HOURS after the States approved the financial deal for the £330m Waterfront development yesterday, Members were handed documents that raised concerns about the funding behind the project.

And Chief Minister Frank Walker had to apologise for misleading the House yesterday after originally denying the existence of a multi-million-dollar lawsuit against developers Harcourt over Las Vegas’s $800m Sullivan Square development.

He said he had been misinformed, and that he had only been told about the lawsuit after the debate. The reports into Harcourt by Pricewaterhouse-Coopers and a risk management company – given to Members confidentially but leaked almost immediately to the JEP – strike a note of caution and say that the Waterfront Enterprise Board should ask for more recent information about developers Harcourt and claim that they would have to borrow money for the project.

Senator Walker says that the deal will be guaranteed by a major bank before it is signed, and that the public interest will be protected if things go wrong.

The reports praise Harcourt’s record in large-scale developments and include letters from three major banks supporting them.

But they also say that ‘we would recommend a wider consideration of Harcourt’s financial capacity’ and ‘caution should be exercised as the bulk of the group’s asset base is not liquid’.

The reports were written in September 2007 – before the full impact of the global ‘credit crunch’ on lending and property markets hit home and before the company became embroiled in a US court action potentially worth hundreds of millions of dollars.

Three experienced finance industry professionals approached by the JEP have described the reports as cautious, and say that they flag up potential areas of serious concern all the way through.

But Senator Walker said this morning that solid bank guarantees to protect the public interest would be set up before the formal development agreement was signed.

He said that no deal would be signed until the guarantees, issued through a bank chosen by the Council of Ministers, had been checked by lawyers and put in place.

Both Senator Walker and Waterfront Enterprise Board director Senator Jim Perchard, who distributed the report, said the result of yesterday’s debate would not have been different had the paperwork been in Members’ hands before the final vote.

Plans for the £330m finance district on the Waterfront, which are based on lowering Route de la Libération and building a 14-block office and residential grid-style development on top of it and the Esplanade car park, were agreed by Members yesterday.

The development could take ten years, but before it can begin Harcourt need to sign a development agreement with WEB which must be endorsed by the Council of Ministers, and a full public planning inquiry must take place.

Senator Walker said that the bank guarantees, which would be attached to the development agreement, offered the Island every protection it needed.

He said: ‘Harcourt are a long-established internationally based company, and I have personally checked them out with leading politicians in Belfast and Dublin and got a very strong endorsement.

‘There is always caution with developments, but they are a company with a very substantial development record.
‘If there turned out to be a financial problem with Harcourt, which I do not believe there will be, then the Island is covered.

‘If there is any under-performance by Harcourt, if they fail to meet a whole list of stringent conditions, then WEB can step in, repossess the land and receive on behalf of the public either all of the £95m in guarantees, or that part of it which has not been delivered.’

According to Senator Perchard, WEB can step in and take over if work stops on the site for 30 days, or if a host of other conditions are not met.

Environment Minister Freddie Cohen, who proposed the planning part of the deal, said he had deliberately kept away from the financial part of the proposal and had not even read the reports.

*Picture: An artist’s impression of the Las Vegas development