“Conflict of interest” at Hinkley C (oddly, not at our LEP!)

What’s the fuss – they should be looking MUCH closer to home at the members (and influential past members) of our Local Enterprise Partnership for much more conflict and much more interest!

“Consultancy firms working for the government on the Hinkley Point C nuclear power station were advising the project’s Chinese investor and its French builder at the same time, an investigation by The Times has revealed.

KPMG, the professional services group, was paid £4.4 million between 2012 and 2017 as a financial adviser to the energy and business departments, despite telling officials that it was also acting for China General Nuclear Power Corp on the project.

The apparent conflict of interest has been revealed after the Information Commissioner’s Office intervened to press for disclosure from the Department for Business, Energy and Industrial Strategy. Previously, officials had redacted the information, claiming that it was commercially sensitive.

In a second potential conflict, Lazard, the financial advisory firm, was paid £2.6 million between 2012 and 2015 to advise the business department on Hinkley Point. Details of its previously redacted tender documents reveal that it was an adviser to EDF, the French developer that is investing in Hinkley Point alongside the Chinese. A source said that Lazard’s advice to EDF was not related to the Somerset project.

MPs expressed concern about the perceived conflicts. The government has struck a 35-year deal under which the energy companies could receive £50 billion above market prices.

Meg Hillier, chairwoman of the Commons public accounts committee, said that Hinkley Point was crucial public infrastructure and therefore it was “vital that auditors get full sight” of the potential conflicts. It “looks cosy”, she said, adding that it was “not really appropriate” for firms to be advising both sides.

The details have been released more than a year and half after The Times complained to the Information Commissioner’s Office, which informally advised the business department to reconsider its position. The department previously had handed over heavily redacted documents in response to a Freedom of Information request.

The Information Commissioner’s Office said that there was a “significant and important public interest”, something that had been strengthened by a report from the National Audit Office in June, which found that the government’s deal had “locked consumers into a risky and expensive project with uncertain strategic and economic benefits”. The project has been riddled with delays and controversy over its spiralling costs.

The National Audit Office also criticised the business department for insufficiently managing the potential conflict of Leigh Fisher, another government adviser. The Times reported in November 2016 that Leigh Fisher, the management consultant, had been awarded contracts worth a combined £1.2 million despite telling officials that the British division of Jacobs Engineering Group, an American firm that owns Leigh Fisher, was working for EDF on Hinkley Point.

In tendering for a 2015 contract, KPMG told officials that “as DECC [the Department of Energy & Climate Change] is fully aware, a KPMG team is currently acting for [China General Nuclear Power Corp] in relation to their potential investment into [Hinkley Point C]. This work is being carried out by a team, separate to the KPMG team acting for DECC, operating under strict internal conditions.” The auditing firm added that it had “mature policies and procedures . . . to identify and manage potential conflicts of interest”, including “properly segregated resources . . . to handle the projects”.

In Lazard’s 82-page tender document in 2013, which initially was almost entirely redacted, it told officials “that it has no conflict of interest in respect of the work contemplated by the ITT [intention to tender] regarding the development at Hinkley Point C. The Lazard group does have a relationship with Electricité de France [EDF] led out of its Paris office and is assisting it with a current advisory mandate that has no bearing on, and creates no conflict with, the advisory work contemplated by the ITT but this will not prejudice in any manner the qualifications of a Lazard team led out of its London office to provide the high-quality, independent advice contemplated by the ITT.”

Paul Flynn, a Labour MP who has campaigned against Hinkley Point C, said that the project was the “worst civil investment decision made by any government” and that the potential conflicts were “further proof that the contract was agreed for political imperatives . . . To avoid future calamities, a full national inquiry must be held.”

Leigh Fisher said that it “managed the work and resources in accordance with agreed protocols throughout”.

The National Audit Office was not aware of the KPMG and Lazard situations. On Leigh Fisher, it said: “Placing the onus on Leigh Fisher to manage the potential conflict is not in line with good practice”; “by the time Leigh Fisher did confirm it was complying with arrangements stipulated by the department, it had already completed the majority of its work”; “the department did not receive any monthly updates on the arrangements in place, as it had requested”; and that “even when the department did stipulate ethical wall arrangements, they were below the standard we would expect”.

The business department said: “In line with our requirements, both Lazard and KPMG outlined their policy on dealing with any potential conflicts of interest in their tender documents, together with the actions they would take to mitigate these. As a result, we are satisfied that the perceived conflicts had no impact on the work carried out under the contract(s).”

Source: The Times (pay wall)

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