Lime Grove House - Deputy Le Fondre - Transcript - 2 September 2011

STATES OF JERSEY

Corporate Services Scrutiny Panel Lime Grove House: Failure to Complete Transaction Sub-Panel

FRIDAY, 2nd SEPTEMBER 2011

Panel:

Senator S.C. Ferguson (Chairman) Deputy D.J. De Sousa of St. Helier Deputy C.H. Egré of St. Peter

Witness:

Deputy J.A.N. Le Fondré of St. Lawrence

Also Present:

Ms. K. Boydens (Scrutiny Officer)

Ms. S. McKee (Training Scrutiny Officer)

[14:02]

Senator S.C. Ferguson (Chairman):

Good afternoon, ladies and gentlemen, welcome to this hearing of the Sub-Panel of the Corporate Services Scrutiny Panel into the purchase of Lime Grove, or the abortive purchase of Lime Grove. Now, I believe this is the first time you have been that side of the table ... so you have read the health warning?

Deputy J.A.N. Le Fondré of St. Lawrence :

I am sure I have but I might just remind myself. So basically I have parliamentary privilege?

Senator S.C. Ferguson:

Yes. The transcripts will be recorded and sent to you over the next 2 or 3 days to check the facts, after which they will be a matter of public record. Now, for the purposes of the transcription employees I wonder if you could say who you are and what your position is.

Deputy J.A.N. Le Fondré:

Deputy John Le Fondré and in relevance to here is I used to be the Assistant Minister for Treasury and Resources with responsibility for Property Holdings. Presently I am no longer in that case and I am a normal States Member.

Senator S.C. Ferguson: Thank you.

Deputy D.J. De Sousa of St. Helier : Deputy Debbie De Sousa.

Senator S.C. Ferguson:

Senator Sarah Ferguson, Chairman.

Deputy C.H. Egré of St. Peter : Deputy Collin Egré.

Ms. S. McKee (Training Scrutiny Officer): Sammy McKee , Training Scrutiny Officer.

Ms. K. Boydens (Scrutiny Officer): Kellie Boydens , Scrutiny Officer.

Senator S.C. Ferguson:

Right, well I wonder if you could take us through the chronology of your involvement with the Lime Grove purchase, bearing in mind that we had a fairly detailed session this morning. If your information duplicates any of the information we had, you might want to just refer to it in passing.

Deputy J.A.N. Le Fondré:

The difficulty is I missed the first half hour or so of this morning so if I am repeating something that has been said, do move me on, please. I apologise as well, which is never a good start, because it has taken about 3 days to sift through something like 3,000 emails and get them down to something that is manageable. I got to bed exceptionally late last night so I am losing my voice already.

Senator S.C. Ferguson:

We will wake you up if you go to sleep.

Deputy J.A.N. Le Fondré:

I am sure you will. Can I just do a quick summary, as it were, of where I understand ... what my view is on the whole matter, which is that much so it is not terribly long. I think especially given the comments made yesterday, no matter how it is dressed up the responsibility was taken for the project on 19th November, and we will obviously go into that when we get to that point in the file. There was a meeting on that day of which I attended and then a memo was issued that afternoon without any warning and the responsibility was taken away from Jersey Property Holdings by and to John Richardson as Acting Chief Executive Officer and the Minister for Treasury and Resources. As far as I am concerned the deal has failed. It does not matter which way you look at it is not happening, it could and should have happened and that can only be a failure in my book. Up to the point when I was Assistant Minister, or while I was Assistant Minister, the wider project was designed to achieve revenue property savings of £1 million a year. If you want to account of those numbers you can slice them and dice them however you like but keep it as a round £1 million. You know, a rabbit might be pulled out of a hat tomorrow for some new project. It sounds like it would have to be a building one, it is probably going to be a 2 and 3 year delayed. So we have lost those revenue savings for that period of time until that project is implemented. If that was for the whole project that may be reduced because parts can go forward or whatever. So in essence not only am I exceptionally disappointed and, I would say, angry at the failure of the project, it has not happened, it could have happened and it should have happened. I think that is a failure in my book and I have to say I am also angry at what appears to be the - I am going to say - witch hunt in regard to minutiae that we heard very recently. A lot of red herrings were raised and they seem to be trying to cloud what I will call the somewhat more fundamental issues. I hope that puts it into the sort of context of where I am coming from and I hope I will be able to back up a number of those remarks. David Flowers this morning made comments about progress reports. There is a progress report for 2009 in my books which does make reference to the police H.Q. (Headquarters) and value engineering workshops and things like that. What had happened at that point ... have you had the details of the work that was done and the £7 million that was taken off the capital cost of the original project? Very, very simplistically under the previous regime the ... which I think included Lenny Harper and people ...

Deputy D.J. De Sousa: Is that pre-2009?

Deputy J.A.N. Le Fondré:

Yes, I think so. The police requirements at that point were very much into compartmentalised spaces, lots of cubicle offices, partitions and things like that. For example, and bearing in mind I am a layman, it means things like air conditioning costs, et cetera, are huge. I think that added an extra £2 million on to the project from what I was told at the time. Under the new regime with David Warcup and Barry Taylor the department has had a very good working relationship with them and was able to effectively adopt what I call a line by line approach challenging almost every room area and space that was required. I know that at one set of meetings, in one of the big meeting rooms down the road, I think they taped out 2 areas of 200 square feet and 500 square feet to exaggerate and what you might have had - again an exaggeration - a couple of P.A.s (Personal Assistants) saying: "I want that much bigger space." When you pointed it out to them they said: "Oh, maybe not, I can live with the smaller space." So it was a case of physically taking people down with the Property Holdings Team and with the huge support of the various heads of the departments in Home Affairs and the police and challenging what the original

requirements had been laid out.

Deputy D.J. De Sousa:

So you had like workshops?

Deputy J.A.N. Le Fondré:

Yes, I mean obviously that is a completely operational thing but that is how I understood it worked. The ultimate course of that was that a significant amount of space was taken out of the original scheme and it took about £7 million, if you costed that up to ...

Deputy D.J. De Sousa:

We believe a 30 per cent reduction?

Deputy J.A.N. Le Fondré:

I am not too sure at that stage. There was a significant reduction is all I can remember and I always remember ... it is in the progress report, it says it delivers a saving of over £7 million. I can say at that point ... I can always remember because we thought it was very good news at the time and somewhere in here is the first page of the spreadsheet I was sent for my information. It is one tab on a large spreadsheet which gives the kind of indication of what was done. I can at that time I think I had had a meeting with Terry Le Sueur as his Assistant Minister of the day as well and was just passing on the information and Philip Ozouf came in at the same time and he was informed ... you know, there was a potentially good news story there but this was obviously very early days of a project. Now, I presume you will have had the notes and exchanges that went on in February between Mark Grant and the vendors' agents already?

Senator S.C. Ferguson: Yes, I think they are in here.

The summary is there was a price, the vendors came through with a price and I think Mark does say: "Please tell ..." it is almost along lines of, and almost in that language: "Please tell your client to get real" I think it is. Then obviously you have the letter of 25th March which is without prejudice, subject to contract, sub to ministerial and States approval. Certainly I was informed ... I was not aware of the amount which I do not have a problem with, I was certainly informed of the principle of: "We think buying Lime Grove was a good idea and we want to obtain a period of exclusivity" and we will put a letter in which will be subject to basically those 4 terms that I read out.

Deputy D.J. De Sousa:

Was the Ministry informed at that stage?

Deputy J.A.N. Le Fondré:

Hang on, this was me, and I cannot say exactly when, it was a verbal conversation that I was informed in and I said: "I do not have a problem with that at all.

Senator S.C. Ferguson:

You were dealing with this under delegated authority?

Deputy J.A.N. Le Fondré:

Yes, it was a conversation that was had as part of one of the meetings that we were having at Property Holdings on a variety of matters.

Deputy D.J. De Sousa:

So it was members of the team at Property Holdings that informed you of where they?

Deputy J.A.N. Le Fondré: Yes.

Senator S.C. Ferguson:

But it was a Holding letter rather than ...

Deputy J.A.N. Le Fondré:

As far as I am concerned very simplistically this is not ... when I say it is not worth the paper it is written on, it is something that you can walk away from at any stage. Subject to ministerial and States approval, obviously the ministerial approval, as I understood it, could either have been me or the Minister for Treasury and Resources and the States approval is obviously the 15-day rule. Certainly in other transactions and ... in my role there I was in and out of Property Holdings very, very regularly. I think I had a very good working relationship with, I would say, all of the team, I would hope, and it was a fairly routine matter at that stage. What I will say, except I do not have the documentation for it, I would hope you do, much later on this letter became an issue and a file note was produced, it was produced after the event but it was a sort of ... it was a recollection file note as it were signed by 2 members of the team, which from my memory did state that John Richardson had been in the building when the letter was received from the vendors on or around, I believe, 31st March. You would have to check the details of that file note, but it was signed off by 2 officers I believe.

Deputy D.J. De Sousa:

Around roughly what date was that?

The file note would have been in respect of somewhere around the end of March. I cannot remember what date it was. It was produced quite some time later because it had suddenly become an issue and their recollection was at the time it was fairly rare to see Mr. Richardson in the building and that is why they remembered the date. Just moving forward ... now bear in mind this is around the Easter break as well and I believe Easter Sunday was something like 3rd or 4th April, somewhere around there so I am presuming - I have not checked out my diary - that that following week would probably have been a break, as it were, or trying to have one and so very shortly afterwards we started ... well basically I have got a meeting request notes just to try and arrange to get a meeting with Anne Pryke and Ian Le Marquand to do some briefings with them on this. This is in April and I think - and this is recollection - the idea would have been to make sure that, you know, we have established this, the thing is coalescing, we are making sure that we have got an in principle view from those 2 relevant Ministers before we start taking it up further.

[14:15]

I do not know what date those happened, I have not got my diary but it does say on 16th April that Senator Ian Le Marquand can attend the meeting at 12.30 p.m. on Monday, Anne Pryke will attend a further meeting at 3.00 p.m. on Monday. So I do recall ... as I say, I do assume that the meetings took place and there was certainly no alarms bells going off whatever happened. What did then happen and is ... again, I have to say I completely disagree with some of the comments that were made yesterday about not being informed. I have a meeting request here which is dated 29th April from 4.30 p.m. to 5.30 p.m., in attendance, John Le Fondré, David Flowers and Philip Ozouf . I know Treasury yesterday seemed to imply that that did not happen, however I have an email dated 4th May which says: "Philip, re the police station. Have you had any queries after our discussion last week? Would you like David Flowers (D.F.) or Ray Foster (R.F.) to attend the ministerial meeting tomorrow?" That is dated 4th May and so obviously the meeting would have been on 5th May. The agenda for 5th May has item 4 under ministerial business, police station.

Deputy D.J. De Sousa:

Do we know if a price was mentioned at this stage?

Deputy J.A.N. Le Fondré:

Now I cannot demonstrate that. I will give you a recollection, and the only thing I can say is that there is a note here from me to David at 9.08 a.m. on 5th May: "Just to say the meeting is meant to be in Ian Black's office, not sure what time we will get to the H.Q." I can recall, because I can visualise the office, if you see what I mean, that after we had a briefly, and my recollection was it David and Ray so it would fit in, that after they had left, so it would have been me, Philip Ozouf , I think Eddie Noel, I do not know if there was any officer present, that a comment was made by Philip about the price. So there was certainly a discussion about the price.

Deputy D.J. De Sousa: That was in May?

Deputy J.A.N. Le Fondré:

That is my recollection. Put it this way, there was definitely a discussion at some point and my belief is it was on 5th May but I cannot prove it, but we can obviously demonstrate that there was something on 4th June. My recollection of that comment

is along the lines of: "What do you think of the price?" It could even have been: "I think I could get it for less, I will ask around." It was something of that ilk.

Deputy D.J. De Sousa:

Is it likely that this meeting was minuted?

Deputy J.A.N. Le Fondré: No.

Deputy D.J. De Sousa: Why?

Senator S.C. Ferguson: This was 2010?

Deputy J.A.N. Le Fondré:

It was a comment ... sorry, the presentation by David and Ray would not have been, it would have been a presentation. They would probably have the paper. I cannot remember. At one of those meetings ... David certainly used to do boards, this kind of size, to blow the PowerPoint slides up or something along those lines. I would not think you would minute it to be honest. But the comment by Philip was just an informal throw away comment.

Deputy D.J. De Sousa:

But would there be a file note made by what is now the Acting C.E.O. (Chief Executive Officer)?

Deputy J.A.N. Le Fondré: No, he was not present.

Deputy D.J. De Sousa:

He was not present, right, okay.

Deputy J.A.N. Le Fondré:

No, not in those days, definitely.

Senator S.C. Ferguson: This was all in 2010?

Deputy J.A.N. Le Fondré:

This is all 2010 and, as I say, in my recollection there were certainly meetings there on somewhere around 29th April to ... certainly, I said: "Look, this is all great, we have got to give Philip a heads up" and so there was definitely a meeting on 29th April or before 5th May. As I said, bear in mind we have got a very conditional position. We have got informal soundings, we have had soundings from Home Affairs and Health to say: "Yes, a principle we are happy with what you are proposing." So then we are going to Treasury, and as a principle that seemed to be fairly okay. You know on 10th May there is a message from David saying: "Mark/Richard, will you please make sure this report is completed and sent to the Minister A.S.A.P. (as soon as possible)." He does say tomorrow morning at the latest and it went out, I think, on 13th May, so 3 days later. 13th May, Ray Foster: "Dear Senator, please find attached an update on the issues raised at our meeting last week regarding police H.Q. proposals. I will ensure you are kept regularly informed of progress." Certainly on that memo ... now the email was sent on 13th May at 0912 and the memo is commercially confidential dated 12th May.

Deputy D.J. De Sousa: Did it have a price in there?

Deputy J.A.N. Le Fondré:

No, this one says: "The present proposed project will return a ..." it talks about the reduction of £7 million: "The present proposed project will return a surplus of £2 million compared to budget" so in other words going to spend less ... sorry, overall the net result will be that we will put £2 million back. "However, it has a funding requirement to spend more than the allocated budget before recouping funds from disposals. So it is very clear that although the overall project, the gross expansion figure was bigger than was budgeted, the net, because you are bringing in proceeds from other land receipts and things like that which was the way it was going in circle basically, and as David covered very significantly this morning, had been the way that Treasury had appeared to indicated they wanted to go. But it is in black and white that is where we were going, so your gross spend is higher but your net spend, your net result at the end was projected to be a £2 million reinvestment if you like back to the consolidated fund. What it certainly does say there, it says: "An extension has been sought on period of exclusivity with owners, we are awaiting a response." That has been covered this morning. That has got to have been something in writing. Now, Mark responds on 18th May: "Letter on the way confirming a 4-week extension of exclusivity." Mark's comment is that he feels that

the vendor really supports this deal.

Deputy D.J. De Sousa: Mark?

Deputy J.A.N. Le Fondré:

Mark Grant. Philip Ozouf , 3rd June: "Can I have an update of this by 5.00 p.m. on Monday, please." That is to everybody; David, me, Mark Grant, Richard Cheal, Jason Turner, the Deputy Treasurer. Now, the one thing I have to say I could not find in my records around 4th June was that memo but it is attached to a further report, and I have left it in the sequence there. Let us just find ... it was somewhere around 18th, 4th June memo. Lime Grove officers, this is to the Minister for Treasury and Resources, cc me: "Valuation completed by BNP Paribas on an R.I.C.S. (Royal Institution of Chartered Surveyors) red book basis valued at £8.8 million for shell and core only.

Senator S.C. Ferguson:

This is the briefing note of 4th June 2010?

Deputy J.A.N. Le Fondré: Yes.

Senator S.C. Ferguson: Yes, we have that in the ...

Deputy J.A.N. Le Fondré:

Okay, the only point just to reiterate is the point it says about: "Snagging report expected next week, this will influence the J.P.H. (Jersey Property Holdings) current offer of £8.75 million subject to contract and approvals."

Deputy D.J. De Sousa:

That was sent to the Minister for Treasury and Resources on 4th June 2010?

Deputy J.A.N. Le Fondré:

Yes. Well, certainly according to this. That, by the way, is an addition, an appendix to a report that was further sent to a number of people, I think again on 18th November 2010, which is the day before the rather crucial meeting. The point about this whole thing is it does tie into the wider context of the office strategy and the whole principle as was elaborated upon ... the very simple principle is the less space we occupy the cheaper it is to run. It is about heating costs and lighting cost and cleaning costs. We have generally only focused on what we call the property costs, which are the ones I have pretty well stated but the experience elsewhere, and including locally, but the statistics from the U.K. (United Kingdom) demonstrate that what is referred to as the operational savings that come out of this can be up to 4 times as much. So if, for example, you are looking at it on the wider scheme, because obviously in my time we were doing the wider scheme, it was £1 million a year property savings. As I said, it depends how you cut that. You are looking at potentially quite significant numbers over and above from the operational savings. As has been demonstrated elsewhere that can be silly things from even like if you go from the situation of everybody or every other person having a printer on their desk or something along those lines, because you are changing the office layouts and the designs and all this type of stuff, you can have a large printer sitting in the corner that everybody uses. That type of stuff can take your printing costs down quite significantly. It is all those type of iterative ideas that people are demonstrating. Ogiers building is a classic, in fact it is a real source of annoyance to me because I have never been in it but I understand it applies all the principles, and we were told they were showing a 20 percent increase in productivity within a month down there. You are thinking: "They are private law firm, why can we as a Government not do it?" That is the principle and it seems to have been - and we will probably get on to that

later - in the minds of a very few individuals: "Oh dear, we cannot do that."

Deputy D.J. De Sousa:

But this was all tied up to the office strategy?

Deputy J.A.N. Le Fondré:

Yes, so that is the wider context, the office strategy and then ... so obviously the Lime Grove side, the police HQ reallocation is kind of a mixture because it is operational with cells and things like that. But obviously the whole point of Lime Grove is that ... the one use and I add this simplistically, do not pick me up if the detail is wrong, it is the principles that is the point. Financial Crimes Unit are probably a mainly desk based exercise, so that will be office work. So although they are police, if you see what I mean, or part of the police force, it is an office based system so you can ... you know, a desk is a desk is a desk type of scenario so you can apply those principles. The whole key thing about this was that we had had huge resistance from all sorts of quarters about trying to unlock the office strategy full stop. This morning, as I saw, David waved a number of iterations around. I reckon I have got a stack like that at home. There was one done in February 2009 where C.M.B. (Corporate Management Board) basically endorsed the details but then the whole thing got bogged down again. One of the principles was that if we could unlock with the police you can then - and also it widened a bit - start unlocking it with everyone else. If the police can do it, you can do it. So that was the principle and that then does go into the C.S.R. (Comprehensive Spending Review) because although it has not been booked in the present C.S.R. we already know from our other work that the results of the C.S.R. may be patchy this time around but there is talk of C.S.R. 3 or 4 or whatever going forward and the office strategy is one of your big cost cutting things where there are significant savings to be made.

Deputy D.J. De Sousa:

I asked the Minister yesterday if the failure to secure Lime Grove will have a knock on effect on the office strategy in the C.S.R. and he said: "No, because they are all standalone." Is that the case?

Deputy J.A.N. Le Fondré:

I think it depends is the short answer, and that is not an answer. What we were looking at in my time was that basically we had a pot of money allocated for the police station, this then widened out but at the end of it we had a pot of money left. I think it was slightly smaller but it was still, I think David said, £8-10 million. Obviously my recollection of some of the details has gone because we are August now and I have been out of the loop since January and even before then obviously things were not going right. So you had a pot of money and that pot of money could then have been utilised to start looking what could have been phase 2. David has given you the executive summary, I do not know what date it was, of one of the things and I know elsewhere we have seen other versions of it. If you look, there is about 3 or 4 strands, the police relocation project being the first phase. So to unlock phase 2 you need cash from somewhere. If you can do it from a disposal or something along those lines, fine, but you need the cash from somewhere. This provided the seed corn cash so I would have thought logically there must at least be a delay.

Senator S.C. Ferguson:

Given that you need seed corn cash and given that under financial directions Property Holdings has to have a certain amount before it could start working on this, how much had they got? Had they got enough? Were they going to require more from elsewhere?

Deputy J.A.N. Le Fondré:

Was this for the police project or for the office strategy?

Senator S.C. Ferguson:

For getting the police project going.

Deputy J.A.N. Le Fondré:

Well, the police project, you obviously have the budget of whatever the number was, in the order of £18 million sitting around somewhere and I have to say I pause because I cannot remember if it was £18 million with a transfer this year and therefore ... but it was that kind of number.

[14:30]

As has been pointed out there was a ... although we ...

Deputy D.J. De Sousa: £17 million.

Deputy J.A.N. Le Fondré:

Stick with the principles, if you see what I mean. Although the work that had been done had taken £7 million off it did not quite bring it down to the necessary funding. In fact I think that is even if you go through the statement here that was made yesterday, which I might come on to later, there are ... it does identify certain gaps and that, I think, was the starting point for bringing the ambulance station in because although that made the project bigger the proceeds released by the site were bigger still and therefore as a net result at the end of it you were within your budget. You did this by utilising the space freed up on Rouge Bouillon I seem to recall by buying Lime Grove. Because you bought Lime Grove, you flatten the site, you move the ambulance station across, that then gives you ...

Deputy D.J. De Sousa: Frees it up.

Deputy J.A.N. Le Fondré:

Yes, and it is that type of jigsaw that you are talking about. The difficulty here is there will be a lot of iterations. It is a 3-year project type of thing, there are various options that you can do but the key point was that Lime Grove was fairly integral to all of those options. That was your starting point. If you did not get it you were back to down to a 3 year delay at least. Plus also - and this is a recollection but presumably it is in the numbers that you have been given already - certainly it is in the statement today that the other options that had been looked at were more expensive. Because my initial reaction, I can remember Paul Tucker years ago saying: "We would like to buy Lime Grove" for, I think it was probably, £10 million at that point to move planning into. Also I was not too keen about the idea at all. But it was one of those it never got ... I do not know what stage it ever got to. It was a comment that was made, I think there was some reluctance at that point and it certainly never got to the detail that was done in the period of 2010.

Deputy D.J. De Sousa:

So this would have been way back post when the building was fairly new?

Deputy J.A.N. Le Fondré:

I am going to guess 2007-ish, 2006-ish. I am going to say "ish" I cannot remember. Then it kind of died away, I suppose. I mean there is a record in the timeline saying the States had previously informed ... well, effectively expressed an interest.

Senator S.C. Ferguson:

No, what I was going to say was from what you are saying it appears that you had the police station budget and possibly a bit of spare cash in your own budgets. But there was no prospect of getting any large cash injections from Treasury at that point in time?

Deputy J.A.N. Le Fondré:

No. No, no, Treasury ... it was raised because there was this point ... I think the difference was £2-3 million from what I recall. That is kind of the number that sticks in my head. Certainly the message ... that was done at an officer level is my recollection and the message I had understood certainly was that Treasury were not going to give us any additional money. The reason I left in the file ... there is a couple of things in here that I have suggested ... I am happy to give you the whole lot by the way but ...

Senator S.C. Ferguson: Super, thank you.

Deputy J.A.N. Le Fondré:

I would like it to be treated ... when I say it is confidential some have got draft numbers which may not be accurate because they may have been just there to have a number if you see what I mean. I would not want those to go out because they are not accurate. There are others where there is direct reference to a transaction, which my understanding is still live, in there which I would not want to go into the public domain. Again, my view on this was even though I was taken out of it it was a very, very good project and I wanted to see it happen, which is why I have never

commented on it up until now. There is a jump here in time but this is now 20th July. I must have bumped into Anne Pryke and Ian Le Marquand briefly and just a check that everybody's still happy and I think what I was saying is let us start getting our heads together because hopefully things are moving forward is my recollection. There is nothing in writing here. I would have been probably a chat in the coffee room or something. Let us get together, and so we start thinking about if this is going to happen what are the communications and things like that that we have got to do. Just as an aside, certainly what was in mind and it demonstrated later on, it was probably going to be a controversial project in terms of ... I think it was Ben Shenton when we gave P.A.C. (Public Accounts Committee) a briefing, I seem to remember him saying: "Your one thing is going to be you have to justify buying a new building to the public." We know it works but ... well I do not want to attribute that comment to him but even if one knows it works as a States Member you have to make sure you have got your communications sorted out for when it goes live. Certainly what I was contemplating at the time, assuming whoever signed off the M.D. (ministerial decision), at that point I was rather hoping, should I say, or assuming it would have been me. My understanding is I did have the authority to do that subject to accounting officer approval. Later on we started putting out the messages to the Ministers, the Assistant Ministers, we then fractionally later spoke to both Scrutiny - you had a briefly if you recall - and P.A.C. and those were all confidential. As my intention would have been, potentially you would have set out that you were agreed States Members on the day that the decision was signed so that ... preferably in advance, but maybe do it in the morning and you sign the decision in the afternoon, if that was practical, but something along those lines. That also gives the ability to inform the relevant staff, like the ambulance people or whoever, what hopefully would

be happening. Then you at least hopefully are taking the relevant people with you. Obviously you do a proper press and media briefing as well and explain the whole issue and explain the savings that are coming out and things like that. Hopefully you are starting to mitigate the potential political risk with it being called in. That, I think, is probably one of our roles as politicians, if you see what I mean. So we were talking about it and it really is just a case of getting your heads in gear, we do not need anything to happen but do start thinking about it. Various exchanges going on about arranging meetings, truly exciting stuff, and it looks like a meeting was held on 27 July with Ian and Anne to talk about things. What I will say, and again I have not included in this pack, my recollection is that somewhere - and presumably there are meeting request, in fact I think they have been referred to in July - there was a briefing given on the overall office strategy. So one comment and one correction. The comment that was made by Nora O'Reilly yesterday was that the briefing in 29th April and/or 5th May was about the overall office strategy. As far as I am concerned they were not specifically about the police H.Q. project. So it was not something that was buried, it was specifically to deal with the police H.Q., as I say it is on the agenda as police project. The briefing that happened in July was about the overall office strategy. The comment I have to say is that in my view - and I have to say I do not know the whys and wherefores - there seemed to be a huge reluctance from the Minister for Treasury and Resources and from John Richardson about the second stage, which was the consolidated office strategy. I have never got to the bottom of it but certainly my recollection of that meeting was when we went through and David was doing the general briefing, Philip was sitting there effectively flicking the pages as we went through it nodding, boom, boom, boom, boom, boom. It was effectively when we were talking about police H.Q. it was: "Go away and get on and do it". I can remember the hand gestures, it was just: "Yeah, fine." It was only when we got to the

consolidated office side that he started getting very antsy.

Deputy D.J. De Sousa: What did that involve?

The consolidated office? This is the problem, John Richardson, in my view, has consistently ... this goes back to probably February 2009 bearing in mind that John was also meant to be head of the Property Management Board or programme board or whatever it is called, which is mean to oversee the property side of things. I have never been entirely sure what the interaction is there. In February 2009, there is quite a large document, about that thick done which was the initial of the strategy. In fact, just by way of background, one of the reasons I wanted to stay as Assistant Minister for Treasury and Resources or for Property Holdings was because I knew the amount of work had been done on this in the 2008-2009 period. It must have been 2008, I guess. I wanted to hit the ground running with this. I have never been called a born optimist before. That particular one was when we were thinking about J.C.G. (Jersey College for Girls) as an office location. The point about it was that you had a site, it was big enough, it had a planning permission attached to it, the States owned it, and it is not that far out of town. If you walk from this door ...

Deputy D.J. De Sousa: It is on the Ring Road.

Deputy J.A.N. Le Fondré:

Yes, exactly. I walked it, relatively swiftly, in 13 minutes. You see one of the arguments: "It is too far out of town" or: "The traffic ..." it was blocks to doing it. But anyway the point was it was a big enough site for what you want to do - let us not go into the office strategy today - but obviously work was done in terms of examining sites and establishing the principles. Philip did get a bit excited or worked up about the fact how much work has been done on this, but although J.C.G was a recommendation it was saying: "Well, what you now need to do is evaluate it properly. This is high level, this seems okay but you need to do the proper work and put the proper resources into doing it. So my guess is that 70 per cent of the work would have had to be done anyway. But John Richardson seemed to get it into his head, and he has even said it to us on transcript in front of C.S.R. within the last 2 or 3 months because you may remember I pulled him up on, where it was talking about: "It seems to be about doing one big office block." You would have to have a look at the phrase but the office strategy, as far as I am concerned, has always been about trying to get most people within the town area into a building but not all.

The Deputy of St. Peter :

So just to clarify in my own mind, please, when you are talking about Jersey College for Girls, in what context are you talking about it? This is office element not the police station?

Deputy J.A.N. Le Fondré:

Not the police. Well, what happened is sometime before I had said to David: "Look, J.C.G. has gone pear-shaped, because you remember we had had all the debates in the States." David had just come in. We knew the developer was going to spend X on it and we knew we had Y in our budget type of thing, it is worth ... can you just have a quick look, is it any good for the police? It was a comment I had been asked prior and it was very much an off the cuff comment. The response was that no, at that point the opinion was it did not suit the requirements but it might be appropriate for office accommodation.

Deputy D.J. De Sousa:

This was after ... I think it was 2008 before I entered the States and it had been pulled back because it was going to be sold for next to nothing of the value.

We are going slightly off tangent but just to correct that, what happened - and I was not on Island when that happened - the ministerial decision made reference to selling it for a minimum price of £1.8 million with overage or profit. What unfortunately the media picked up on at the time, and I think that is when I came back, was we were selling it for £1.8 million when we were not. I believe when you got to the point where the proceeds would have been coming in, somebody had done the numbers and we reckoned it would have been about £5.3 million, but it was purely about ... that was one of my first early lessons, as it were, about making sure that what is in the ministerial decision is clear and also how you handle how that information is put out. Sometimes you get it right, sometimes you do not but that was a key message that went completely wrong. Yes, so that was the outcome ...

Deputy D.J. De Sousa:

Just remember me here, who was it who that made that ministerial decision?

Deputy J.A.N. Le Fondré:

It was signed off ... what happened was the ministerial decision was signed off by the then Minister for Treasury and Resources.

Deputy D.J. De Sousa: Which was Senator Le Sueur ?

Deputy J.A.N. Le Fondré:

It was Terry. But it was purely the wording, I think it might have been ... I do not know if it was at the end of the report and it probably for the sake of maybe 5 words, it read okay if you knew the subject.

[14:45]

If you did not know the subject and depending how it was handled obviously the message did not go out quite right. That is the way it goes sometimes. So we were talking about consolidated office strategy and there were messages coming through from John from the very early days: "This is about one big central office, everybody in it." No matter how many times we seemed to say: "No, it is not" and read the report or whatever, he seemed to have that in his head.

Senator S.C. Ferguson:

Can we get back to Lime Grove, do you think?

Deputy J.A.N. Le Fondré:

Yes, but the point was where we were in July on that briefing was that was when Philip started getting very antsy about the consolidated office side, he had waved through Lime Grove and then we got some very negative feedback on the office side. How well he fully appreciated it or understood it, I do not know. Sorry, let us get straight back on to track, various meetings going on, a summary of the strategy. Now this version of July 2010 was sent on 27th July: "Current annual property operating costs ..." so this is what was the benefits of the proposals at that time. "The accommodation benefits for this project delivers as follows: new combined police and Home Affairs admin building, new police operations H.Q. and new ambulance station and combined emergency control suite, a new Harbours office at Elizabeth Terminal, the release of South Hill for residential development, the release of a significant area of land for residential development and possibly the release of Pique(?) House for disposal. If my memory serves me right we had not taken into

account Pique House. It was a benefit but we had not quantified it. So in other words we had underplayed some of the numbers here. The current annual property operating costs were reduced by £789,000 and in addition there are annual revenue costs as follows of an extra £481,000. The avoided capital costs. I was wrong, I was speaking to someone the other day and I quoted £13 million. At this point it was just under £8 million but it is still a significant sum. That number does subsequently change and goes up. So the point is there are some quite significant benefits in there of what we were trying to do, let alone obviously where we ... you know, last year and you have got benefits to the ... Tom Buckley covered it about the benefits to the construction industry and things like that. We have generally been briefing Home Affairs and the ambulance and obviously the scheme has got wider now. Certainly I am being told all the way through July, August time - possibly earlier, I cannot remember - that Property at the officer level are talking to the other department that are involved, which would make senses. I know we had a pretty good relationship with Harbours, with Planning and obviously with Home Affairs and E.D. (Economic Development), and Mike King there. So are just to name 4 departments type of thing. So my understanding was that everybody was being informally briefed and were generally on board and happy. John Richardson - and I have no problem with this one because he was right in this instance, I do disagree with a number of his views elsewhere - had said you do need to get political sign off from everyone. That is fine. It is conservative but it is true, and so we were doing that, we started setting up meetings and getting letters ready and that type of thing. In principle what we were doing is we were trying to get the Minister in initially, do a briefing, take them through it, make sure they had understood it anyway, make sure they are happy and

at a later date a letter was sent to them.

The Deputy of St. Peter :

So where are we at the moment in time?

Deputy J.A.N. Le Fondré:

I think we are just coming into August.

The Deputy of St. Peter : 2010?

Deputy J.A.N. Le Fondré:

Yes. This is just a note I sent to David on 7th August, I think this must be around Battle of Flowers time: "Key points, Alan Maclean is coming into J.P.H. at 2.30 p.m. on Monday for a discussion/presentation re Maritime House/Harbours. It can be extended later into the office strategy if necessary.

The Deputy of St. Peter :

When these discussions were being had by the Ministers, was the fact that Lime Grove would appear to have been the key to cap it all off mentioned in those briefings? Would it be the natural thing to ...

Deputy J.A.N. Le Fondré:

Lime Grove would have been ... the briefing would have been fairly standard all the way through. To an extent E.D. would not have been interested in Lime Grove so it would have been ... put it this way, I cannot think of any reason why it would not have been included. I cannot say, hand on heart, swear on the Bible, yes it definitely was because I have not got it in writing. I do not like saying that but I am sure it must have been. Why would you not have ... because you were talking about the overall context. Certainly there was a diagram, I remember, which was a bit of jigsaw because it was showing the phasing ... there was definitely a map with arrows on it of

the various moves around and that various buildings, so it would have included Lime Grove in there. So there must have been a discussion within the whole context of it. That is just another decision that was going off at the time. There was a message came back from Ian, and he says Jackie Hilton had been briefed at that point and he has made a comment just to say that ... I am not too sure what happened there, he said: "Make sure that David Warcup and Barry Taylor are happy as to whether the proposed new buildings meet their space requirements." I did forward that to the officers and they kind of said: "Who has he spoken to because we thought they were." That was sorted very, very swiftly. I think there was a communications glitch in there somewhere, a minor one, or it might have been additional space requirements, I do not know. But anyway draft letter going to Ian Le Marquand, or getting ready to be sent to Ian Le Marquand, and this is kind of one you will see going through, which basically is saying: "Dear Minister, thank you for your support." So obviously we are at the end of the presentations. This is around 24th, 28th August. "Here is the complex project which requires the full support of all stakeholders if it is to succeed. However, prior to finalising these documents we wish to set out the key elements of the project and the proposed programme of works in order that you may have the opportunity to raise any further concerns and that they may be addressed before you are committed to the final reports." It carries on and it gives a project summary. The financial benefits have obviously changed slightly in there but they are highlighted. It talks about total annual property savings of just under £1.3 million a year and it gives a phasing. It talks about assuming we had acquired Lime Grove, which at that point was quarter 3, 2010, develop and fit out police administration H.Q., quarter 3 2010 to quarter 2 2011. Whatever that works out to in timing. So if it had gone ahead pre Christmas, yes, they would probably be in there by now. "Phase 5, move the following officers to new police administration offices, quarter 2, 2011." People might say that might be aggressive or whatever it is but certainly ... I have learnt a lot in the last 5 years and I would say my property experience is now much compared to the department's which is obviously that amount. They have got professional people in there in terms of project managers and things like that. Richard Cheal, who is one of the people who was going to be involved or involved, he was responsibility, I think, for the Turner building up at

Highlands, the airport control tower - the build I hasten to add.

Deputy D.J. De Sousa: The new one.

Deputy J.A.N. Le Fondré:

Yes, the new one, not the equipment going inside as far as I am aware and I think even the markets roof. The market roof was a £1.2 million project and I think fit out here is about £1.4-1.6 million, whatever the numbers were. We are not talking rocket science, for want of a better expression, in terms of experience within the department. Now, 9th September, letter from Barry Taylor : "I refer to our telephone conversation of 31st August, I am also grateful for the support provided by Richard Cheal on 27th in helping me to develop an internal plan to assist the project. I have now revisited the detailed schedules provided by Property Holdings in November 2009, have reviewed them with my staff, I can confirm I am entirely happy with the data presented and that the proposal for new accommodation spread over 2 sites at Lime Grove and Summerland adequately meet our space requirements." It talks about a few changes, minor. It talks about Home Affairs going in potentially and: "I have also briefed the Minister for Home Affairs and he is very supportive of the proposal." He has copied the letter from him to Ian Le Marquand. 13th September is trying to arrange meetings with Mike Jackson for T.T.S. (Transport and Technical Services). To a certain extent I would say it was a little bit ... I think we used the expression it was a little bit like herding feral cats at times because you think you have got everybody corralled with that and then somebody 2 weeks later comes up with a bright idea and goes off somewhere else. You kind of have to pull them in again. But we did get that. The one thing I - it is not a disagreement - did not quite agree with Ian Le Marquand about is he made a comment about the public sector not being geared up or not being able to achieve these types of things. As far as I am concerned we had done it. Everybody in terms of the departmental levels were signed up, in terms of the separate Ministers - obviously other than the Minister for Treasury and Resources - were signed up. Bearing in mind, as I said in July: "Go away and get on and do it." More letters, they are just drafts, a quick revision on numbers. Right, now where we are in terms ... this is my assumption, that in terms of trying to get a business case ready for an accounting officer to sign off on, bear in mind as well that as far as I am aware John Richardson - I had definitely been with him at the briefing in July - I was told he was being briefed fairly often about the whole Lime Grove thing. So I suppose in my view if somebody had had serious concerns about this I would have expected them to raise them a lot earlier in the process.

Senator S.C. Ferguson:

One of the things we heard yesterday was that the Minister had regular briefings with his Assistant Ministers who kept him up to date with things that were going on. How often did you have those?

Deputy J.A.N. Le Fondré:

Funnily enough, the briefings ... the idea was, and I have got a feeling it might have been me pushing it, what we tried to get set up with it was a briefing pre-ministerial decision day, as it were. Sorry, Treasury decisions are basically done on a Monday, probably 2.30 p.m. or something along those lines. Funnily enough it was Philip that said that when he was at E.D. he used to have everybody around the table at E.D. on the morning and discuss all the various issues. Certainly I remember going to a meeting at one point and they definitely used to do that. I thought that was a very good idea. I do remember when the Council of Ministers was being created, or it may have been just after, suggesting are you going to be do that, and he was going to. I remember him saying later, because it had not happened - or sorry my recollection is that it had not happened - and he made a comment: "Well, Treasury do things in a slightly different way." But anyway we did get established and I am fairly certain I sent him an email. The principle of having, I think, it was either a half hour or an hour - I think it was normally a half an hour - pre the ministerial meeting day to discuss issues that were coming up. It was interesting in the early days Philip was not too worried as to whether I attended the Treasury M.D. meetings or not. His view seemed to be I was Property and not necessarily Treasury, if you see what I

mean.

Deputy D.J. De Sousa:

Did he communicate that to you?

Deputy J.A.N. Le Fondré:

Only verbally. It is odd because obviously previously ... the relevance is ministries are occasionally a little bit odd in terms of differing Ministers, and I am not talking about necessarily now, I am talking about even in the first 3 years. I know differing Ministers used to have different roles with Assistant Ministers and some of them used to get quite frustrated because there was not really a defined area of responsibility. I suppose from that point of view, certainly I was told I was exceptionally lucky because I had a very defined area and essentially I just got on and did it. So what sometimes used to happen, I have to say, is that it seemed to me that depending whether Philip was in a rush or whatever, or sometimes meetings just happened to get rescheduled, that these sometimes go eroded into. So you would end up with maybe 15 minutes, it might be pre an important debate in the States, you might end up having a 10 minute discussion on that and a 5 minute discussion on other things.

Senator S.C. Ferguson:

So during the period in time that we are talking about, you did not necessarily have a Monday morning with a 2 hour meeting?

Deputy J.A.N. Le Fondré:

We certainly did not have ... I do not think I have ever had a 2 hour meeting with Philip Ozouf .

Senator S.C. Ferguson: Okay, sorry, carry on.

Deputy J.A.N. Le Fondré:

But, as I said, the briefings we did make sure happened, are documented in here, definitely happened on the project.

[15:00]

One of the other slight difficulties I had I found that when ... I work on the principle I want to ... establish when it is ... in theory I was meant to start having some role H.R. (human resources) and then I.T. (information technology) and it is not areas that I have ... well I.T. I have a degree of experience in but not from a technical end, if you see what I mean. H.R. I have probably got zero experience in. So from the principle that they are not ... when I say they are not political, they are not ones that generate ministerial decisions regularly at all, whereas property generates quite significant numbers but it is something, as far as I am concerned, that I take the view that if I want to understand this subject they are responsible for so as far as I was concerned you should be having fairly regular meetings with the heads of those departments. Certainly I found that when John Richardson came in it got a lot more difficult to see those individual heads.

Senator S.C. Ferguson: Can we get back to ...

Deputy J.A.N. Le Fondré:

Sorry, where I was going is that, as David elaborated, John had made it very clear that David Flowers was not to ... that John was going to be the main point of contact so I was certainly aware that there were very regular briefings happening between John and Philip on a very regular basis.

Senator S.C. Ferguson:

But the Minister made it clear to us that political contact should come through the Assistant Minister.

Deputy J.A.N. Le Fondré:

It should do and as I said on the relevant key stages of the project he was briefed and we made sure he was briefed properly.

Deputy D.J. De Sousa:

Can I just keep it there a minute? The Minister made much play yesterday, I cannot quote word for word, that he had a very open and happy team. He did the same at E.D.D. (Economic Development Department) and he did the same at Treasury. He

expected to be constantly kept informed of what was happening in every area so that if anyone was away or he was away somebody was able to pick up and run with whatever was going. So you had regular open meetings where you kept him fully informed?

Deputy J.A.N. Le Fondré:

We had fairly regular meetings. I would not have said there was a huge amount of time allocated to discuss matters. We did discuss some matters and in terms of the Lime Grove project, I would have to say I do not think he ever raised any concerns with me.

Deputy D.J. De Sousa:

But you constantly kept him informed of where you were within the department?

Deputy J.A.N. Le Fondré:

The point was in July we had had the brief, when I say the key brief ... the point I am saying is that he had the regular ... they turned into run of the mill briefings for what was happening that week and a lot of it sometimes was probably political. So was I each week turning around to him saying: "This is what has happened on Lime Grove this week"? Probably not. But, that said, I was certainly aware that there was a very key line of communication that was going up through John Richardson.

Senator S.C. Ferguson:

Surely it is up to you as Assistant Minister to make sure that you communicate?

Deputy J.A.N. Le Fondré:

What I was going to say is that when there were key things happening ... so, that is what we were saying, we had given him the briefing in July, we have given him the heads up of the projects and basically all indications are, let us get on and do it. So then the key role after that is to get the accounting officer to sign off on the business case, that is your main focus because that is your key risk. If you do not get it signed off, and he is the one ultimately who is advising the Minister or me whether ...

Deputy D.J. De Sousa: He has responsibility.

Deputy J.A.N. Le Fondré: He has the responsibility.

Deputy D.J. De Sousa:

So if he signed it off and he was not happy it would come back on him not anyone else.

Deputy J.A.N. Le Fondré:

That is, I believe, meant to be the case, it would probably come back on everyone I suspect but, yes, he has to make sure he is ... as accounting officer he has to be happy that the thing is right.

Deputy D.J. De Sousa:

So at what stage was he and the Minister presented with the business case? What was the first instance?

Deputy J.A.N. Le Fondré:

The business case ... see this is depending on what you call the business case, because if you are talking about ... you see, as we said, Philip had ...

Deputy D.J. De Sousa:

By the business case I mean the one that was checked by ...

Deputy J.A.N. Le Fondré: By Stewart Rowney?

Deputy D.J. De Sousa: Yes.

Deputy J.A.N. Le Fondré:

Right, because what I was going to say, bearing in mind the business case is that thick, would you expect the Minister necessarily to go through that? I would say that was probably an officer role.

Deputy D.J. De Sousa:

I was not implying that. John Richardson as the officer went through it and this was where the problem came in because he tore it apart?

Deputy J.A.N. Le Fondré:

Exactly. So what I was going to say is at a high level Philip was given ... well, at a high level I think he was given the stuff that was in the office strategy in July. I think he was given some high level numbers before that. He was certainly given the values well before that.

Deputy D.J. De Sousa: But you do not know that.

Deputy J.A.N. Le Fondré:

We know he was given the values before that on 4th June. When was he given the cash flow graph, I would have to go back and check records. They had been briefed going along anyway, and bearing in mind I think the principle was as well, we had to have the letters ready to ... he would not sign off until he had political sign off in there. So in other words having the sign off by all the Ministers. There was a glitch at one point, so a letter went to Senator Cohen on somewhere around 11th October. Alan Maclean, Paul Routier, 11th October. Keep going, Anne Pryke. Right, Anne Pryke came back with her support 28th September. So physical thick business case, draft, was given to John Richardson on 13th October. What I was going to say is there has been a lot of discussion on the principles of the numbers for quite some time and obviously a lot of numbers have been verified externally and things like that. So in theory by this stage one would assume a lot of it was ... it is kind of how do you work the process? If you have something important coming along, surely you should have a decent understanding at the beginning and coming through, so that when you get to this whole documentation issue, yes, you ask your questions, but provided that is then sorted out, you are ready to go, do you know what I mean? It is what drives what. Do you drive it on having every piece of paper in the right place, or you are

looking at your key risks and making sure that the thing is going to work?

The Deputy of St. Peter :

So just again from a political perspective, you have the Minister for Treasury, who has the responsibility politically for his whole remit.

Deputy J.A.N. Le Fondré: Yes.

The Deputy of St. Peter :

You have responsibility politically for J.P.H., but the nature of the works being carried out is at officer level, and the communication was running between officer and the Treasury through John Richardson.

Deputy J.A.N. Le Fondré: Yes.

The Deputy of St. Peter :

Would you assume there, as John Richardson was very close to the Minister for Treasury, that he would also be passing information across to the Minister for Treasury?

Deputy J.A.N. Le Fondré: Absolutely.

The Deputy of St. Peter :

Now, just referring to the business case, and as I recall yesterday, the business case was quite a well-researched document.

Deputy J.A.N. Le Fondré: Sorry, that was a yes.

The Deputy of St. Peter :

It seemed yesterday to be rubbished - for want of another word - by saying it was a very limited document with no due diligence and no risk assessment.

Deputy J.A.N. Le Fondré:

Well, I do remember discussions being had, and yes ...

The Deputy of St. Peter :

Was this another document that was reviewed independently?

Deputy J.A.N. Le Fondré:

Yes. Now, I think the review was done ... I think it was November or something. Now, the point was that the draft document, it was a draft document that was given to John in mid-October, saying: "Please can you look at this urgently? You know that this is important and time is moving on" and we have now got pretty well ... because the idea was that you get John happy with it and then it would have been circulated effectively to the various stakeholders as well to make sure they were all signed up to it. You will see - I am sure you have got the exchange of emails - that John turns around and says: "Well, I still have not had time to look at it. Can you circulate it to those stakeholders at the same time, with the caveat that this is under review?" Now, in terms of risks at that point and the inclusion of risks, my recollection is that discussions were had, possibly even with Mick Heald, and certainly Ray Foster, as to what else would be required and that again was at an officer level, it is not something I was party to, but my take on it was that as a draft business case, and certainly when you looked at it later on, it looked pretty well put together. That is all I can say.

The Deputy of St. Peter :

You said: "The draft business case when looked at later on."

Deputy J.A.N. Le Fondré: Oh, sorry.

No, what alteration, if any, had taken place before it was reviewed by the independent review?

Deputy J.A.N. Le Fondré:

Oh, that I cannot genuinely recollect, I mean, obviously only because I cannot remember when the review took place. I do know that the risk workshop ... there was a point where John did ask for a risk workshop to be done. It would probably have been quite nice for that to have been asked for during the summer months, as an example, because you can do an analysis of what you think the internal risks are. That was done fairly swiftly internally to identify the risk, but when you have got to try and get ... I think Barry Taylor made a reference to sort of a cast of thousands, I think it was, but I know there was a lot of people at the risk workshop. When you try and get that number of people together, it again slows things down. But anyway, I do recall that a major effort was made to get it done quite early and then it had to be cancelled because John was unable to attend, and so it was then put back a further week. But the risk workshop - and I think it has been documented - certainly I was informed that one of the key risks ... I cannot remember if it was one of the top ones, but it was saying a key risk was the fact of the project not going ahead, in other words, they missed out on the acquisition of Lime Grove. Now, the risk workshop itself - well, we are getting a month ahead of ourselves - I think was in the week Tuesday, Wednesday possibly of 19th November; the 19th November was the Friday. We will get to that shortly to see if that is correct, because that was kind of meant to be hopefully the last key outstanding item. Yes. So anyway, the point was on 13th October, a draft business case given. Now, I will say, to be fair to John, which we did not know until slightly later on, he was having some personal problems but it was ... bear in mind that in theory this was a paperwork exercise, you know, the work, the number-crunching had been done, if that makes sense, and what you are

now doing is you are bringing all those threads together in a documented thing. What I rather felt is that there seemed to be risks popping out of the ... or concerns or questions being sort of plucked out of the ether in a ... I will not say random way, but it was not ... I did not get the impression that he had sat down methodically, bearing in mind the importance of this, for a morning and worked his way through it. That is purely a personal comment. But he goes on ... he says he will not be around, he will not be back until Monday, which is on ... so it is given to him on the Wednesday, I think. On the Friday he responds. He has not looked at it at that point, and suggests: "Can you send it to the project sponsors?" That is there. Now, the thing that got me concerned is that: "Given the size of this project and the level of interest it is likely to generate, I think you have to set some realistic timescales, and although I appreciate the Lime Grove issue, we are several weeks away from a final decision to proceed and months if Scrutiny want to get involved" at which point I kind of got a bit twitchy, because we have already been through a lot of, as I said, herding feral cats, if you like, and reworking numbers and things like that - I say: "we", the department, although I was involved on the political side - and to suddenly start suggesting that we could be months away from getting a decision, yes, alarm bells started going off

in my head.

Deputy D.J. De Sousa:

But it is a well-known fact that even when it comes to the date when the States debate something, it can be pulled during that debate before Scrutiny will see it.

Deputy J.A.N. Le Fondré:

Exactly, that is absolutely fine, but bearing in mind by that point I believe we had already briefed Scrutiny on that informally. Now, that does not preclude Scrutiny pulling it in, but one had a slight ...

Deputy D.J. De Sousa:

By that you mean P.A.C. and P.P.C. (Privileges and Procedures Committee), because they ...?

Deputy J.A.N. Le Fondré: P.A.C. and Corporate, yes.

Deputy D.J. De Sousa:

Sorry, and Corporate. Because they would have been the only ones that could have pulled it at this stage of going to the States?

Deputy J.A.N. Le Fondré:

At that stage, yes. As we said, there is obviously a political risk there. There is going to be, we have seen it previously, and I think it is one that one gets used to dealing with.

[15:15]

But you have to have measures in place to mitigate that risk, very clearly. But several weeks away from a decision to proceed: bearing in mind the amount of work that had been done in all that year, and bearing in mind obviously presumably I am assuming that the officer level briefings are taking place on a regular basis and we know, as David Flowers was saying, this is a private deal, they are not going to hang around for ever. There had been mutterings. In fact, it is raised that there had been mutterings about State Street or another interested party. Funnily enough, completely unrelated, I was in a social context and I had 2 people standing up beside me starting to have a conversation. One said: "What is happening about this empty building at the end of Green Street, you know, the end of the tunnel?" and the other one says: "I tried to rent it in March, but the States are buying it" and I thought: "Oh, that is interesting." I had not opened my mouth at that point, and it was not somebody from State Street, so it implied to me it was one of those anecdotal feelings that gives you a slightly warm feeling that what you are being told, yes, there is an interest out there, it is being confirmed. Now, the sponsors ... so you will see there is an exchange of emails going on to ... oh, that is just to advise certain

numbers. There is an update of moving Customs & Immigration possibly to Elizabeth Terminal, which was obviously something they wanted to do, and then obviously Ian, just as a chaser to me on ... Ian Le Marquand does a chaser to me on 16th October, just saying: "I realise I have not formally replied to Property Services. Both I and the acting police leadership are very happy with the project and want it to be progressed as soon as possible." There was a minor issue raised, but he confirms that it is still flexible: "The last I had heard was that things were with John Richardson, but the process seems to be dragging on. I am very concerned that we might lose Lime Grove through delay, thus sending us back to square one. Best wishes, Ian." I do a reply: "Please rest assured Dave and myself and the rest of the team are fully aware of the urgency. As I am sure you are aware, a lot of time and effort has been spent on this and we would all be devastated if it fell at the last hurdle. It is confirmed that John has undertaken to look at it early next week. I do not know if he has taken any part of it with him over the weekend, but I have asked him to keep me appraised of the state of play" and I am copying him in on the email: "Obviously John, as the accounting officer, needs to be satisfied as to whether there is any significant matter that has been overlooked and whether that impinges on the decision to buy Lime Grove or not." It carries on: "I would be surprised if anything was identified that caused any insurmountable problems." He just says: "Thanks" in response. Then the business case goes to the Chief Officer and the heads of department, so that is

going to the ... I said stakeholders, but whatever the terminology was for the people who are the heads of the various departments. I am losing my voice.

Deputy D.J. De Sousa:

The officers from each of the departments?

Deputy J.A.N. Le Fondré:

Yes. So at that point, we have got no real indications of any issues, apart from obviously we are wanting the business case to be looked at. I cannot remember what date that was, but anyway, 21st October I do a chaser ... yes, my reply was on 17th October, which was the Sunday, and on 21st October, I do a chaser to David Flowers and John: "I am expecting Ian Le Marquand and possibly others to be chasing again on this matter. Could I have an update, please?" On 21st October in the evening, David sends a note to John Richardson: "From our brief conversation yesterday, I understood you were planning to start reading the business case of phase 1 of the office rationalisation programme last night." So I think it was given to him on the 13th. Now, I accept he did have some personal problems in there, and you will see in one of the emails I have suggested that if that was going to cause a delay, could he delegate it to someone else, because ... and, I mean, I have had it directly that, you know, you are in a personal position, you have got a family problem, but of course life carries on out there, you cannot delay things, and so ... and in other circumstances, you normally have some form of system where that work can be set aside for someone to take it over, especially if you do not know how long it is going to carry on for. I am then saying: "If you are in a position to comment, I would be most grateful if you would let me have your feedback A.S.A.P., as I am anxious to produce the final document without further delay, and so far I have received written

confirmation of approval of the business case from the police. E.D., H.A. (Home Affairs) and Health, Planning and Environment and T.T.S. have given verbal consent." John comes back on that Thursday, saying: "Halfway through. I will take it home again tonight and try to finish reading it through." On 22nd October, yes, there is a cross, I think, in the emails, which is just I think Ian has chased me on 21st October, just saying: "I am rather concerned that time is now drifting. We still do not have an answer from John Richardson."

Deputy D.J. De Sousa: 21st of?

Deputy J.A.N. Le Fondré:

This is 21st October at 7.34 p.m. in the evening: "If John had had this on Wednesday last week, surely he has had enough time to consider it and form a view by now" and I do chase, and I say ... the chaser I sent includes: "Obviously if you have any concerns, I do need to know, and also so that it can be assessed whether they are of significance to the overall delivery of the project and whether the concern can be resolved." That is when I also raised the personal issue. I mean, I can say even in Eric Le Ruez's day, I have had stuff where ... I think it was Eric. It may have been later, but Eric made the comment on his leaving thing that he had appreciated the fact that you have to be able to ... and that I was flexible, and from the point of view that sometimes you get things that come up that are urgent and you have to move on them. I remember we had an issue when one of the law officers rang up and basically contacted him and said: "We have got a big issue in front of us. It needs to be done within 24 hours. We need an M.D. (managing director)" and so as long as you turn around and say: "Is it your advice that we sign it?" "Yes" then you move.

Anyway, the ...

Deputy D.J. De Sousa:

Talking about ministerial decisions, you said fairly early on today that you believed that you, as Assistant Minister, would sign off the ministerial decision on this.

Deputy J.A.N. Le Fondré:

I believed I certainly had the authority to do so.

Deputy D.J. De Sousa:

When the ministerial decision was made to put you in as Assistant Minister and to give you delegated powers, you were delegated to make decisions on those within standing order 168, which is: "The disposal, acquisition, letting or rental of land on behalf of the public of Jersey; (b) the grant or acquisition of rights or servitudes over land on behalf of the public of Jersey; (c) the renewal, extension or variation of any lease of land on behalf of the public of Jersey; and (d) the approval of plans for the construction or alteration of buildings where the work is to be funded wholly or partly by money voted by the States." But that was within a remit of between £1 million and £5 million, whereas this was £8 million.

Deputy J.A.N. Le Fondré:

Well, that is where I was going to pause. My recollection - and bearing in mind I have been out of the loop for a while on this one - is the limit of that was on contracts, and I think that was ... and I think, from recollection, that is different to an acquisition. Certainly I did ask the question at the time, quite some time earlier on, and advice was sought, but I mean, it was one of those that I certainly was not advised that it could not be me signing it off. That said, the focus, as I said at that point, was to get the business case signed. Your hurdle at this point, you want your accounting officer to sign off. Who then signs it from a ministerial point of view, I do not really mind. You know, it is going to be a recommendation. As I have said in July, again we have just been told: "Get on and do it."

The Deputy of St. Peter :

So it is the accounting officer sign off, that is the ...?

Deputy J.A.N. Le Fondré:

That is the crucial one from that perspective. I mean, yes, it is always subject to ministerial decision, and if the Minister ... you know, the Minister would be perfectly in his right to turn around and say no, but there were no indications coming through at any time at this point saying: "I have got a problem on this transaction."

Deputy D.J. De Sousa: That came later?

Deputy J.A.N. Le Fondré: Well ...

Senator S.C. Ferguson:

Yes, I wonder, can we move on reasonably fast, because ...

Deputy J.A.N. Le Fondré:

Okay, we have got the one of 22nd October: "I have read the report and in principle the police scheme looks okay. However, I think there are some very significant risks from the information I have received." This is when he talks about South Hill and the ambulance station. Now, he turned round and said that he had not said something about ...

The Deputy of St. Peter :

Sorry, who is he?

Deputy D.J. De Sousa: He?

Deputy J.A.N. Le Fondré:

John Richardson, sorry. He had not said something about a 50 per cent reduction in land.

Deputy D.J. De Sousa: That was this morning.

Deputy J.A.N. Le Fondré:

Yes. Well, all I can say - and we will keep to the order - 22nd October, David sends him a sensitivity analysis and identifying various things on the disposals et cetera. Now, again, on 22nd October, because I send him a note ... yes, I send him a note saying ...

The Deputy of St. Peter :

Just for clarity, could you say ...?

Deputy J.A.N. Le Fondré: John Richardson.

The Deputy of St. Peter : Yes, okay. Fine.

Deputy J.A.N. Le Fondré:

"The police scheme looks okay. Hopefully that means from your perspective we can proceed to the purchase of Lime Grove, which is obviously the critical matter at present." You know, that is still the focus: "The actual details, the harbours move, as far as I am concerned, as long as we have got the overall principle sorted out, is a less risky issue." You know, standing right back from here, if this project is meant to deliver £1 million a year savings, if we are £1 million out in our assumptions, will it pay for itself within a year? It is what is the bigger risk, what is the risk of not having it? Well, according to the numbers in here, one of the risks is that depending on your delays, you have got an awful lot of backlog maintenance and things like that, to the tune of £7 million to £8 million. That is over a period of time, I think it was over about 10 years, and that number had gone up later on, which you have got to cover. It will not be all in one shot; as I said, it is spread over a period of time. We already heard 2 or 3 days ago we might now have to go and sort out the heating in the building or something, which is going to cost several tens of thousands of pounds. It will be all those type of things building up. So anyway ...

Deputy D.J. De Sousa:

Risk was made a big thing of yesterday as well. Were you aware of any risks to the States of Jersey and taxpayer in regard to what was being proposed with the acquisition of Lime Grove?

Deputy J.A.N. Le Fondré:

Sorry, is that a question you are asking me?

Deputy D.J. De Sousa: Yes.

Deputy J.A.N. Le Fondré:

No. I mean, as far as I am concerned, this was a major thing for the taxpayer, speaking as a taxpayer, if you see what I mean.

Deputy D.J. De Sousa:

But were you involved in any analysis of the risks?

Deputy J.A.N. Le Fondré:

Of the risk workshop, for example?

Deputy D.J. De Sousa: Yes.

Deputy J.A.N. Le Fondré:

No. No, and to be honest, I would not. I saw the results and it is documented in here, but again, I would have said ... although I do sometimes get accused of going into detail too much, I certainly would not have been expected to have been present at the risk workshop to go through it. As far as I am concerned, it is definitely an officer issue. What I was going to say is what I do say in my email: "Cash flow/values. What I would be very interested to know is who you have approached re the values in order to assess their experience et cetera. My understanding is that the values used by J.P.H. have been since checked with the professional valuers that the department normally uses, so I would be alarmed that South Hill would show a drop in £5 million in value, i.e. [I have said] 40 to 50 per cent. Are these professional opinions that have been obtained?" Now, this is where I am afraid my frustration starts coming to the fore. It felt like it was phone a friend decision time. Somewhere around here, on ...

Senator S.C. Ferguson: Can we stick to the facts?

Deputy J.A.N. Le Fondré:

No, no, I am going to tell you why it is a fact. On 22nd October, and it said ... John says: "Sorry." I say: "Well, fine. Can we meet to discuss?" He says: "Sorry, although I have just told you that I am back online, I still have to go to the U.K. this afternoon. Can we meet at South Hill at 2.00 p.m.?" I have got very short notice on this, so I went straight up there. David Flowers was there and I was there and John was there, and it was in, I think, Graeme Hutchison's office, and he kind of said: "Well, W.E.B. (Waterfront Enterprise Board) do not agree with your values, and I have had a friend of mine from [I think it was] Canada who has got property experience seems to think that the property market is a bit flat and does not ... and that either these values do not work ..." basically, it was casting doubt into John's mind. So that, as far as I am concerned, is a fact. You know, it was said.

[15:30]

The meeting was definitely held at South Hill.

Deputy D.J. De Sousa: Was it minuted?

Deputy J.A.N. Le Fondré:

It was a discussion in the office. No, it was not.

Deputy D.J. De Sousa:

Any file notes made?

Deputy J.A.N. Le Fondré:

No. I mean ... but no, it was not. You are meant to be dealing with someone who is earning, I do not know, £150,000 a year, so ...

Senator S.C. Ferguson:

This is all ... come on. Let us keep out of the emotional stuff, please.

Deputy J.A.N. Le Fondré:

Yes. No, no. Yes, but you are expecting to get professional advice based on professional evidence. Now, if, for example, you are getting ... we have been told this by the Minister for Treasury as well: "I have taken informal soundings." What is the data that those informal soundings are being based on, because it is a bit like you see a doctor at a party: "I have got this illness. Should I ... what will ...?" He will normally tell you: "Go and see your own doctor." If I, as an accountant, am asked an opinion about something or other, you have got to be very, very careful about what you do. So what is happening when we are getting these informal opinions from we do not know who?

Senator S.C. Ferguson: Okay, carry on.

Deputy J.A.N. Le Fondré:

Yes, and that is the point about evidence.

Senator S.C. Ferguson: Point taken.

Deputy D.J. De Sousa:

Bearing in mind that yesterday - and we will come to it at the end - in the annex of Senator Ozouf 's statement that he made to us yesterday that he calls into question about companies that are used by the States that were used in this case and their dealings with those.

Deputy J.A.N. Le Fondré:

Oh, yes. So where is this information coming from? Anyway, so he is raising doubts about values, which are then feeding into his concerns he is now expressing on the business case. The other point I will say, which is ... well, as far as I am concerned is fact, but - well, no, it is fact - you referred to the East of Albert project this morning ...

Deputy D.J. De Sousa: The what project?

Deputy J.A.N. Le Fondré:

With what is called is the East of Albert project, Mr. Richardson this morning. It is a slight tangent, but it is relevant, because it is a concern that is raised by John here. The East of Albert project - in fact, the bits I shall refer to are in the public domain - is the phase 2 of it was a 27-year project. It involves huge amounts of expenditure, it is something like £1.2 billion, and in year 17 of that project, from memory, it requires borrowing of something like just under £400 million. The things that were produced and presented to a number of Ministers, including, I believe, the Minister for Treasury, on somewhere around 19th March 2010 - I have to check the date, but it is in here - basically there was a request in there for I think it was about £500,000 contingency, of further spending on this project, including traffic studies and master planning, and the head of that group was John Richardson. He was the head of that particular project board. What later transpired, it was interesting, is that certain people on that board had not seen the full figures until ... well, until after they were presented to politicians. The cash flows that were in there, the one that demonstrates £400 million worth of borrowing, did not make any allowance for inflation and what they tried to demonstrate at the end of it in cash terms - I am not going to get sucked into assets in and assets out - was it was £1.2 billion of expenditure and basically £1.280 million, in other words £1 million, coming back in. So in other words, at the end of 27 years, after spending £1.2 billion, you have got £80 million back, which I do not think is a particularly large sum, given if you are talking about that huge amount of money, it is not a great return at the end of it. But the point was there was no allowance for inflation in there, and I - and indeed, with Senator Routier at the time - did a joint note to Terry Le Sueur to express the concerns about the project, and one of the concerns was that there had been no allowance for inflation, which is what is called an N.P.V. (Net Present Value) calculation. The other concern was that to have funding of £400 million I have always been given to understand requires a security of 3 times that amount, and so assets, you would need assets of over £1 billion to fund this project, to give security

to do this project.

Deputy D.J. De Sousa:

Which is what we are told is the total value of the States assets, everything.

Deputy J.A.N. Le Fondré: Of everything we own, yes.

Senator S.C. Ferguson:

But should we really be using the hospital as security for a loan?

Deputy J.A.N. Le Fondré: Well, exactly. It was ...

Senator S.C. Ferguson:

But anyway, can we get back to ...

Deputy J.A.N. Le Fondré:

Well, the reason was one of the queries I raised, okay, on a project chaired by John Richardson was: "Why have you not done any N.P.V. calculations?" All right. In his email of 22nd October, he says: "I think we need to look at how to de-risk the project and ensure that suitable funding can be achieved. Do we have full N.P.V. calculations for this project?" This is a 3-year project: "This is an essential tool and I would want to see them." So as I said, I was getting concerned that there seemed to be like a reactive approach to this, of ... well, he asked for N.P.V. calculations back on a 27-year project, huge. What is going on here? But anyway ...

Senator S.C. Ferguson:

But I am sorry, can we get on with the facts, please?

Deputy J.A.N. Le Fondré:

Yes. That is the fact in the email, because he is asking for them, as a concern.

Senator S.C. Ferguson:

Yes, we have a copy of that from the Minister for Home Affairs.

Deputy J.A.N. Le Fondré:

I was putting that into the context of concerns.

Senator S.C. Ferguson: Okay.

Deputy J.A.N. Le Fondré:

So that is okay. Now, so we have had the meeting up at South Hill and he is concerned about property values again. At that point, David then obviously updates John Richardson on the valuations on South Hill. It is a very prime site. I mean, obviously it is a high-level valuation, but it is based, I understand, on discussions with planning and things like that. It is deemed to be conservative. Anyway, revised business case is being prepared on 24th October, and identifies various other financial benefits in there.