Renowned inventor Dr John Taylor informed the Tynwald Select Committee he was “shocked” by the evidence presented by Treasury officials “that they were not being kept fully informed of the MEA’s expenditure and borrowing"

Renowned inventor Dr John Taylor informed the Tynwald Select Committee, investigating the Manx Electricity Authority (MEA) ‘loans affair’, he was “shocked” by the evidence presented by Treasury officials “that they were not being kept fully informed of the MEA’s expenditure and borrowing”.

He stated that had he known this at the time he would have insisted they were informed as he fully accepted “this is something of which they should have been made aware”.

Dr Taylor appears to have distanced himself some what from his former colleagues on the Board by emphasizing he was not involved in any of the subsidiary companies or a member of any remunerated committees.

He even sat noticeably apart from his former colleagues during the evidence session, although this may have been due more to arriving after the session had commenced rather than any other reason; but he has employed the services of a different advocate.

Whilst he seemed to have conceded to some of Treasury’s version of events in his opening statement he did adopt a more defensive stance during the subsequent questioning by the Committee.

In his opening statement he also emphasized his lack of financial and legal expertise which meant he relied heavily on the advice and information being provided to him at Board meetings. He said he had no reason to disbelieve what he was being told.

As for financial regulations and the Capital procedure notes (CPN) he said he had never come across them when working in the private sector; and even after joining the MEA he said he never saw them, as he wasn’t involved in meetings with Treasury regarding compliance issues.

Committee Chairman, Speaker Steve Rodan commenced the questioning by apologising if some of the questions appeared to repeat issues already answered in Dr Taylor’s statement; but he explained he still wanted them answering for the record.

He asked Dr Taylor what awareness he had of the obligations on the MEA in regards to financial regulations.

Dr Taylor explained that when David North had invited him to join the Board he had been informed there were no terms of reference but they needed to operate in accordance with the Electricity Act 1996. No mention, he said was made to the Statutory Boards Act or the CPN etc; and he repeated he had never even seen them.

He reminded the Committee he is a scientist and a designer, with 169 inventions and 389 patents to his name - which is what, he said, occupies his time - and it was this expertise which was the reason why he was invited to join the Board.

He pointed out he had advised the Board to obtain patents for the broadband over copper wires initiative - to secure benefits for the IOM and the MEA - and reiterated he has a scientific mind not an accountancy or legal one. He added he was not involved in the day-to-day management of the MEA.

He went on to say the first he knew of a problem was when the Treasury issued its direction in 2002; as prior to that he had never been informed of any problems.

However, he said it hadn’t been made clear to him if there was a general problem or whether it related specifically to the MEA; but he did know it incensed Mike Proffitt.

Dr Taylor claimed Mr Proffitt informed him the problem related to the process and format of the information; and what Treasury wanted wasn’t suitable for the most complex capital project in the IOM’s history.

He had thought the matter had been concluded by the withdrawal of the direction; and referred to a board minute that said a meeting would be arranged for Mr Proffitt to meet the new Chief Financial Officer (Mark Shimmin) to discuss new procedures.

He referred to another minute in which it was recorded Treasury had approved the new process, which related to best practice in the electricity industry.

So as far as he was concerned the issue was resolved.

Clare Christian MLC said given he had known nothing about the problems prior to the direction arriving did he think he should have been informed earlier the problem had been going on for 2 -3 years.

Dr Taylor said this surprised him as he no idea of this; to which Mrs Christian suggested he should have known; but Dr Taylor said he relied on what the MEA minutes record.

Dudley Butt MLC put it to Dr Taylor that he had said he had expected the MEA to provide CAPEX and significant financial information to Treasury, so did he consider the two loans to be significant.

Yes, Dr Taylor did think they were and he had expected Treasury to be informed; and pointed out regular meetings were held with Treasury.

Mr Butt also put to Dr Taylor that he had no knowledge if the information was given to Treasury; and he confirmed this.

Mr Rodan inquired if Mr Proffitt had informed the Board of the level of financial information given to Treasury; to which Dr Taylor responded he was unaware of any dissatisfaction, and nobody, including Treasury officials had told him otherwise. He added that subsequent to the direction he was informed the relationship was good.

He said even Mr Bell had commented on the good relationship and, if it was as bad as everybody is now being told, he was surprised the Board was not informed.

Mr Rodan put it to Dr Taylor that Mr Bell had said the direction caused a severe reaction from the Board and that they threatened to resign; but Dr Taylor said it had “never crossed my mind”. This was because the issue related to a procedure and format; and although he felt the tone of the letter was inappropriate he didn’t think it was a resigning matter.

He said he had no contact with Treasury but he expected Treasury and MEA officials of being capable of resolving the issue; and said he was later informed it had been.

Mr Rodan wanted to know if he had thought Treasury needed to approve the loans.

Dr Taylor was adamant they only needed to consent to the loans and not approve them. He explained the Manx Cable Company (MCC) had been established before he joined the Board and all the assets were ring-fenced. In 1999 a £36m loan had been taken from HSBC without any consent sought from Treasury; but it had been included in the accounts which were approved by Tynwald. He said the additional loans from Barclays followed a similar pattern, and some of which was used to pay off the HSBC loan.

He assumed Treasury knew of the £70m and was happy; and stated that advice from Cains had said the loan was lawful. He remarked that he thought it was the responsibility of the borrower to satisfy themselves it was legal; and the Board had not doubted the legality and even the advice from the Attorney General had been the same.

David Callister MLC put it to Dr Taylor that Mr Bell had claimed he was not aware of the loans, yet the Board had assumed COMIN and Treasury had knowledge of them. So the Committee was being led to believe there was something remiss with the process when perhaps the Board shouldn’t have made its assumption.

All Dr Taylor could say was regular meetings were held, between the MEA and Treasury, and that the Board minutes record that information was being given. So what would be the purpose of the meetings if it was not to discuss the financial information, he queried; and added, why would he think they were not getting the information when the minutes said they were?

Mr Butt pressed him about the £70m loan and the repaying of the HSBC loan; but Dr Taylor could only answer the HSBC loan was short term and he assumed it needed repaying.

So what had the remaining money been used for, asked Mr Butt; to which Dr Taylor thought it had been used on the gas infrastructure.

Mr Butt reminded Dr Taylor he had agreed the amount was significant so had he expected Treasury to be notified; and he agreed.

Having already overrun the allotted time, by some margin, Mr Rodan called the session to an end.

When Dr Taylor inquired if he wanted answers to the other questions, Mr Rodan assure Dr Taylor all his evidence would be looked at; and if necessary he would be recalled. However, he explained, that would be a decision for the Committee to determine in due course.

It is unknown who the Committee will call next and when; but they must be getting close to having all the evidence they require to report on the issue of compliance with financial regulations.

The Manx Herald will be making its own assessment of the evidence presented so far and will also publish its own conclusions shortly.