapest, least strings attached offer.

 

Once Barclays has been choosen the MEA pays for a legal opinion from Cains under Manx Law (the earlier advice was under English law) which says its legal. So the Board give approval for things to proceed and the loans are taken out.

 

Now given all that ... are people really saying the MEA knew that they were acting illegally and that conflicts of interests etc weren't properly disclosed?

 

What's the evidence for this?

 

Since the controversey exploded Barclays Group Audit have checked out the loans and found no issues with it ... This is the clincher for me ... This is a HUGE organisation and about as hard nosed as you can get ... anyone who pretends they'd hand over the money without checking things out just because a NON EXECUTIVE Chairman was involved is in cloud cockoo land ... caveat emptor and all that ... they are the ones handing over the money ... Plus any conspiracy theorist would have to further claim that Barlcays GROUP Audit department would also ignore any dubious things and that just isn't tenable ... it would put Barclays entire organisation at risk if its Group audit was found to be engaged in dubious practices.

[simon]

Good post. But all those careful checks and balances - without the Treasury or Government, in general, knowing anything about the emerging situation?

[Gladys]

Couldn't agree more (see my earlier posts) but what went wrong?

[Chinahand]

.... I do still come back to my basic concern as to why did the loans so quickly become unservicable?  Were they not commercially viable from the outset, or was the MEA and its subsidiaries somehow fettered in their ability to meet the business plan which substantiated them?

 

<{POST_SNAPBACK}>

 

I've two answers to this ...

 

One: I'm pretty certain the entire project is totally viable ... taken over a 30 to 60 year time frame. Having a pipeline that can take gas etc ... Yes ... even the Methane gas produced from solid Methyl Hydrates in 40-50 years time when there isn't much NG around ... will produce real value!

 

Two: The MEA say in the PKF report that the Barclays loans were only interim financing ... they fully expected to take out a further set of long term loans to put the financing on a long term footing ... They borrowed enough to tide them over until they could go to Tynwald etc to get a proper package sorted out ... Using debt to service cashflow deficits is perfectly normal in Finance ... as long its a +ve NPV project OVER ITS LIFE.

[Gladys]

Thanks Chinahand, but that still does not answer the question as to what changed? Pretty substantial interim borrowing and, yes, I do understand long-term financing, but why enter into a borrowing commitment to "tide them over" which could only mean a huge commitment now without Tynwald approval? What would happen if Tynwald did not approve? Probably where we are now.

[simon]

If the whole plan and borrowing was viable then why did the entire MEA board resign?

 

So who asked them to resign and why? Or why did they all feel the need to resign together?

 

And did govt know about the loans (which Barclays are said to have carefully checked and balanced) or not? It doesn't seem possible that Barclays could have agreed the borrowing without reference to govt - or without govt getting wind of it. And if the business plan wasn't viable.

 

And if the loans / plans were viable then what exactly is the issue? Which brings us back to why did anyone resign? And why did the loans seem a shock to the govt?

 

So it doesn't yet make any sense and the PKF report doesn't explain it.

 

That isn't a conspiracy theory. It's just that the story doesn't yet make sense.

 

The simplest solution, surely, would be to call on Barclays, the former board members and the various ministers and former ministers to each simply state their versions of the story. Either at a Parliamentary hearing or via the press. Get it all out in the open.

[Tempus Fugit]

With the latest hike in prices being published in the paper this week, I notice a few private wind generators have been approved along with a news item on solar panels on Braddan commissioners housing, will this mean there will be a decline in demand to be followed by a further increase because of loss of consumption (as in the great fuel 'crisis' years ago when they wanted all the lights turning out and the tv went off at 10pm etc)

 

Time to eat some more carrots so I can see in the dark

[Fatty]

With the latest hike in prices being published in the paper this week, I notice a few private wind generators have been approved

<{POST_SNAPBACK}>

 

Yes, but this becomes expensive as did you not also see the costs of the Standing Charge if you are a generator? Can't remember the exact figure, but something like 68p, daily. So if i understand that right, that would equate to £248 a year. Add that to the expense of buying a wind generator, and i doubt any savings would be made.

 

Cheers.

[Tugger]

Barclays were entitled to rely on the legal opinion from Cains. The MEA specifically were not

[ManxWarrior]

Sorry to do this folks but since we only have one thread which seems to be following the money situation. But there's another battle quietly going on in the background - that of the Telecommunications. Dark forces are quietly manipulating civil servants and others to get their wicked way.

 

Its my belief that a lot of money could be generated by the telecoms side of things and some mention of this was made in the KPMG report. I'm dammed sure it was included in the MEAs business plan which maybe has wobbled off track because of the issues which you've already been discussing. Shame because us good folks will pay for it anyway.

 

I’d like to draw peoples attention to the annual report from Standing Committee on Economic Initiatives.

 

Standing Committee - Annual Report for 2004-2005

 

Paragraphs 26 thro 57 inclusive deal with the MEA Telecommunications Links.

 

The whole report makes some very interesting reading and highlights a lot of major issues. These guys are on the ball and are not being diverted by smoke-screens and red herrings thrown up by all and sundry. Five of our ‘man in the street’ politicians are coming up trumps here - sincerely well done and thank you.

 

I strongly recommend everybody to read this report thoroughly including the rest of you MHKs out there.

 

It is my intention to go more deeply into a number of aspects of this report. At this point I think it relevant to point out the potential data capacity this cable. Bringing such capacity into play and delivering it to the manx public is what worries Manx Telecom.

 

Paragraph 27 mentions the 12 strands (6pairs) Fibre Optic Cable(FOC) which was laid alongside the electricity cable. I think it worthwile just explaining its data capacity.

 

Each Single pair of strands simultaneous carrying capacity (approx)

 

Existing Lighting Technology-5Mil PhoneCalls OR 200k 2mbBroadbandConnects

Next Generation Technology-60Mil PhoneCalls OR 3Mil 2mbBroadbandConnects

 

Yes those numbers are millions. Multiply them by 6 and you have more than enough to run to whole of the UK and probably Europe. I’m opening myself here to a lot of debate over the actual capacity but suffice to say its awesome whichever way you do the sums. I do also appreciate that all six pairs may not be available; currently two pairs are used for control purposes of the electricity cable.

 

Paragraph 27 identifies the FOC to have an orginal life span of between 20 and 35years so the clock is running and over 5 years is now wasted. Even so they estimate todays value still to be £7million. Overall, some urgency is upon our politicians to make some decisions whether to light the fibre. (paragraph 51) .Unlit its known as Dark Fibre.

 

What our MHKs must decide is whether this communications stuff is sufficiently important for the IoM to classify it has a national asset like electricity, water, roads, sewerage, hospitals, prisons, abattoir etc etc. I can hear you folks screaming ‘get rid now’, we don’t want another Incinerator or IRIS scheme. I think we must look at the bigger picture and certainly towards the next generation.

 

Traditionally third parties have provided communications. Originally IoM telecoms was serviced by the UK government (GPO), then BT, but its now transferred to German ownership (o2). So we end up with this strange situation that a private (in the sense of off island & non controllable) company has a near monopolistic hold on the manx telecommunications market. That’s the rub, and I don’t think it should continue. Faster and cheaper telecoms are key to the IoM’s future and our Government have an opportunity right now to shape that future and keep the IoM truly in the forefront of modern telecommunications technology.

 

Todate its been the remit of telephone companies, to supply telecoms. These companies are about to start becoming overwhelmed by a ‘comms-tsunami’. Witness the recent EU directive to member countries for them to change legislation to enable incumbent utility operators to supply telecoms via Power Line Communications (PLC). The way things are shaping up is such that we will end up with a combination of wireless and PLC technology. Such technology is going to handle our video phones, data and television. All handled by high bandwidth comms technology probably in the 20mb/s (10x todays rates) region running on the Internet. You can see why all this is scaring the brown stuff out of traditional telecoms suppliers.

 

Back to our friends the MEA who have had the forethought to see the future and are in a position to start rolling out PLC to the Manx community. Our legislation has already been changed by an act of Tynwald (Oct 2003), have a look at paragraph 4.

 

Gas and Electricity Act of 2003

 

I’ll make comment on this act in a future posting and on how the Dark Forces work.

 

There’s lot of stuff on the net re the PLC, just google it.

For starters have a look at:

Some EU info on PLC

 

 

sorry its a big posting but it is a big subject - thanks for reading it.

ttfn

[ButterflyMaiden]

sorry its a big posting but it is a big subject - thanks for reading it.

ttfn

<{POST_SNAPBACK}>

 

and the point is ? ...............

[ans]

Multiply them by 6 and you have more than enough to run to whole of the UK and probably Europe.

 

You might want to rethink that piece of fantasy chief.

[Tempus Fugit]

and google PLT INTERFERENCE

 

and see about 16,200 hits and reasons that it has been abandoned elsewhere as impossible to meet emc levels. BBC engineering has a good brief on it too.

[Tempus Fugit]

With the latest hike in prices being published in the paper this week, I notice a few private wind generators have been approved

<{POST_SNAPBACK}>

 

Yes, but this becomes expensive as did you not also see the costs of the Standing Charge if you are a generator? Can't remember the exact figure, but something like 68p, daily. So if i understand that right, that would equate to £248 a year. Add that to the expense of buying a wind generator, and i doubt any savings would be made.

 

Cheers.

<{POST_SNAPBACK}>

 

but if you don't want to sell electricity to them, or you use solar panels to heat water I hardly think this is subject to a standing charge