asitis

MUA in weak financial position

218 posts in this topic

 

" ...  the £14m investment in pipelines to provide natural gas to Manx Gas’s distribution networks. The cost of these pipelines is charged to Manx Gas through a leasing arrangement"

Heres why they will do nothing about the Manx Gas standing charges here. MG put them in place to give them the cash flow to meet the lease payments due to IOMG for the investment made. 

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As the piece makes clear, the loans were never authorised. To say the least. On that basis I have never seen any reason why they should be honoured. Meanwhile what about a one off windfall tax on everyone who made on the deal. Including the landowners. 

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4 minutes ago, pongo said:

As the piece makes clear, the loans were never authorised. To say the least. On that basis I have never seen any reason why they should be honoured. Meanwhile what about a one off windfall tax on everyone who made on the deal. Including the landowners. 

Well if you read the KPMG report they ratified the ultra vires loans and moved them from the MEA subsidiaries directly into Treasury thereby effectively guaranteeing repayment and giving them a much better legal status than they had as effectively unauthorized borrowings in the subsidiary of a statutory board; when they could potentially have partially walked away if they left them where they were and had a scrap. Banks were making bad loans all over the place at that time. Loads of them subsequently got written back after 2008. 

Edited by thesultanofsheight
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that was quite a lucky stroke for the banks really. how did the decision to ratify them come about?

Edited by the stinking enigma

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21 minutes ago, thesultanofsheight said:

Well if you read the KPMG report they ratified the ultra vires loans and moved them from the MEA subsidiaries directly into Treasury thereby effectively guaranteeing repayment and giving them a much better legal status than they had as effectively unauthorized borrowings in the subsidiary of a statutory board; when they could potentially have partially walked away if they left them where they were and had a scrap. Banks were making bad loans all over the place at that time. Loads of them subsequently got written back after 2008. 

The same organisation issuing the borrowing to Mike Proffitt and the MUA was the same that backed The Louis Group - a few familiar faces on both sets of docs....

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43 minutes ago, Mr Helmut Fromage said:

The same organisation issuing the borrowing to Mike Proffitt and the MUA was the same that backed The Louis Group - a few familiar faces on both sets of docs....

Yes. But only via the Manager who was overseeing the lending if I remember right. To me so much debt was written off as bad loans after 2008 I'm struggling to see why we ratified this and took it on to Treasury's books. We had a chance to tell them to fuck off. Now we're giving them £95m. If I remember rightly the main chunk ratified was one loan of £110m due to Barclays which I assume the £95m will offset. All this talk about long term savings on interest repayment by the MUA is bollocks as it's just how Treasury internally recharges the interest that it's paying anyway to the MUA. The debt is held at Treasury level. It's paying the interest currently. The fact that they recharge the interest to the MUA (and therefore on to MUA consumers) is a red herring as they could just service the debt direct out of general revenue if they wanted to as it's now their loan. But they'd rather use £95m of reserves to pay it off to avoid putting up taxes now they can't get away with recharging the repayments to the MUA as it puts too much strain on the consumer. 

Edited by thesultanofsheight
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18 minutes ago, thesultanofsheight said:

Yes. But only via the Manager who was overseeing the lending if I remember right. To me so much debt was written off as bad loans after 2008 I'm struggling to see why we ratified this and took it on to Treasury's books. We had a chance to tell them to fuck off. Now we're giving them £95m. If I remember rightly the main chunk ratified was one loan of £110m due to Barclays which I assume the £95m will offset. All this talk about long term savings on interest repayment by the MUA is bollocks as it's just how Treasury internally recharges the interest that it's paying anyway to the MUA. The debt is held at Treasury level. It's paying the interest currently. The fact that they recharge the interest to the MUA (and therefore on to MUA consumers) is a red herring as they could just service the debt direct out of general revenue if they wanted to as it's now their loan. But they'd rather use £95m of reserves to pay it off to avoid putting up taxes now they can't get away with recharging the repayments to the MUA as it puts too much strain on the consumer. 

Wasn't Proffitt also on the board of Barclays ?????

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15 minutes ago, dilligaf said:

Wasn't Proffitt also on the board of Barclays ?????

Yes, stinks doesn't it.

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2 hours ago, thesultanofsheight said:

Yes. But only via the Manager who was overseeing the lending if I remember right. To me so much debt was written off as bad loans after 2008 I'm struggling to see why we ratified this and took it on to Treasury's books. We had a chance to tell them to fuck off. Now we're giving them £95m.

Supposedly considered at the time - for about 2 seconds - and it was concluded that the reputational damage to the Island would be overwhelming and could have unforeseeable consequences.

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6 hours ago, woolley said:

Supposedly considered at the time - for about 2 seconds - and it was concluded that the reputational damage to the Island would be overwhelming and could have unforeseeable consequences.

...and that is how people get away with murder on the Island.

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In my view I fully expect that the loans were perfectly legal as there is no way the bank would have lent otherwise without making an awfully big cock up. It is very unlikely the bank would have made the loans without obtaining a formal legal opinion, probably from a local lawyer, that the company had the power and capacity to enter into the loan and had followed all proper procedures to ensure that the entering into was valid. That is standard procedure when a bank lends to a commercial organisation.  The lawyers would or should have reviewed carefully as if they get it wrong their backside / PI is on the line.

Whilst I fully expect it was perfectly legal it does seem pretty clear that Proffitt found and exploited a loophole that enabled the MEA via it subsidiary to obtain the borrowings without requiring Treasury approval which would have been required if the MEA had undertaken the borrowing directly 

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