Opposition maintains pressure on Savings Bank involvement in stadium project
The GSD said on Wednesday that the involvement of the Gibraltar Savings Bank in the financing of the proposed Gibraltar National Stadium amounted to the Gibraltar Government, through the bank, “stumping up the cash for the development, not charging the right value for the land and allowing another entity to keep the profits”.
The Opposition was reacting after No.6 Convent Place insisted the bank’s £100m investment in the stadium was “100% safe for depositors” and would generate economic activity while creating an asset of value to the community as whole.
Together Gibraltar also hit out at the government over the stadium investment, insisting it was “dismayed” by the explanations from No.6 Convent Place.
On Monday the Government confirmed the GSB would invest “in the region of” £100m through the acquisition of loan notes from the GFA at an interest rate that would deliver “a small but meaningful profit” for the bank.
No.6 Convent Place said funds from UEFA and FIFA would continue to pay “for aspects” of the stadium, adding the GFA’s initial purchase of the Victoria Stadium had been completed with UEFA funds for £16.5m.
The Government said the sum paid by the GFA to date was for land only for sporting use but that the residential and hotel aspects of the proposed stadium had been agreed to make it financially viable against the backdrop of increased development and building costs, and with an eye on the wider economic benefit to Gibraltar.
For the GSD, the explanations avoided key questions and were “less than forthcoming” about the details of the scheme.
It said people would be surprised that the GSB would make only a small return if it was providing all or most of the money needed for the scheme.
It questioned why, given the residential and commercial aspects of the project, these would not be for the benefit of the GSB.
“If someone is sold public land and then wants to develop it for commercial or residential purposes they would always have to negotiate and pay an additional sum of money - a premium - to develop it because the development of land is a valuable public asset,” the party said in a statement.
“Rather than now revalue the land and seek a premium for the residential and commercial development the Savings Bank are apparently providing a ‘loan’ to GFA that will be repaid from the profits of the development that the GFA never paid a premium for.”
The GSD asked why other entities would be allowed to keep the profits of the stadium project and its ancillary aspects.
“Who those entities are remains deeply unclear after the Government’s statement,” it added.
“Rather than this being a good investment it is free cash being given away by the Government to others.”
Keith Azopardi, the Leader of the Opposition, said the effect of the Government explanation of the investment scheme was that the land was sold at an undervalue in 2016 and now that the GFA wanted to develop a high-value, high-profit scheme which contains residential, commercial units and a hotel, the Savings Bank will fund it for only a “small” interest rate return and with the Government not extracting a premium for development of this public asset, allowing someone else to “pocket the profits” to which the Government or Savings Bank should have been entitled.
“That is an outcome that is clearly not value for money and amounts to taxpayers and savers not getting a proper return for their investment,” Mr Azopardi said.
“It is unacceptable if that is what is happening as the public are entitled to get better value for their money.”
“This is public or savers monies and not the Government’s.”
The GSD called on the Gibraltar Government to be transparent about how it was structuring the scheme and “precisely” who would profit from it, and why.
It called on the Government to be open about “who is pulling the strings” at Community Supplies and Services Ltd, the company which the GFA said it was working with on the stadium project.
“It seems plain now that it is the Government itself behind this structure in one guise or another,” the GSD said.
The GSD also questioned the “staggering” £100m cost of the proposed 8,000-seat stadium.
While there may be “local and unique factors” that affect the cost of construction in Gibraltar, the GSD said the public and GSB depositors were entitled to know why a stadium of that size required so much funding.
By way of comparison, the GSD said other European stadia of comparative size had been developed at a far lower cost.
It cited, among others, AFC Wimbledon’s 9,000-seat stadium which cost £33m; Stadion Dubocica, in Serbia, which accommodates 8,000 spectators and cost $25m; Poland’s 15,000-seat Stadion Wisly Plock, built for $44m; and Romania’s 8,000-seat Stadion Arcul de Triumf, built for 37m euros.
It also singled out La Linea’s ongoing construction of an 8,000-seat stadium for which the council was contributing 7m euros.
“Major questions that go to the root of value for money and who is benefitting from the scheme also arise because of this,” Mr Azopardi said.
“People are entitled to know when public assets are sold at an undervalue and savings bank money is used in this way.”
The Shadow Minister for Public Finance and the Gibraltar Savings Bank, Roy Clinton, added: “The amount of money needed for this project is staggering.”
“If this is such a great project I don’t understand why the GFA hasn’t obtained funding directly from an external bank and not had to rely on money taken from public savings.”
“The Government or Savings Bank should publish the business plan for the proposed new stadium project and financial feasibility projections and payback period that underpin the loan notes that will be issued.”
“This needs to be commercially sound and at arms-length with no conflicts of interest, political or otherwise.”
“The answers provided so far are light on detail and have made depositors in the Gibraltar Savings Bank uneasy despite Government’s assurances.”
Together Gibraltar said it was “dismayed” by the Government’s response to questions it had raised, insisting its initial presentation of the deal had been “opaque and deliberately sketchy”, and that subsequent explanations used “dubious arguments” to justify using “massive public funds” entrusted to the GSB by depositors.
“The Government’s PR states, in a nutshell, that Mr Bossano knows best and should not have to clarify further,” TG said.
“With many businesses struggling and the Brexit issue still unresolved, the public are expected to take on trust that the government should put their savings at risk with no further elaboration.”
“This is especially worrying at a time of great uncertainty in global markets, rampant inflation, and impending recession across western nations.”
TG said it believed GSB funds should be invested in a way that was good for the savings of Gibraltarians, “not football”.
It questioned why the return on an investment this size should be “small but meanginful”, asking what that meant in this context.
“The government needs to stop treating the public as fools, and refrain from using Orwellian language in reference to this deal,” TG said.
“There is no ‘sponsorship’, and there is no such thing as meaningful or meaningless profits in a business loan.”
“This is a business loan, and a simple issue of pounds, pence and profits.”
TG added that the Government had not justified why the stadium required a capacity of 8,000, adding that the most attractive international matches “hardly sell out” and that local games were attracted even fewer spectators.
An empty stadium would not create an attractive footballing spectacle and would dampen the mood of crowds and frustrate supporters, TG said.
The part was also baffled as to why the proposed retail and housing units would be owned and managed by the GFA.
“If these developments are such a good investment as to warrant public ‘sponsorship’, they should remain within government ownership or be put out to tender as is normal for any publicly funded development,” TG said.
“Together Gibraltar is not opposed to investing in our community but it believes that such an exorbitant investment should have come in a way that is forthcoming, transparent and after consultation and public debate.”
“At a time in which public services are being slashed, basic infrastructures are either non-existent - like the promised sewage treatment plant - or in disrepair - roads, housing estates, touristic infrastructure - and the housing list continues to grow, the least this Government could do is consult the community on what its priorities are.”
“Instead, what we’re seeing is more of the typical lack of transparency with a new, largely unknown network of companies already embedded in the deal.”
“That the government considers this investment zero-risk is irresponsible, and testament to their arrogance.”
“To pretend they can simply avoid scrutiny because this investment is about football and has the green light from Sir Joe is an insult to this community.”