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.

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    [Mr Wardle Cont] been shown any accounts, who have got this debenture who at any stage can put the company into receivership at which point no doubt they have the first charge on any plant and equipment that has been supplied and they can help themselves to it and set up elsewhere and no doubt decide to offer you incinerating capacity through some other company. Why is the taxpayer, through you, in such a vulnerable position? (Mr Trevelyan) The taxpayer has few alternatives. That is the view we have taken. There are, of course, limitations to the utility of competitive tendering. 238. You can say that again. (Mr Trevelyan) We have followed the best available practice to the Government in engaging suppliers of services in these circumstances. We have driven the price down from £200-plus a tonne, which was the price quoted by the NAO when they did the report in 1997, to just over £60. 239. Courtesy of a £5.7 million loan which does not have any visible security in the first stages. (Mr Trevelyan) {should make it clear that the loan is in effect our funding the capital development. It is paid on invoice and on certification by our technical consultants. 240. But you do not have a first charge over the company’s assets, the company will take ownership of that once that certification is provided by a consulting engineer who has been on the company’s balance sheet. You do not have a first charge. (Mr Trevelyan) Yes, we do.’ 241. How on earth did the Treasury approve these procedures? (Mr Trevelyan) The circumstances were the same as we have discussed in various other areas. The Government has few alternatives. We have reduced the price very significantly. We are in an exposed position and I felt bound to expose this position to the Committee because it would have seemed wrong to come and discuss disposal without indicating the terms on which we were undertaking them. This is an uncomfortable period for the Government, I make no secret of that. At the end of the process there will be a plant which is converted specifically for burning meat and bone meal. It is not easy to give a worth of that once that process has been gone through, so that is speculative. It is quite clear that this company, if it completes the contract successfully, will have had three years’ successful trading at the taxpayer’s expense. Mr Wardle: Chairman, I wish to place on record, I know my time is up, this deal—I can only call it a deal—seems to be riddled with irregularities. The Government is not in the role of a venture capitalist in any form, I am astonished that Mr Trevelyan should seek to make a virtue of the fact that he has told the Committee when I should hope so too, it seems that we have not been told enough. ' The Board’s charge will take effect immediately the banks are repaid but there is one other existing creditor, owed £1.5 million who will want it first. Mr Williams: Can I ask you both to look at the record, at all of the questions because Mr Wardle has raised some very important questions. We would like full answers on them. The fuller you make them the less likely it is that we will need to call you back at the start of another hearing to finish this hearing. I would appreciate the fullest possible answers.” Mr Davidson 242. I wonder if I can just follow up the question of prosecutions and fraud and refer in particular to the additional report, page six, paragraph 19, where it says that the Board’s records show that some £120,000 has been recovered to date. I am not clear whether or not the £120,000 is the total amount for which recovery is sought or whether or not that is going to be the advance payments and that is a percentage of a bigger sum, but £120,000 has come in so far and a much larger sum is to follow later on. Can you clarify that for me? (Mr Trevelyan) | think it would be better if I wrote in on that also' because we have a large number of cases outstanding at the moment. I could not readily answer that. I will just consult my colleagues. I would need to go to my Anti-Fraud Unit to get a full read out. 243. When you say you have a large number of cases outstanding, is this beyond the numbers that are mentioned here? (Mr Trevelyan) No. 244. Can you just clarify this question of the sum involved of over £1 million, whether or not that is something that is likely to be absolutely and utterly unique? If I thought this was something that might have been done by a number of other people but had not been picked up I would be much more concerned. (Mr Trevelyan) It is a one-off. In the Beef Stock Transfer Scheme if a trader described as eligible some product which was ineligible then he gained major advantage. That opportunity is not really available under the Over Thirty Month Scheme; either you have a cow of a certain age or you do not. It is difficult to conceive of major exercises of misdescription of this sort. 245. Presumably there could have been many others involved in misdescription as well? (Mr Trevelyan) We have a process of verification. This particular problem was shown by _ our verification officers. 246. You are satisfied that it would not have happened anywhere else? (Mr Trevelyan) I cannot say that with any certainty. I believe that the verification has been adequate and I am in a sense pleased that it has shown up this particular problem. 247. Can I clarify something which relates back to this point about the cases that were passed to the Intervention Board’s Anti-Fraud Unit. You seemed to be saying to me that the only way in which they reached the Intervention Board’s Anti-Fraud Unit was