BSE, the cost of a crisis : thirty-fourth report, together with the proceedings of the Committee relating to the report, the minutes of evidence and appendices / Committee of Public Accounts.

  • Public Accounts Committee
Date:
1999
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Licence: Open Government Licence

Credit: BSE, the cost of a crisis : thirty-fourth report, together with the proceedings of the Committee relating to the report, the minutes of evidence and appendices / Committee of Public Accounts. Source: Wellcome Collection.

    53/68 (page 27)
    [Mr Wardle Cont] me something. Thank you. Who are the shareholders of Fibrogen? (Mr Trevelyan) We have information on that as a result of our own 227. I am sure you have, but who are the main shareholders of Fibrogen? This Committee would like to know, or at least one Member would. Do you know? Do you have it at your fingertips? (Mr Trevelyan) Yes, we do, but I would not like to state it without having a listing. I have full listings on my files. Mr Williams 228. Please give us as much information as you possibly can. You have some colleagues behind you, so we are willing to wait a moment or two and move to another question if someone else is able to get the information for you.’ (Mr Trevelyan) As you probably know, they are a wholly-owned company of another company. Mr Wardle: I do not know any of those details. I have not seen them. I am bound to say, Chairman, that I am deeply suspicious of the need to hold this session in camera, as it were, because it seems to me that the only thing that needs to be kept hidden is the extraordinary nature of the deal that appears to have been done on the basis of the information we have just had. Let me move on Mr Williams 229. Before we move on, you say it is wholly-owned by another company, but what company? (Mr Trevelyan) The holding company is one which is described as Fibrowatt. There is a whole network of companies Mr Wardle 230. Chairman, may I ask the C&AG why we were not informed of that? Let me ask the C&AG straightaway, what is the network of Fibrowatt? (Mr Le Marechal) We do not have _ that information. 231. You do not have that information? Let me move on. The other eight chosen bidders under the restrictive procedure outlined by the EC Directive, were they given a similar opportunity to collect £5.7 million of taxpayers’ money for an exercise like this— yes or no? (Mr Trevelyan) They were all invited to state their terms for doing business with the Intervention Board and we have done business with them on the terms they have asked for. 232. So that is the long-winded way of saying that they did not have £5.7 million of taxpayers’ money dangled in front of them to convert their plant? (Mr Trevelyan) There is no reason for my not stating here that the next most probable or one of the ' Note: See Evidence, Appendix 2, page 33 (PAC 98-99/52). most probable tenderers is Prosper de Mulder. Prosper de Mulder have no need of this funding. 233. That is not answering my question. Were the others made aware that £5.7 million was being offered to one of the bidders? (Mr Trevelyan) No, that is the reason, the only reason why we sidelined a certain amount of information to this Committee, that it seemed to us that our negotiating position would be weakened with the other companies if they knew that we had in the circumstances accepted. 234. Made every day like Christmas for this particular one. It says in this so-called confidential letter that the advantage here was conversion of plant as opposed to new build. How long would it have taken any of the other bidders to complete a new build to this sort of capacity? (Mr Trevelyan) Approximately two years. 235. And how long would it have taken this company? Have you looked at the date of the bid? Would it be the best part of two years before this would be on-stream? (Mr Trevelyan) From the date of contract, and we would not expect anybody to undertake conversion until the contract was completed, from the date of contract, nine months. 236. Time, I know, is limited, Chairman, but there is just one other avenue of inquiry, if | may. You say the Board is advancing £5.7 million to Fibrogen. It appears to be being repaid over three years for which they have a contract. That is repayment of £1.9 million a year which presumably, grossed up for corporation tax, would be £2.7 million. So you are saying even on this reduced level of £62 a tonne Fibrogen can look to a return on capital employed of 50 per cent. Not a return, a gross margin of 50 per cent, is that correct? Not even a gross margin, a net margin of 50 per cent. (Mr Trevelyan) On this capital? 237. And you are saying that they have a contract for three years which will not eliminate the backlog. You are saying it is going to give an increase in 70,000 tonnes a year and they are going to deal with roughly 75,000 tonnes a year. It seems to me—forgive the haste—that you will hardly have made a dent in the 350,000 tonne backlog although another incinerating company will reduce that by 45,000 tonnes a year. All of that means, does it not, that at the end of this three year contract Fibrogen will have got a fully paid for plant courtesy of the taxpayer paid off in three years and will be operating on a huge margin for any further work they do for you and they will have you over a barrel because they know they have got the capacity and they know you will need the capacity? Where is the commercial nous in any of this? How did the Treasury approve any of this? I am rattling these away to get them on the record, so forgive me. What will happend if Fibrogen’s bankers put the company into receivership? They have got a first and floating charge, an exception to the normal rule where the Government is a preferential creditor. You have a set of bankers or a banker, I do not know, we have not