At the end of May, Swiss bank UBS signed up as the first tenants of the development, taking around 16,000 sq ft of office space.
The States-owned Jersey Development Company said that this is enough for work to begin on the site.
However, this rallied those opposed to the development to raise concerns about the States being involved in the provision of office blocks and argue that the development will pose significant risk to taxpayers.
Economic Development Minister Senator Alan Maclean was forced to defend the proposed Finance Centre after the project came under criticism for failing to pre-let a previously stated 200,000 sq ft of office space before beginning building work.
The minister reiterated his belief that comments made in the States last year by the former Treasury Minister Philip Ozouf that 200,000 sq ft of space would be pre-let before building work would begin was a mistake.
And now the JEP has received a clip of the moment Senator Ozouf made these comments in the States, which you can listen to below.
From Dave Cabeldu
I HAVE extracted a 90-second audio clip (below) of the relevant section of the States questions 4 Feb 2014, from the official States Greffe recording from which Hansard is transcribed.
Senator Alan Maclean had no memory of his predecessor’s pledge when I first tackled him at the St Brelade meeting.
Our view is that the Council of Ministers have ignored their responsibilities in their haste to get a tenant, however small the floor space, and put the public at risk with a 25% pre-let when 75% is the industry standard for risk averse professional developers.
In five debates on the International Finance Centre, every States Member who voted ‘pour’, did so in good faith in the belief that the public were adequately protected by the fully pre-let pledges, including debates and questions, post Harcourt, contrary to assertions by our current Treasury Minister.
I have spoken to several Members past and present, and all agree that this perception was correct.
Finance Centre: Treasury due diligence called into question
POLITICIANS investigating plans for the controversial Jersey International Finance Centre have questioned the amount of due diligence carried out by the Treasury Department.
At a two-hour hearing yesterday the Corporate Services Scrutiny Panel quizzed Treasury Minister Alan Maclean over the details behind the major building project, which is being handled by the States-owned Jersey Development Company.
Work on constructing the first building of the six-block development, due to be created on the Esplanade car park, is expected to begin later this month after the JDC announced it had secured Swiss investment bank UBS as its first tenant.
The biggest clash between the panel and Senator Maclean came during a discussion about the level of pre-let agreements needed to trigger the start of the project.
That debate focussed on the wording of the document that the States agreed when they set up the JDC in 2010.
- Dubai in 2004 had 75 people working in financial services. Ten years later they have 13,600. That [finance centre] was a government-led scheme. Senator Alan Maclean
- If you only achieve one or two buildings [of the JIFC] is that a good use of a public asset? Deputy John Le Fondré, panel chairman
- Over the last year alone there have been 400 new jobs created by the finance industry. Senator Alan Maclean
- Why is that report still not available to States Members? Constable Chris Taylor asks why the King Sturge Report has not been passed to politicians as previous Treasury Minister Terry Le Sueur said it would be
The proposition – P.73/2010 – sets out that the value of the pre-let agreements needs to cover the cost of construction of each building in order to minimise the commercial risk of the project.
Panel chairman Deputy John Le Fondré asked whether the Treasury Department had independently checked whether the JDC had met that requirement.
Senator Maclean, who was joined by Ray Foster, the director of Jersey Property Holdings and Paul Bradbury, the director of corporate policy for the States, said the department had seen a summary, created by the JDC, of lender HSBC’s valuation of the first building, but not the original valuation provided by the bank.
He added that the department had spoken to the States developers and taken legal advice and were satisfied the company had fulfilled the brief set out by the States to begin work.
However, the Treasury Department’s response left panel vice-chairman Deputy Simon Brée ‘astounded’.
‘I am astounded that at no time did you see fit, as custodians of this asset, to check and ask can we see HSBC’s valuation. That is called due diligence.’
When Senator Maclean asked whether the States would set up a company with a board of highly experienced professionals Deputy Brée added: ‘I’m not questioning the experience of the board, I am questioning the level of due diligence your department has gone to to assess what conditions have been met.’
During the hearing the panel also asked about a previous report commissioned about the Esplanade Quarter Masterplan – in which the JIFC is phase one – that is widely rumoured to project a £50 million loss for the whole project.
However, Senator Maclean said the ‘King Sturge Report’ was now irrelevant as it referred to the scheme when it was due to be carried out all at once by third-party developers Harcourt.
The Treasury Minister was also asked what action would be taken if the JDC could not service their loan repayments with HSBC, but said he could not answer the question directly without knowing more about the circumstances of such a situation.
Senator Maclean also said that he believed there to be enough demand for all six office buildings of the project, but that the Esplanade Quarter Masterplan needed to remain flexible so that the States could change their plans if needed.
Constable Chris Taylor and Deputy Kevin Lewis were also sitting as part of the CSSP panel.
