Directors' handling of ship purchase blamed in move to oust Isle of Sark directors

The papers were published at lunchtime with Chief Pleas being asked to make a decision tonight.

Isle of Sark shipping directors, who were until today officially in the dark about the proposals details, have already called for time to explain their position to conseillers before any decision is made.

Policy & Finance outlined why it has lost confidence in the managing director Yan Milner, finance director Paul Burnard and four non-executive directors Mark Dunster, Richard Graham, Andrew Cook and Peter Gill.

The committee blames: the executive directors' failure to ensure the completion of work required for the Sark Venture to return to service in February, she is still in Guernsey; managing the finances in a manner which that may have led to the company being placed into administration; buying a new vessel, the Corsaire des Isles, using all available company funds but not telling the committee; and failing to adapt the business model to reflect demand and changing service requirements.

It says it has lost trust and confidence in the ability of the non-executive directors to supervise the business.

'The committee met with the non-executive directors on 10 August to discuss the reasons for its loss of trust and confidence in the executive directors and, more widely, the board, and to give the non-executive directors the

opportunity to respond to its concerns,' the report says.

'The committee's concerns were not allayed by anything said by the non-executive directors at the meeting.'

It wants to employ Julie Mann, a former IoSS director said to have opposed Mr Milner, and Conseiller John Guille as executive directors instead.

The committee also proposes that Richard Wickens is appointed as a director.

Much of the latest rift stems from the purchase of the new vessel to replace the Bon Marin, which because of her wooden decking did not meet UK classification standards, and the handling of the finances around that.

According to P&F, on 31 March the company purchased the Corsaire des Isles using its cash reserves, overdraft facility of £150,000 (guaranteed by Chief Pleas), a further unsecured overdraft of £50,000 and deductions made and held as provisions for employee tax and social security payments.

'A guarantee for a secured loan in the sum of £300,000 was signed by Chief Pleas on 6 April 2020. The company's bankers indicated that, if they were to advance funds on the guarantee, they required a letter of comfort signed by Chief Pleas to the effect that the guarantee would no longer be against a secured loan, but against an unsecured overdraft to fund general expenses. A guarantee for unsecured lending of £450,000 (ie £300,000 plus the existing secured overdraft facility of £150,000) was unacceptable to Policy & Finance and the letter was not signed.'

On Sunday 3 May committee chairman Sam La Trobe-Bateman received an email from Mr Milner saying that the company face being put into administration within four days without the loan.

'The committee worked with the bank urgently to establish a financial package to enable the company to continue trading,' its Chief Pleas report says.

There were no passenger sailings between 24 March and 28 March because of the pandemic.

The committee said it made repeated requests for the company to apply for States of Guernsey support under the guarantee support scheme from when it was announced on 3 April.

When the company wrote to its bankers on 17 April, it stated the amount needed was £775,000, which was in excess of the £500,000 upper limit of the scheme, it is claimed in the report.

A final application for support under the GSS was submitted on 29 April with an expected turnaround time of four or five working days, but before that expired the administration threat was aired.

'In May 2020, the company's worsening financial position eventually led the board and the committee to agree a redundancy exercise. The projected cost of the redundancy exercise was more than £50,000 (in excess of the unsecured overdraft facility). This led to the company's bankers requiring a further financial injection from Chief Pleas into the

company of £30,000. This additional funding was approved on 7 May 2020.

But the provision for redundancies was almost immediately removed from the company's financial reports.

'The committee was given to understand that redundancies were not implemented at the request of the States of Guernsey, although this remains unverified.'

The committee also blames the restricted schedule being operated on the lack of available vessels, with no new boat and the Venture still being worked on in Guernsey.

Only the Sark Belle is sailing for passengers - the directors were told this failure point is a 'critical concern'.