S.Atlantic : Sartma Daily (27/11/05)
Submitted by SARTMA.com (Juanita Brock) 29.11.2005 (Article Archived on 06.12.2005)
A brief run-down of South Atlantic News
SARTMA DAILY (27/11/05)
Compiled by J. Brock (FINN)
CONTENTS:
Section 1: Press Release from FIG
Section 2: Committee News
Section 3: Business News from St. Helena
Section 4: Announcements
Section 1:
PRESS RELEASE
Gordon Forbes Cases Settled
The long running disputes with Gordon Forbes Construction have been settled.
FIG’s Standing Finance Committee has today given its seal of approval to the settlement negotiated by the Chief Executive and the Principal Crown Counsel when they met with Gordon Forbes and his advisers in London on 12th October.
The disputes, which have been the subject of Arbitration proceedings and court hearings in the UK and the Falkland Islands and date back to 1998, were in respect of payments claimed by Gordon Forbes Construction for construction work carried out in East Stanley. In total, the additional payments sought have been calculated at approximately £3.7m plus substantial interest and costs.
Whilst FIG had succeeded in its defence of the majority of areas of claim, Acting Judge Christopher Purchas sitting in the Supreme Court in Stanley last June rejected FIG’s appeal against the Arbitrator’s final award given in July 2004 which left FIG with an obligation to pay substantial costs and interest to GFC in addition to payments which the Supreme Court had decided were due to GFC under the contract. Further claims exceeding £700,000 in value were still to be considered by an Arbitrator. As at October 2005, the total value of the claims and payments due to GFC were estimated at almost £2.4m.
At the beginning of October, Executive Council instructed the Chief Executive to travel to London to try to negotiate a settlement of all existing and potential future claims in respect of the contracts.
Standing Finance Committee has today agreed to pay £1.6m to GFC in full and final settlement of all existing and potential claims which when added to FIG’s own legal fees which total £1.361m produces a total cost of the cases to FIG of £2.961m.
Chairman of Standing Finance Committee, Cllr. Mike Summers commented:
“These very complicated cases have consumed an enormous amount of time during the last seven years and were still some way from being completed. The total cost to FIG is still over £700,000 less than the original claims. FIG is pleased that a settlement has been achieved to the satisfaction of both sides. We repeatedly received very firm and consistent legal and expert advice of the strength of our case to resist the payments claimed but it is plain that, in some respects at least, the Arbitrator and Courts felt differently. It was time to bring things to a conclusion. Quite clearly, we need to examine what lessons can be learnt from this experience in an effort to avoid a repeat. The Chief Executive and Principal Crown Counsel have been instructed to prepare a report for consideration at a future meeting of ExCo.”
25th November 2005
Contacts:
Cllr. Mike Summers, Chairman of Standing Finance Committee
Chris Simpkins, Chief Executive
Section 2:
COMMITTEE NEWS
SANDING FINANCE COMMITTEE REPORT
Compiled by J. Brock (FINN)
A meeting of the Standing Finance Committee took place in the Liberation Room of the Secretariat at 0800 on Friday, 25 November 2005. Present were Cllrs. Clausen AC), Cockwell (RC), Davies (RD), Hansen (IH), Rendell (MR), Robertson (JR), Stevens (RS) and Summers (MS). Others present were the Chief Executive, Mr. Chris Simpkins (CS), the Principal Auditor, Mr. Peter Copp (PC), the Financial Secretary Mr. Derek Howatt (DH) and the Assistant Financial Secretary, Mr. Keith Padgett (KP). Mrs Hulga Burroughs (HB) took the minutes.
The first item on the agenda was to elect a chairman, as this was the first sitting of the new Council. Cllr Hansen proposed Cllr. Summers for the Chair and the nomination was seconded. Cllr Summers then proposed that Cllr. Robertson be vice Chairman. Cllr Cockwell seconded the proposal ad Cllr Robertson accepted.
After declarations of interests, the minutes of the meeting held on 23 September 2005 were confirmed and signed and matters arising from them were discussed. Keith Padgett said that in 5.1, the Director of Education had found some savings but a full report would be given to the December Standing Finance Committee. Education dominated the matters arising with passage costs and equipment being discussed. Matters regarding the Tamar were also brought up.
Keith Padgett presented the Financial Manager’s report, which he described as complex. It updated Members on details of financial transactions that occurred during the financial year 2005/06. He explained that departments had expenditures they knew about, like wages that came out at certain times of the month. Other payments came out in lump sum form. One problem with the MOD not invoicing properly was solved.
Our position at the end of October 2005 was better than it was last year at this time, with each department under budget and realising better savings compared to last year at this time. Besides departments, several funds were reviewed. Fund Transfers and Transfer Payments and the Capital Equalisation Fund were explained in detail.
Next there was an investment Manager’s report where the difference between income generating investments and ready cash investments was discussed. Investments were made in order to generate income and those investments couldn’t be touched. But they were not the same ones that were made to create income that could be spent.
Mr. Peter Copp, the Principal Auditor, presented his report to the Standing Finance Committee and explained that the method of audit had changed to add Government assets like Fixed Assets, Stores and Stocks, a Debtors Ledger and Liabilities Capture to the items being audited. He explained the benefits of recognising income and expenditure when they come due as well as assets and liabilities. He calls the overall balance sheet Taxpayers Equity.
Resource accounting was a more complete picture of what was going on. The identification of exceptional one-off items and noting underlying patterns was useful to all departments. He said it was practical to have an end of year routine and areas of judgment in accounting policies against background of GAAP, an SFC position of stewardship to challenges and audit committee type functions.
The external Audit was discussed with the final visit focusing on the balance sheet. Mr. Copp had worked closely with the Treasury team especially with asset tracking. He then went into the form the audit report would be taking, focusing on non compliance with financial instructions. There would be a management report in due course. Internal auditing was important, with departmental and cross-cutting assignments proving to be vital and risk based working models preferred. He mentioned that though reporting had improved it was a bit behind. There were special assignments like compiling a domestic fuel formula.
It was recommended that project management processes need to be constantly updated through training and that staff had to be won over to a new system even though it seems complicated. It needs to be monitored. There really wasn’t a software problem but an attitude problem amongst some staff. They have to be won over.
Estimates and budget balancing, Statutory Corporations, and other matters like team achievements were included in Mr. Copp’s extensive report.
The next item on the agenda was the items from the summary of the Executive Council Meeting held on 27 October 2005 can be considered in the public domain and which are still not in the public domain. Item 4, the Gordon Forbes case has changed since the Committee meeting in that a press release has been provided by FIG. it will be published in the context of the Daily Record.
Item five is still subject to contract negotiations and will not be made public yet. Item 11, the Stanley Dairy will go into the public sector and item 12 will not. Item 16, Regulations concerning Civil Aviation will go in the Public sector.
As for the Stanley Dairy, it is not a going concern because it is not a going concern. It is now contained within FIDC’s remit and they are prepared to invest public money. Cllr. Clausen questioned whether it was enough money to buy pasteurising equipment.
The Inspection of air Safety Services is an international self regulatory requirement of the CAA. A. S. I. will inspect but eventually will charge and the money has to be found somewhere.
Pen ultimately, the Committee determined items from the summary of the Executive Council Meeting held on 24 November 2005 can be considered in public and to resolve the items. Item 4 was not going into the Public Domain yet. No 5 is. No. 6 is not and No 7 is.
With regard to No. 7: The Police Investigation in to the suspension of two senior Police Officers, the cost is estimated at £102,000.00 with additional expenditure should a prosecution take place.
Cllr. Davis said that perhaps more money had to be found if the case was to be heard by a special judge, with Cllr. Hansen saying we would have to take it on the chin.
Lastly £24,000.00 was agreed for the services of the Principal Auditor.
Section 3:
BUSINESS NEWS FROM ST. HELENA
Press Notice
The Charity Commission met on Monday 21st November and Saint Helena now has its first registered charities. The next meeting of the Charity Commissioners will be held at the end of January and the Commission welcomes further applications from voluntary organisations which wish to be registered for their consideration at that time. All applications for consideration at that meeting should be received by the Registrar in Legal and Lands Department by 20th January."
Crude Blows Hit St Helena
An Item Published in the St. Helena Herald
The chilly winds of economic reality blew a rare and unwelcome gust upon St Helena last week, when it was announced that fuel prices were finally set to rise.
Solomons stated that from 15th November, as a result of the Bulk Fuel Installation increasing the cost of wholesale fuel, the retail price of diesel has risen from 53p to 58p per litre, and from 72p to 80p in the case of petrol. Linda Clemett, the Chief Financial Secretary, very kindly agreed to go into the details of how the island manages its fuel consumption.
“The fuel is initially purchased by the Bulk Fuel Installation (BFI), which is owned by the Government, and run by Solomons. Two years ago an ordinance was set up to start an agency whose sole job would be to manage fuel, so that any price rises would be up to the agency and not the Government, as is the case at the moment. Under the present arrangement, the BFI sells its fuel to Solomons, the power station etc., and it is then up to Solomons to distribute the fuel to its various outlets.
“In the financial year 2003/04, the BFI sold fuel worth £1.7m, having originally bought the fuel for £1.2m. That means that, even after allowing for overheads such as the cost of staffing BFI, the latter made a profit of around £250,000. We always run at a surplus, as it means that we are able to put money aside for future needs. It is important to have an operating profit, as it helps with any expansion that might be needed in the future.
“The problem recently has been that, due to world oil prices, the last two shipments have cost more than we were able recoup from selling the fuel. In short, we’re running at a loss. So I proposed that we put prices up, in order to stop us eating into our retained profit, which we need to use if we are to manage our cash flow. Even with the recent rise in prices, however, we are running completely at cost, which means that we are not putting anything aside for future expansion or emergencies. That is why there will be another rise in January: - it’ll give us a small profit again.”
I asked Linda how the BFI prices are reflected in other parts of the economy, such as the cost of fuel from Solomons, or the price of electricity, to give two examples. “The BFI sells the oil to Solomons, but we leave them to decide the price they charge at the pumps. I do keep an eye on Solomons however, as they are only allowed to mark fuel up to a certain limit. Below that limit though, Solomons are free to announce any price changes as they see fit.
“We do have control over the price of electricity, however. We have decided to accept a £200,000 loss on electricity revenue for the present financial year. We have a commitment to ensure prices don’t go up, as they affect everybody. We’re holding prices down for this financial year. As for next year, I have no guarantee, as DfID have not given us a budget yet. Of course everyone thinks they’ll go up, simply because I insisted that they’d stay the same for this financial year! Even as things stand at the moment though, electricity prices here are amongst the highest in the world.
“The positive side of all this is that DfID are really pushing the wind turbines project. They’ve postponed it recently, but it remains in place. Although DfID are keen for us to keep electricity prices high, if we go ahead with the wind turbines, then we won’t have to put prices up.”
Linda said that the island is still in a privileged position when it comes to bearing the brunt of fluctuations in the world oil price. “Prices in the UK are 95p per litre, as against 80p here. Bear in mind that the fuel has to be shipped thousands of miles before it gets here, and you can see that people on St Helena are economically cushioned, even though they might think oil is getting expensive. In reality, we actually need another price rise.
“Take the cost of transporting the stuff here. Each voyage costs $125,000, before you’ve even paid for a drop of oil. There were five deliveries last year, so that means that, before you’ve consumed any petrol, you’ve already paid out shipping costs of $600,000.” When asked about the island’s year-on-year consumption of oil, Linda said that this had remained quite static, due to the fact that so many people have left. This means that, even with the recently increased importation of cars from UK, demand had remained constant because, quite simply, there are fewer drivers here than there were four or five years ago.
Overall, Linda feels that the price increases are inevitable. “At the end of the day it’s about getting a grasp of economic reality” she said. The deficit between the cost of oil on the world markets, and the local prices at the pumps has to be addressed, and the island’s books have to be balanced.
Section 4:
ANNOUNCEMENTS:
Air Movements at MPA advises that the Air-bridge Flight RR3200 scheduled to land at MPA at 1410hrs on Monday has been delayed for 24 hours. It is now due to land at 1410hrs on Tuesday, 29 November 2005.
Professor David Walton of the British Antarctic Survey will be giving a public lecture in the Geography Room of the FICS on Tuesday, 29 November at 1900 hrs.
The local launch of the Second Edition of “A Visitors Guide to the Falkland Islands” by Debbie Summers will take place at the Malvina House Hotel on Monday, 05 December 2005 at a function for invited guests. Also being launched at the venue will be “Birds and Mammals of the Falkland Islands” by Mr. Robin Woods, Mrs Anne Woods and Mr. Alan Henry.
Falklands Conservation would like to invite all its members to attend an exclusive guided Bird-walk with Alan Henry at Long Island on Sunday, 04 December 2005. Members are asked to meet in the Jetty Centre car park at 1000hrs and the day is expected to finish at 1500. Transport is provided to and from Long Island. Participants are asked to take a packed lunch and wear suitable footwear and warm clothing. Please contact Amanda or Sarah on 22432.
If you are in for an interesting time then why not attend the Beaver Hanger on Ross Road West at 1400 hrs on Saturday, 26 November 2005 for the Annual Fire Engine Pull. Money is being raised for charity during the pull.
Cable & Wireless would like to inform customers that due to a new numbering range required for the new GSM Mobile Numbering Service, the numbers to call Saddle Computers Help Line have changed to 48001. And, the Mail Collection Announcement Line has changed to 49001. Until 01 December 2005, if you ring the old numbers your call will be diverted to the new numbers but after that all calls must be made to the new numbers. Cable & Wireless apologise for any inconvenience but say this is an essential change to allow the new GSM Mobile Numbering Range to work.
There will be a special Stanley Regatta Event on Saturday, 10 December 2005. Watch this space for details or call Steve Dent at the Leisure Centre.
Also on the 10th of December the Girl Guides will be singing Christmas Carols at various venues around town during the afternoon from 1400 to 1600. They will be in fancy Christmas costumes and raising money for the Guide Unit here. Dig deep everyone!
Nominations are invited to fill two positions for lay members to represent the public on the Health and Medical Services Committee. The Committee normally meets once a month and those selected for appointment will be expected to serve for a period of three years from early January 2006. Candidates for appointment to the committee should forward their name and address to the Government Secretary, Secretariat, Stanley, by 1630 hrs by Wednesday, 30 November 2005. The Director of Health Services will be happy to provide information regarding the functions of the Committee to anyone interested in this appointment. Her phone is 28003 and e-mail is nosborne@kemh.gov.fk
Contributing Websites: http://www.falklandnews.com. http://www.tristantimes.com, http://www.the-islander.org.ac, http://www.sartma.com, http://www.news.co.sh, http://www.sgisland.org
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