Questions asked about minster's role

BOSSES at Guernsey's leading building firm had every reason to be confident. They had cleared all the competence hurdles required by the States, been scrutinised by external consultants and had put in the lowest bid to build the much-needed clinical block at the Princess Elizabeth Hospital.

As such, they were the preferred tenderer and, with Les Nicolles schools under R. G. Falla Ltd's belt as well, they had lucrative work for years to come.

Until, that is, the firm's involvement was due to be rubber-stamped by the Policy Council.

Treasury minister Lyndon Trott led the attack.

Health minister Peter Roffey had earlier been presenting details of the PEH project and had all his top officials and external consultants to hand to deal with any points arising.

After they had gone, however, Deputy Trott questioned the propriety of a single firm having so much States money, about 90% of the current capital spend, in its control.

It was, he said, contrary to States policy, citing a little known and comparatively recent decision.

Council members could have considered whether, in the circumstances of a substantially cheaper tender and no one, including Treasury and Resources, having raised this as an issue until the last minute, the rule could be waived.

But they did not.

They could have questioned why Health and Treasury allowed Falla to tender knowing that, if it succeeded, it would fall foul of the restriction now raised by the Treasury minister.

But they did not.

They could have questioned how the tender evaluation strategy had failed to include something so seemingly vital as current levels of States work.

But they did not.

Instead, members, including deputy chief minister Bernard Flouquet, Social Security minister Mary Lowe and, particularly, Housing minister Dave Jones, questioned the propriety of one of their fellows being so closely linked to R. G. Falla.

Very little thought appears to have been given to the taxpayer and none to the ethics of trying to block a tenderer that had met all the conditions and terms that the States had imposed upon it.

Deputy Trott's contention was that the element of risk of so much money resting with one contractor meant that R. G. Falla could not be awarded the hospital job (ironically, 'hospital job' is builder's slang for a project that's worked on only when there's nothing better to do).

He appears to have presented no evidence to back up that view. Health and Social Security had employed specialist value-for-money consultants while putting together the clinical block plans but it had not been asked for its views on this, even though officials had only recently left the council meeting at Frossard House.

Other members also pitched in, making comments that many would regard as attacking the integrity of Commerce and Employment minister Stuart Falla on the basis of his still retaining a shareholding in the firm started by his father.

Members were concerned that a minister should be seen to benefit financially in any way from a States contract and felt that Deputy Falla was politically exposed and they could be tainted as a result.

It was suggested that work for which Commerce and Employment has responsibility relating to the island's building and construction industry was behind schedule and that might be seen to be in Deputy Falla's personal interests and there was unease that he had been involved closely in the Strategic Land Use Group.

Chief Minister Laurie Morgan agreed to speak to Deputy Falla the following day.

By all accounts, it was not an easy conversation.

Deputy Falla reacted badly to having, as he saw it, his integrity questioned and being challenged in this manner.

His business interests were well known and properly declared and the people of the Castel had put him top of the poll.

All day-to-day influence he had with R. G. Falla had ended when he entered the States, he said.

In addition, knowing all this, the States had elected him as head of Commerce and Employment precisely because of his extensive - and successful - business interests and his own Policy Council colleagues were responsible for his being involved in putting together a competitions policy and chairing elements of the land use strategy considerations.

Deputy Falla, who does not suffer fools gladly at the best of times, was considerably irritated.

Sensing this, Deputy Morgan appears to have tried to cool things by suggesting that the Commerce minister should see things 'from the outside', through the eyes of a critical electorate (and, although this was probably unspoken, highly critical Policy Council).

'All I am saying,' Deputy Morgan pressed on, 'is that you might want to consider your position over this.'

It was the last straw.

A furious Deputy Falla told the chief minister in no uncertain terms: 'I am not resigning and you can't make me.'

He felt he had done nothing wrong and at all times had endeavoured to carry out the wishes of the States and the Policy Council.

At this stage, the mood seems to have changed.

In Deputy Falla's mind, this unwarranted attack on him had arisen because a firm in which he has an inherited interest proposed building a clinical block for the States of Guernsey substantially cheaper than anyone else.

No tender, no conflict of interest.

With icy politeness, he informed the chief minister.

'R. G. Falla,' he said, 'will be withdrawing its bid.'

There was a pause while Deputy Morgan considered this.

'You have no involvement with the firm so how can you?'

It was a good question, but Deputy Falla was ready.

'Because Andy 'Hall, R. G Falla chairman' has already spoken to me of his concerns about how this is going and believes it would be better for the company not to be involved.'

The following day, Deputy Morgan reported back to the Policy Council.

Members were stunned.

They never wanted it to be a resignation issue and had never asked the chief minister to steer it that way or to give Deputy Falla any such impression.

More significantly, a vitally important hospital project that was already behind schedule because of delays in putting together the States report on capital prioritisation, might be in jeopardy if it had to be re-tendered.

After some reflection, however, members realised that whatever had or had not been said and whatever their individual intentions, they had triggered a wholly avoidable bill of £2.4m.

That was not going to look good, especially since the States was short of cash and under considerable public pressure through overspends.

Several expressed their concerns, among them Culture and Leisure minister Peter Sirrett, Public Services minister Bill Bell and Education's Martin Ozanne.

Deputy Ozanne had earlier expressed support for Deputy Falla. As a leading hotelier and president of the then Guernsey Tourist Board, his father had had similar accusations of a conflict of interest against him. Brother Richard, who also later headed Tourism, did too.

By then, however, there was no going back and the damage was done.

Word of the Policy Council's ineptitude was starting to leak out in States circles, along with the waste of taxpayers' money.

That unease is one reason why the briefest mention was made in the October Billet d'Etat that there had been a cheaper tender than Charles Le Quesne (Gsy) Ltd's £27m. bid 'but was subsequently withdrawn', as the Billet notes.

Ministers were desperately hoping to play down their involvement in that but could not run the risk of making no mention of it in case they were accused of a cover-up at a later date.

It is one reason the chief minister and others were so angry at the late intervention of the Public Accounts Committee, just before the States meeting to consider the PEH project, 'blowing the whistle' on the cheaper tender price fiasco.

The whole episode is potentially very damaging, which is why ministers would have used rules of procedure to prevent a debate over which they had little control on PAC's motion to halt the hospital project pending an inquiry.

Instead, PAC chairman Leon Gallienne was persuaded to withdraw his motion on the basis that the project would go ahead but an inquiry would be held anyway.

It is, however, telling that the chief minister trenchantly resisted calls for the Policy Council minutes to be released. From our account here, islanders will understand why. There is still no confirmation that PAC will have access to those crucial minutes or - even more importantly - whether they will be published.

Until they are, however, the most serious questions remain over the conduct of the Policy Council.