Agenda item

The Chairman said that the purpose of the call-in was to find out whether appropriate procedures were followed in arriving at that Cabinet decision. The cross-party call-in had been prompted by some Members of the Panel who expressed some concerns regarding ‘inadequate reasons’ given for the decision made by Cabinet.

Paul Cook, Director of Corporate Resources & S151 officer set out the due diligence undertaken and the reasons behind the Cabinet decision on the matter. These were as follows:

1.  Investment resources evidence was not demonstrated by Party A;

2.  The email statement from Party A, which was provided to the Council from Party A’s solicitors showed an investment amount set aside of $1,6million and a separate $400,000 set aside as a general line of credit that might be called on for this and other projects. Council viewed the $1,6million as insufficient considering such factors as the value of land which would be involved in the CPO process;

3.  Three years’ financial accounts were not provided by Party A as requested by Council. Council observed that the accounts provided by Party A complied with State of Delaware income tax requirements but not with generally accepted US accounting principles. According to the accounting policies included in the accounts provided, the accounts were not intended to present the fund’s financial position

4.  The accounts provided in any case covered only a fraction of Party A’s activities;

5.  The balance sheet was unaudited and appeared to be unconsolidated. Council was therefore unable to make further appropriate assessments.

6.  The business plan did not demonstrate a viable project;

7.  The duration of the business plan provided was not adequate. There was no 20 year plan as required by Council. The business plan provided only covered a five year period. The Falcon Report required a 20 year business plan.

8.  The business plan did not make adequate provision for CPO costs; site acquisition and development of the airport;

9.  Some of the business plan expenditure assumptions and some of the income assumptions appeared optimistic.

Paul Cook said that Council had received feedback from its external auditors, Grant Thornton, LLP who commented that they had no issues with the decision taken by Council on this indemnity partnership matter. He said that Council had received counsel’s opinion confirming the conduct of the soft marketing exercise was appropriate. The Council had compared its process with that used by other local Councils in seeking a CPO indemnity partner for a major project. Paul Cook said the process used by TDC was comparable to that used by the other local councils.

Some Members were concerned that Council had put ‘too much weight’ on the advice given by the Falcon Report. Other Members acknowledged that Cabinet had kept other Political Group Leaders informed of the progress regarding the sourcing for a CPO Indemnity Partner. Councillor Johnston, Leader of Council said that Cabinet extended deadlines to Party A to submit all the information that was required to assess their viability as an indemnity partner. However despite the extension of deadlines, the information handed to Council was still inadequate to confirm the viability of Party A as a potential indemnity partner. Madeline Homer, Acting CEx advised the meeting that the costs incurred by Council to date regarding the soft marketing and legal advice was £26,000 and this figure excluded officer time.

Councillor Bayford proposed, Councillor Marson seconded and Members unanimously agreed that the following:

That the decision that ‘That no further action be taken at this present time on a CPO of Manston” be reviewed by Cabinet on receipt of new information from the Minister of Transport.

The Chairman adjourned the meeting for five minutes to allow members of the public to leave the Chamber after this issue had been concluded.