Incinerator blunder
Friday 20th March 2009, 3:00PM GMT.
AT least £3m of public money has been lost over the failure to fix exchange rates on Jersey’s biggest-ever capital project.
An independent report has found that the pound’s fall against the euro has added millions of pounds to the cost of the new incinerator.
As soon as the report was published, Treasury Minister Philip Ozouf issued a statement saying that disciplinary action was being taken against some staff. It is understood that three or four Treasury employees, both senior and junior, are facing action over the mistakes.
When the States approved the proposition to build the incinerator last July they were told that the rate would be fixed when the contract was signed, eliminating any risk due to currency fluctuations.
But that did not happen, and the changes in exchange rates since the contract was signed in November have made the euro portion of the contract — which represents more than half the total cost — more expensive.
• Picture: The euro’s rise against the pound means that the incinerator will cost an extra £3 million because rates were not fixed
Read the full story in the Jersey Evening Post. Click here for subscription details. Individual editions are also available online.
The Queen's Diamond Jubilee
JEP Jubilee Editions
Saturday 2 June: Guide to Celebrations
Wednesday 6 June: Souvenir of Events
View The Queen in Jersey supplement
Travel
To, from and around the Island
Airport Arrivals/Departures
Harbours Arrivals/Departures
Bus Information/Timetables
This is Jersey
Jersey Evening Post
Useful links
This is an utter disgrace, those accountable should resign immediately along with those who signed the completed contract without reading and confirming everthing down to the minute details – and who was in charge of the treasury during the this time the man holding the purse strings….this just shows us what a joke Terry (an Accountant !!!)really is
Report abuse
Oh dear just goes to show the quality of civil servants we have. Overpaid, underworked and incompetant. And who pays for these errors, no surprise here…you and I
Report abuse
The Treasury had Terry le Sueur as the previous Minister and it now has Phillip Ozouf.
Both of them qualified and worked as accountants before they became members of the States.
Not only that but the Treasury department is packed with accountants on salaries competitive with the private sector, we have to attract the best staff etc.
Despite an assurance to the States that the currency would be hedged that did not happen so the island is facing a higher price.
If the island’s government cannot organise itself better we are facing disaster, the old days of buying our way out of every problem are over as the money will not be there in the future!
Report abuse
Surely there are enough financial brains over here that someone could have been brought in as a consultant (pre cock up, rather than the usual post cock up) to hedge against the potential currency exchange loss? This is an utter, utter disgrace, there are no excuses. Please can i stop paying tax – you just keep wasting it.
Report abuse
I notice that Ozouf insists that he cannot be blamed because it was not on his watch.
By implication this means that the one to blame is TLS.
Report abuse
slapped wrists all round then and a hour in the corner with the dunces hat on.
Report abuse
oh dear terry you were there along side guy de faye when this was signed did you not read it first stand down now terry you have cost the island millions
Report abuse
Is it just me that gets sick and tired of reading about the constant stupidity and waste made by the people running the island? All trying to blame each other , no accountability. Its generally pathetic.
Report abuse
Money to BURN-should have used a U.K contractor !!
Report abuse
…and this from a major FINANCIAL centre! Yet again the world will be laughing at us.
Perhaps the people that did this should have stuck to farming, I bet they’re good at that!
As they have thrown away £mil of public money, one would hope that the fools responsible will be publicly named and shamed?!
Report abuse
all is not well in this ‘nation state’……
Report abuse
One thing you can guarantee is that this will not be the first unexpected rise in the cost of the incinerator.
Report abuse
Totally agree with comment 2
I think you are totally incompetent and not reliable no wonder Jersey is the way it is with people who lack attention to detail prior to agreeing to any amount to be paid out, knowing fully that a FX (foreign exchange just in case you state members do not understand FX) would be required and who was the numpety to sign off this!
Why should we pay, we pay enough out as it is…..time to reconsider who is running or monitoring what in the states….
So obviously the states are going use more of the tax payers money to cover up the blunder!!!!
Report abuse
It’s not good that yet again the taxpayer loses out, and its right that if individuals were told to fix the rates and didn’t then they should be disciplined. I wonder however if such a fuss would be being made if the exchange rate had gone the other way and we were saving £3 million instead?!
Report abuse
Terry should have instructed the Treasury to put adequate funds in to a Euro account, rather than simply assume that this money would magically hold the same value due to a contract. We all know that contracts can be full of traps, and get out clauses. What on earth made them think that the contractor would be willing to carry the risk of changing currency rates?
Report abuse
Why did Terry want to become our chief minister if he is never going to “comment ” on any of the major issues?
Report abuse
A little bird told me that at the time of signing the pound had already dropped from its previous norm 1.40 to 1.50 euro, so the decicion was to let it run and take the gamble. No one thought back in Nov that the economic situation would get that much worse and the pound would weaken further. So there was a reasonable chance that we could be looking at several million gain instead of loss.
Report abuse
This happened on Terry’s watch. He should accept responsibility and resign. However, this is very unlikely as he still supports Perchard after last week’s rant in the House. This Government stinks!
Report abuse
Truth is civil servants are underpaid. You get the quality you pay for and those who become and remain civil servants are motivated by the prospects of a safe, cushy number with a big retirement pay-off. They have correctly judged that the more reward based system of the private sector may not favour them.
Pay more and get better quality.
Report abuse
You realise this hedging business also costs a certain amount of money, don’t you?
I don’t think it is worth losing sleep over the change in exchange rates, as by the time the bill comes, they may have reversed. (This would actually save Jersey money.)
Report abuse
Not to worry just put up GST to compensate for a poorly run government. Before we had reserves to deal with their incompentance know we have GST.
Report abuse
In the early 70′s in the days of Cyril Le Marquand he when purchasing a major item for the reclamation site costing £8 million actually bought half the required currency in Gilders in advance therefore saving from what I am led to believe a considerable sum over the term of the purchase.
Without the support quite possibly of numbers of highly paid Civil Servants in that time it makes one wish that the quality of politician of Sen. Le Marquand (Cyril) was around today!!
Report abuse
Yet another exspensive joke. Vote of no confidence on terry le suer and ozouf. This just shows that the Esplanade project should be scrapped.
Report abuse
This is basic accounting; hedging foreign exchange risk.
Where are the controls? Where is the common sense?!
Report abuse
When the States approved the incinerator the Euro exchange rate stood at 1.3 / 1.4. Now it is just over 1. That is at least a 20% drop in the sterling value. It has been reported that over half of the cost was in euros. This would be approx £60 million. 20% off this amount is £12.000.000 ! This would easily have covered the £3.5 million demanded to enable islanders to have free medical treatment. There would be £11.5m left
Just imagine what could be done with this in these difficult times. It makes sense that before anyone signs a contract for such an expensive project he would make sure the important parts arecorrect. By not doing so Terry LS was negiglent and showed incompetence. But then it wasn’t his money wasn’t it ? He would have been much more careful if it had been. As regards to the other chap, De Faye, who signed the contract he simply doesn’t know better and fortunately he has gone. Could this sloppiness have anything to do with the eagerness to sign just one week before the elections ?
Report abuse
“I notice that Ozouf insists that he cannot be blamed because it was not on his watch.
By implication this means that the one to blame is TLS.”
As a matter of fact, Ozouf went further than that ; he explicitly said in a television interview that a Minister could not possibly be held accountable for the mistakes of his civil servants ! In other words, Ministers are NEVER accountable ? Give me a break, This from a man who swore during the senatorial elections that he was going to insist on more accountability ! I guess he was just speaking about the civil servants then.
Does Ozouf not realise that in the majority of cases where a politician steps down, it is because he takes responsibility of mistakes made in his department, not necessarily because of mistakes made by themselves? Oops, I do apologise, that is in the rest of the world, not in Jersey.
Report abuse
For the same cost of this incinerator we could install enough offshore wind turbines to power all of Jersey on windy days.
Report abuse
When we were selling up to leave Jersey a mistake was made by a certain States department which although put right and apologised for eventually it delayed the sale of our house (at the last minute once all our worldy goods were sailing off ahead of us)It also made us look like liars and that we had been trying to “put one over” the buyers.It caused untold stress and anxiety in an already difficult time.It also cost us money.But the moral of the story is,as I was told by certain States Department,”mistakes can happen”
So lighten up everybody-mistakes can happen-even very very expensive ones which cost the taxpayer a fortune!
Report abuse
I will ask agan– why did you not use a U.K contractor pay in £££££– no exchange rate to consider or am I missing something ??????? or as I said before money to BURN !!!!!
Report abuse
Unfortunately I have notice that Mr.Ozouf takes credit when things are judged to have been a success but blames others when they are deemed to be a failure. This is why I have and never ever would vote for him. I like people to be accountable for their actions and not blame their underlings when things go wrong. As for accountability he is accountable for anything going wrong on his watch as far as I am concerned, and if any major blinders occur for which he has responsibility I would expect him to take responsibility and resign if this happens.
I myself think we will be looking at an overspend of £20-30 million on the incinerator and I have already told them this. However even this amount won’t be enough to get anyone sacked for incompetence or wasting of public money. I find it amazing that for a claimed figure of £106M but probably in reality, to be much more that, a chimney wasn’t provided in the price! Why was this? Are there stricter emissions regulations for new chimneys than older predating ones? Maybe a states member could find this out? It would be interesting to know.
Does Mr.Ozouf know that authority can be delegated but that responsibility can not?
Report abuse
I agree with scaredforthefuture at number 26 and adrian at number 30.
Senator Ozouff is quick to bring down discipline on the people responsiblke for the overspend. I hope he has the integrity to discipline himself so quickly if he makes an expensive mistake in the future.
Report abuse
What the betting that the staff resposnsible were “J ” Cat accountants.
Plenty of good local people available for the job, who would have Jersey’s best interest at heart.
A very basic error not fixing exchange rates, and as heads would tole in the private then the public sector must now start doing the same. We cannot let public servants get away with this.
Report abuse
Carrie unfortunately I believe he never would. Tony yes I would put money on many of the blunders occuring due to new people not knowing how to do things over here. J cats are a major issue as far as I am concerned and there are far to many of them. We need to severly curtail this influx as the island cannot sustain it. Locals are always as good if not better than J cats in very job type. The only reason to get someone in should be because no one local is qualified for that job. Only then should Jersey bring in a specialist J cat and onlt then.
I have also noticed that once one J cat gets a top job they tend to get others in under them. Why is this?
Report abuse
we live in a Finance world, surley somebody could of walked to any bank and ask for thier Advice..not only the Treasury Monister of the time resign the Chief Officer should be sacked as well but there again this is Jersey after all
Report abuse
Perhaps they are taking a lead for the banks in how to manage money!
Report abuse
this is not a terry issue- he pays the treasurer very well to look after this type of thing, it is ridiculous to expect TLS to micro-manage every project and memorise every contract. This is the treasurers responsibility and he clearly thought there were more important things to spend his time on. just to be clear it doesn’t need an expert to hedge a position, it just needs someone with a brain and a ‘phone. this was a gamble that didnt pay off, should they be gambling? of course not.
Report abuse
I imagine Tezza will have full confidence in himself and rule the matter closed.
Report abuse
Lets sack the useless 13 and put that towards the bill.
Report abuse
I said this on the last jep incinerator blog about 6months ago when gbp/eur was at 1.40!
Everyone knew it was going to get to 1.05 euros to the pound, every bank has been forecasting it for over a year now…
Nevermind, just put up GST to cover it!!!
Report abuse
Yet again the public will be paying for basic elementary mistakes from an inadequate Government.
This ‘balls up’, the Perchard incident, to name but two. TLS and his COM should be held responsible and give the public who elected them (Well the Members, not the CM!) an explanation.
But as usual they feel they are not accountable and no statement will be forthcoming, well maybe one telling us the matter is now closed!
TLS should stand up and take it on the chin. Pathetic spineless leadership.
Report abuse
Get rid of the whole lot and let’s start again!
Report abuse
Get rid of these incompetent 13 and replace them with 13 random members of the public (jersey born of course). I’m sure you will see a much better job being done in government and the welfare of Jersey and it’s natives better addressed!!!
Report abuse
Number 20 – James Knight
You’re basically telling them to run their own 60 million gbp/eur position?? that’s what got them into this trouble!
I can’t think of even any banks in the world that hold such positions even over one night anymore.
These decision makes are fully responsible and i ask the question, have they locked in a forward rate now?? probably not…can’t wait till gbp/eur breaks through the 1.00 barrier…that’ll cost another 10 million!
I’m soo bored of hearing all these stories of incompetence, when are heads going to roll…i know if i made these basic mistakes in my job, i’d be out the door like a shot!!!
Report abuse
Surely this contract should have been dealt with by trained lawyers – every practising lawyer should by law be covered by P.I insurance so, in cases such as this if the lawyer had made a genuine mistake the insurance company pays out – not the tax payer. Yes the premiums are high and lawyers are expensive, but certainly not as expensive as 3 million or £3,000,000 per contract (not of this sort anyway) The question is who the hell was dealing with this contract?
Amigo
Report abuse
Hi Moi,
Who are these incompetent 13?
I would suggest;
1) Terry le Sueur for failure to hedge the incinerator project despite assuring the House that it would be done
2) Pip Ozouf for his failure to realise that the island is going in to recession.
3) Jim Perchard for his mismanagement of the health agreement negotiations with the UK and abusing another member of the house
4) James Reed for the developing crisis at La Moye School over the new headmaster
That is four and we have not seen four months of this administration and its failures yet!
Report abuse
Brush, brush – Sweep, sweep.
Mr Ozouf, make sure you smack Terry’s bottom before he goes to bed now we know he was the naughty boy!
Report abuse
I await the next blunder on the conveyor belt of States decisions with interest.
Don’t mention the O word. I cringe when I hear it as I associate it with spin or passing the buck.
Report abuse