Allister presses PMS concerns

16 November 2010

In light of growing concerns about delivery of the PMS rescue package, which were heightened by the Finance Minister’s replies in the Assembly last week, TUV Leader Jim Allister QC has posed a series of questions to Sammy Wilson.

In the letter below he quotes the Minister’s assembly answers and then list the pertinent questions which arise.

Commenting Mr Allister said, “Two years on since this crisis arose and long after all other UK savers have been recompensed, it is alarming that so much remains to be done to get justice delivered to the PMS savers. Even the present status of the rescue package is under question, along with whether it is sufficient and in regard to new information we now have the revelation that the anticipated £25m from Stormont will itself only be a loan. So, there is much that the Minister must yet clarify and, therefore, in submitting this detailed letter I trust we can get clear answers that will help move matters forward.”

Dear Minister,
 
Re: PMS

Arising from your answers this week in the Assembly on the PMS, there are a number of matters I would like you to clarify.

You said, “However, a number of local and EU agreements are required before payments can be made. Executive and Assembly agreement to the overall package can be secured as part of the Budget process. The Department of Enterprise, Trade and Investment (DETI) will take the lead on the Assembly legislation necessary to seek EU state aid approval for the loan. I hope that that work will be progressed as quickly as possible. We are working towards resolving all the issues for the 2011-12 Budget. However, I remind Members that any delay in establishing and agreeing the Budget will have a knock-on impact on the PMS solution.”

1.      Should one conclude from the above that as of now there is no Executive approval for the package?

2.      Why are you linking Executive and Assembly approval for the package with approval of the Budget, which patently is a fraught process? Surely, the PMS package can and should be a free-standing project, because as you said later the £175m loan will not impact on the Assembly’s capital programme? So, why not get on with it, rather than tag it to the Budget?

3.      What Assembly legislation is necessary to seek EU state aid approval? State aid applications do not generally require legislation, so why in this case?

4.      Indeed, surely the groundwork has been laid for any state aid application (if such is necessary in view of the fact that these rules exist to prevent distortion of competition, which it is hard to see here), given that as far back as 26 April 2010 Peter Robinson told the Assembly the PM had assured him “that he would have his officials move to try to clear state aid issues” ?

5.      Thus has relevant work not already been done with Brussels and in any event in view of the Commission’s special guidance in 2008 on bank bail-outs, which anticipated approval as quick as within 24 hours, is it right to create the impression that state aid approval could contribute significant delay?

You then said, “Obviously, the bigger the mutual access fund, the more money there will be to give to small investors. The Government at Westminster have put up £25 million, as have the Executive, and the Church has committed £1 million. Obviously, if the Church could provide additional money to increase that mutual access fund, there would be an ability to give much greater sums of money back to small investors.”

6.      Does this mean that the mutual access fund of £51m is not big enough to meet the needs of the small savers?

7.      If £51m is not enough, then why was more not sought, given the governmental boasts about no savers losing money in the banking crisis?

8.      If £51m was not the sum required to restore pound for pound satisfaction, then what was the rationale in settling on this figure?

9.      Is there significance in your use of the term ‘small investors’, as opposed to ‘small savers’?

Finally, you said, “The indications are that the £175 million loan that we will take out, which will not impact on the capital programme for the Assembly as it will be over and above what we have been allowed to raise through loans for capital projects, will be not only serviced but paid back. From the surplus, we will be able to reimburse the money that will be put up for the mutual access fund. That is the intention. The quicker the property market picks up, the quicker that money can be paid back. It is on that basis that we have proceeded.”

10.  From the above it seems clear that you expect repayment from eventual realisation of the PMS assets not just of the £175m loan, but all the interest accumulated. Is that correct?

11.  Additionally, you anticipate the Executive’s £25m also being reimbursed from the asset recovery? Is that also with interest, and will the same apply to the Treasury’s £25m and the Church’s £1m?

12.  So, when the assets are realised, and should there still be money owing to savers and/or investors, where will they rank as creditors vis-à-vis government? Could a situation arise where savers and investors go short because government must be paid back first?

I would appreciate it if you could take time to answer these questions in as detailed a manner as possible. 

Yours sincerely,

Jim Allister QC

General