Incinerator: Mystery of the lost millions
Tuesday 21st April 2009, 3:00PM BST.
THE States’ spending watchdog is taking the unprecedented step of calling the Chief Minister to explain his part in the incinerator exchange-rate fiasco.
Senator Terry Le Sueur is to be called to give evidence before the Public Accounts Committee about his actions as Treasury Minister last year when the deal in euros for the new energy-from-waste plant was signed in November.
Just weeks before, the States had voted to proceed with the deal to build the plant on the understanding that the exchange rate would be fixed or ‘hedged’. However, no fixing or hedging was done and the plummeting value of the pound against the euro has meant that the taxpayer is having to pay millions more than they should.
States Treasurer Ian Black conceded that his department had no experience of the management of hedging and had taken advice from outside consultants. However, not only was the advice conflicting, but two Treasury advisers from Royal London Asset Management told the PAC that they did not believe that they had been asked to advise about hedging.
• Picture: States Treasurer Ian Black faces Public Accounts Committee members Simon Crowcroft, John Refault and Senator Ben Shenton yesterday. Picture by David Ferguson (00673387)
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What advice did Sen.Cyril Le Marquand receive & from whom when purchasing equipment in the 1970,s for the reclamation site as the currency was guilders & that was bought in advance.Did the Treasury department have specialists then for that currency purchase?
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Zurich Capital are the market leaders in tender to contract fx hedging. This risk would easily have been covered with them.
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If he cant be found, try The Zoo! I believe he was lasted spotted there with some new friends. If he had been as sharp a look out as the Meerkats, he wouldn’t be in this spot of bother now!
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Lets be honest hedging currency is not rocket science, and on an island with this many finance professionals. Could have just given our treasury department a call, we would have done it for them!!!!
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Sorry, what advice did he need?
Anyone with even a basic understanding of Foreign Exchange would know how to do this.
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This is what politics should really be about. Holding individuals to account, if the Treasury failed the island, the Treasury Minister at the time should tender his resignation.
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if you are a treasurer taking home hundreds of thousands a year, you ought to at least understand that hedging is necessary when there is fx exposure. I would expect over half the population to understand this. There can be no excuse for this.
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Our States Treasurer doesn’t know how to place a fixed forward currency contract unbelievable!! he should surly be the first one to go as this is basic treasury work. How much did he spend on consultants? Isn’t this indicative of how the civil service is run and why we spend so much every year on consultants because people are placed in Job they are obviously not qualified to do it, so “I know lets employ another consultant” and it appears he consulted more than one but still didn’t do it!!! even more amazing, what was the total amount spent on Consultants? This also shows the calibre of our previous Finance Minister, he was not exactly a success in Social security, a bad Finance Minister and a hopeless First Minister, hopefully he will be exposed by this scrutiny panel. There is hardly a week goes by without some sort of disaster or another surly there must be someone in the states that would make a good strong clever leader.
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Another day of shame
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I saw the photographs of Senator Le Sueur’s trip to the zoo, but I have a question:
Was the bubble he was in supplied by Durrell’s or is it the one he normally lives in?
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terry just quit you are to out of touch with the real world go and work at the zoo the animals seem to like you
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In an island known for Finance ! the posts here reveal that anyone in the buisness knows how,yet we get “WE don’t have experience of how to do it”Please… So here we are again,overpaid civil servants who don’t serve, these people must be fired ,the idea that you can work for the Govt.display incompetence and sail into a fat pension has got to stop.
Everything here seems not to work properly including the people. The politicians will not challenge the civil servants or the organisation that they are training with. Don’t believe? Go see HTTP://www.tpuc.org/node/107 come back and report how it makes you feel.
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So the head of the treasury and anyone in his department doesn’t even know how to purchase a currency forward contract. This is the most pathetic thing I have ever heard. I cannot imagine anyone in the private sector keeping their job for a) not understanding a basic hedging tool, and b) making such a basic error.
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if this is how Terry ran the treasury god knows what he will do to the island
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Just another example of gross incompetence, by the shameless idiots that try to run this Island. Its truly embarrassing.
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As the average locally born tax payer who seems to take the hit for every mistake made by politicians and senior civil servants, I am at a loss as to how such mismanagement could have happened. Why was there a need for consultants? Surely the fundamental aim here was to eliminate a risk and protect the budget allocated to this project? Was it not just a case of contacting the States’ bankers and seeking advice on how this could be achieved if nobody in the department was familiar with the process? I fail to understand how we are paying certain senior States employee huge salaries to run a significant Government Treasury Operation, yet it seems that not one of them are capable of arranging such a transaction.
The Treasurer of the States and his delegates ARE accountable for this fiasco and should be disciplined accordingly. If heads are not going to roll then at least those responsible should be downgraded with salaries being adjusted accordingly. I would suggest that information regarding the savings and payback achieved by such actions should be made available to the public. Maybe this would focus minds in other areas of the States and persuade senior civil servants to treat the taxpayers’ funds as if they were their own.
As for our Chief Minister (the then Treasury Minister) he is ultimately accountable and should do the decent thing and resign. He was an accountant after all!
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I am sorry but there is no excuse, hedging is very straightforward and no senior finance person can turn round and say that this is complicated and requires expert advice. Appalling lack of controls at all levels. Mr le Sueur – how would you partners deal with you if you made an error of this magnitude in your practice ? And to think we now have ozouf( this one has no experience in Finance – scary)
This is a massive error and those responsible must be punished.
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Just an observation or two, but……………
‘If someone is not experienced in doing something, then why do it when the outcome can (did) cost millions?’
Plus having an investigation, just what powers do they have? Is this just another pointless exercise?
You cannot tell me that the Chief Minister will be sacked! After all he was in charge when the papers were signed…NOT…the civil servants!
And last but not least I bet that this would have a different ‘slant’ to it if the Euro had gone UP not DOWN.
The papers and Ministers would have been ‘full of themselves’ if that had been the case…………..unfortunatly not, a bit of an ‘own goal’ me thinks!
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“States Treasurer Ian Black conceded that his department had no experience of the management of hedging”
That is scary. Very scary.
Hedging FX risk is basic accounting and one would question the credibility of their professional qualifications.
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Have they hedged it now? probably not…
What rate was it done at ie. if they don’t know what they’re doing, which ever bank they’ve done the fx with will rip them off!!!
Maybe they need to arrange a 5bps spread with the bank involved?? i bet they haven’t, this will cost the tax payer another million quid!
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“We are the masters. They are the slaves” Yukihiro Matsumoto
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Many in the States set themselves low standards and frequently fail to meet these….the term ‘clowns’ springs to mind.
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larfable…
whats next? the head of the drug squad doesn’t think cocaine is a drug?
this as a pure violation of position and smacks of inexperience, simply a finacial loss that should never have happened, bordering on criminal, nothing more nothing less. heads should roll.
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Mystery of the lost millions.
Sounds like an Indianna jones movie to me.
However when one associates the lost millions with the incinerator one can only assume that the lost money has gone up in smoke!
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As voters we employ the States members to act in our best interests. Come the next election we can vote those who don’t come up to standard out. However if we are to attract candidates of substance we need to pay the going rate and until then the only applicants are the monkeys attracted by the peanuts we offer.
Until such time as we offer a competitive salary we will get the level of service we are prepared to pay for and therefore have no right to complain. Other than the rich who do it for fun or the no hoper with no career potential why would anybody of any calibre give up a well paid job, sacrifice their career and pension for £40k and all the insults that Senator Syvret and the JDA can throw at them. Like our current States members this is a no brainer and like anybody who has tried to get a job done on the cheap we are all suffering.
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sanity
I agree with you 40k is an insult to a good go getter.
Another solution would be to get rid of the deputies, most have failed an island wide mandate anyway.
The constables although remaining states members should not head up departments they have enough to do in the parishes (or should anyway).
Have one senator for each voting district with an island wide mandate.
This would allow the money we spend on government to spread amongst fewer, giving them a decent wage and we might even end up with fiercely contested constables elections.
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Lets just pretend to investigate the matter to look good to the public and then whitewash it and carry on. the tax payer can afford a few million.
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Get rid of the constables who cosy to the the establishment on a regular basis. This isn’t how democracy works in my book. Make those that are left all Senators and remove the 5 unelected establishment officials from the States there is no room in a democracy for these sort of people as far as I am concerned. Obviously the establishment supporters will be chocking in their drinks but if we want democracy we have to grasp the nettle, as far as I am concerned.
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It really is long over due that reforms are enacted so that we simply have “states members” elected to represent a given constituency with each relating to a vaguely similar number of voters.
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Jim, that’s a bit harsh on the poor animals!
Although they might know more about the FX. Am I to believe he honestly needed to take consultancy advice on this matter? Really?
I find this all a bit hard to believe.
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Yet another reason why people standing for election must be made to commit to their preferences for Chief Minister before their electorate go to the polling stations.
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Leah. It is a sad reflection, the world over, to hire a consultant when it comes to something difficult; a safety net in the blame game.
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Another example of Jersey muppets.
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There is surely no mystery about the lost millions – someone made a major ‘faux pas’ and needs to be accountable.
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In my opinion whoever fouled up should be brought to task and sacked. We cannot afford a lackadasical approach to public spending.
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Adrian 28 – At the last Senatorial we had 20 odd candidates for 6 seats and it was very hard going. Have you actually thought through your proposal.
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Bank employees have to take exams and be registered with the Jersey Financial Services Commission to contract forward FX.
It seems laughable that the people responsible for the islands coffers are not expected to take the same qualifications.
What a joke!!!
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