CM offers cross-party oversight of Sovereign Wealth Fund, as GSD probes structure 

Chief Minister Fabian Picardo on Thursday invited the Opposition to help establish and oversee the governance structure for Gibraltar’s Sovereign Wealth Fund, saying it could build a substantial reserve to protect public services and future generations. 

Mr Picardo said cross-party oversight would help safeguard the fund against future governments spending it for short-term electoral advantage, with potential benefits including support for university scholarships, elderly care and protection against unexpected crises. 

The Leader of the Opposition, Keith Azopardi, welcomed the prospect of a bipartisan approach but said the GSD would need to scrutinise the underlying documents before deciding whether to participate “because there are concerns that we have”. 

The exchange followed a battery of detailed questions Mr Azopardi asked on behalf of GSD MP Roy Clinton, covering the investment programme’s structure, legal basis, financial exposure, income and governance. 

Mr Picardo acknowledged Mr Clinton’s financial experience and the work he had undertaken examining the arrangements after they were first announced during the Budget session before the summer. 

During lengthy, often complex exchanges, he said the fund’s future governance structure could include a role for the Opposition leader or the person holding shadow responsibility for public finance, subject to agreement between both sides. 

“The Government would welcome cross-party involvement in shaping and implementing the structure of our pot of gold,” the Chief Minister said, adding that investments spanning 35 years required oversight capable of enduring changes of government. 

“That is a vision that should transcend party lines so that the money that we make protects our children and our nation.” 

Mr Picardo said he envisaged a management board comprising the serving Chief Minister, Leader of the Opposition, Financial Secretary and Chief Secretary, alongside an Opposition nominee and investment experts.  

Former holders of the Chief Minister, Financial Secretary and Chief Secretary posts could also serve, as could the Principal Auditor and a former Principal Auditor.  

Mr Picardo said the aim was to preserve a growing reserve and its investment returns for services Gibraltar valued, rather than allow a future administration to use it to finance election promises. 

“Let's have a fund that principally protects our ability to send our children to university in the future, to protect our ability to provide elderly care for our elderly, which will then include us,” he said. 

The current financial structure from which the fund would receive income involves interests in three UK care home portfolios, Hartford Care, Graham Care and Select Healthcare, comprising more than 37 homes and over 1,700 beds. 

Gibraltar’s involvement is through government-owned Gibraltar Investment Holdings Limited for the Graham Care and Select Healthcare portfolios, and the registered charity Gibraltar Community Initiatives Limited for Hartford Care, with the charity holding its interests and receiving profits on trust for the Government pending decisions on the fund’s permanent shape. 

Mr Picardo said that, under the existing structures, Gibraltar received both equity interests in the underlying properties and quarterly fees in return for supporting the financing through payment deeds. 

The properties were valued at approximately £722.9m against original financing of £544.7m, with the debt repaid progressively over 35 years. 

The Chief Minister said Gibraltar’s property share was worth approximately £180m at current values but would likely grow significantly over the period, while the annual fee income, linked to rents, would also grow over time. 

Mr Picardo said the Government is lending its credit, “not its cash”, and its exposure related to security for rental income and amounted currently to a potential liability of around £28.4m a year, a figure that would rise with inflation.

But he added that there was insurance and cash reserves in the structures that significantly reduced any risk. 

Receipts for Gibraltar had reached approximately £6.6m by June 30, 2026, without Gibraltar committing public capital, Parliament was told. 

Mr Picardo said the combination of accumulated income and property interests could eventually outweigh the Government’s long-term Covid debt, depending on future property performance. 

A central point of contention in the exchanges yesterday was whether the arrangements already constituted a sovereign wealth fund. 

Mr Picardo explained that the term currently described an investment programme held through existing entities, rather than a standalone institutional fund with separate accounts and banking facilities. 

Mr Azopardi challenged this distinction, pointing to earlier statements in which the Chief Minister said a fund had been established. 

He questioned why the governance arrangements associated with sovereign wealth funds were not already operating, stressing the importance of clear legal structures, disclosure, reporting and oversight. 

Mr Picardo said the income and property interests already existed, but a separate vehicle governed by sovereign wealth fund principles had yet to be created. 

He said instructions had been given to establish Gibraltar Sovereign Wealth Fund Company Limited with governance aligned to the Santiago Principles, which are voluntary international principles for the governance, transparency and management of sovereign wealth funds to ensure public wealth is managed professionally, accountably and prudently. 

The existing arrangements, Mr Picardo added, remained subject to corporate law, audit requirements and contractual controls. 

Mr Azopardi said meaningful bipartisan involvement depended on access to the underlying agreements, but Mr Picardo said that legal advice prevented disclosure without counterparties’ consent, which the Government was seeking to enable Opposition access. 

On financial risk, Mr Picardo rejected the suggestion that Gibraltar faced an unprotected liability exceeding half a billion pounds, being the value of the property portfolios in the UK. 

He cited property security, cash reserves, insurance, contractual controls and rights to take over the structures if partners defaulted. 

Mr Azopardi pressed the Chief Minister on the extent of the Government’s liabilities, questioning how its commitment under the payment deeds differed from the £544.7 million in borrowing by the UK companies to acquire the care home portfolios.  

Mr Picardo reiterated that the Government’s primary obligation related to annual rental payments, rather than repayment of that borrowing, with insurance and cash reserves providing protection against any shortfall. 

Annual rental obligations currently amounted to around £28.4 million, rising through indexation over the life of the arrangements, he stressed. 

Mr Azopardi suggested that still represented a potentially substantial exposure extending to 2060, irrespective of the Government’s assessment of how unlikely it was to crystallise. 

“The reality is that the Government has entered into a commercial arrangement which does underwrite as a primary obligation a significant sum,” he said. 

Mr Picardo said the care homes generated income to meet the payments and that any call on public funds would relate to a shortfall.  

He said Hartford’s rent was protected by insurance, while cash held within the other structures exceeded their current annual rental obligations.  

Even if occupancy fell below the level needed to cover the full payments, the homes would continue generating income, reducing the amount that would need to be covered, Parliament heard. 

Mr Picardo rejected Mr Azopardi’s assessment of the potential exposure, arguing that simply multiplying the full annual obligation across the lifetime of the arrangements failed to reflect the income, insurance, reserves and property assets supporting them.  

He acknowledged that the arrangements carried risk, but insisted the protections substantially reduced it. 

“Nothing is ever risk-free,” he said. 

“If it goes well, we can all take the credit.” 

“But if it goes wrong, they can blame me.”