PP135/06 R e p o r t o f t h e S t a n d in g C o m m it t e e o n P u b l ic A c c o u n t s Is l a n d F il m S t u d io s a n d ASSOCIATED MATTERS Standing Committee on Public Accounts Island Film Studios and associated matters Members of the Committee Mrs C M Christian MLC (Chairman) Mrs H Hannan MHK (Peel) (Vice Chairman) Mrs A Craine MHK (Ramsey) Capt A C Douglas MHK (Malew & Santon) Mr Q B Gill MHK (Rushen) Mr P Karran MHK (Onchan) The powers, privileges and immunities relating to the work of a committee of Tynwald are those conferred by sections 3 and 4 of the Tynwald Proceedings Act 1876, sections 1 to 4 of the Privileges of Tynwald (Publications) Act 1973 and sections 2 to 4 of the Tynwald Proceedings Act 1984. Copies of this Report may be obtained from the Tynwald Library, Legislative Buildings, Bucks Road, Douglas IM1 SPW (Tel 01624 685516, Fax 01624 685522) or may be consulted at www. tynwald. ore, im All correspondence with regard to this Report should be addressed to the Clerk of Tynwald, Legislative Buildings, Bucks Road, Douglas 1M1 3PW. Remit of the Committee (1) There shall be a Standing Committee on Public Accounts. (2) The Committee shall have - (a) a Chairman elected by Tynwald, (b) a Vice-Chairman elected by Tynwald, (c) four other Members elected by Tynwald, and a quorum of three Members. (3) Members of Tynwald shall not be eligible for membership of the Committee, if, for the time being, they hold any of the following offices: President of Tynwald, Speaker of the House of Keys, member of the Council of Ministers, member of the Treasury Department referred to in section l(2)(b) of the Government Departments Act 1987. (4) The Committee shall - (a) (i) consider any papers on public expenditure and estimates presented to Tynwald as may seem fit to the Committee; (ii) examine the form of any papers on public expenditure and estimates presented to Tynwald as may seem fit to the Committee; (iii) consider any financial matter relating to a Government Department or Statutory Body as may seem fit to the Committee; (iv) consider such matters as the committee may think fit in order to scrutinise the efficiency and effectiveness of the implementation of Government policy; and (v) lay an Annual Report before Tynwald at each December sitting and any other reports as the Committee may think fit. 2 (b) be authorized in terms of section 3 of the Tynwald Proceedings Act 1876 and the Standing Orders to take evidence and summon the attendance of witnesses and further to require the attendance of Ministers for the purpose of assisting the Committee in the consideration of its terms of reference. (5) The Chairman, Vice-Chairman and any member of the Committee shall not sit when the accounts of any body of which that person is a member are being considered. 3 I¡ TABLE OF CONTENTS Page 1. IN T R O D U C T IO N ...................................................................................................... 8 2. E V ID E N C E ..................................................................................................................... 8 3. B A C K G R O U N D .......................................................................................................... 9 4. LEGISLATION COVERING GRANT APPLICATIONS ...................... 10 5. GRANT APPLICATIONS 5.1 V fg (Isle of M a n ) L im it e d ...................................................................... 10 5.2 J R C re e r L t d ................................................................................................. 11 5.3 Island Studio s L im it e d ........................................................................... 14 6. APPROVAL OF GRANT FOR ISLAND STUDIOS LTD 6.1 T rea su ry C o n cu rren c e............................................................................ 16 6.2 T he O ffer L e t t e r .......................................................................................... 17 6.3 D TI Stan d a rd T erm s and C o n d it io n s .......................................... 18 6.4 T he B usin ess Pro po sal & E rnst & Y oung A ppraisal repo rt 19 7. THE ISLAND STUDIO BUILDING 7.1 C onstruction of the b u il d in g ............................................................ 23 7.2 P l a n n in g ........................................................................................................... 25 7.3 B uild in g C o n t r o l s .................................................................................... 26 7.4 L ocatio n and facilities in the surrounding a r e a ................ 27 7.5 A ppo in tm en t of L ocal Co m pan ies and L a b o u r ....................... 28 7.6 C ertification and W ork P e r m it s ..................................................... 32 7.7 Bu ild in g C o m pa n y....................................................................................... 33 8. V A LU A T IO N AND SEC U R IT Y .......................................................................... 35 9. EQUIPMENT 9.1 T he C o m p a n ie s .............................................................................................. 36 9.2 T he N eed fo r E q u ip m e n t ......................................................................... 38 9.3 T he P ur ch a se of E q u ip m e n t .................................................................. 39 9.4 C onfirmation of th e E x isten ce, C o n d itio n a n d V alue of t h e E q u ip m e n t ............................................................ 40 9.5 O w n ersh ip of th e E q u ip m e n t ............................................................... 44 4 9.6 R e g is t e r o f A s s e t s ................................................................................... 46 9.7 C o n c lu sio n .................................................................................................. 47 10. MONITORING THE PROJECT 10.1 A ppr o v a l of In v o ices fo r P a y m e n t .............................................. 48 10.2 C laim fo r G rant fo r Purch ase of B u ild in g s......................... 48 10.3 Pro gress V is it s .......................................................................................... 50 10.3 Subm ission of A ud ited A c co u n ts.................................................. 51 11. LOUGH HOUSE ANIMATION 11.1 Busin ess Suppo rt Se r v ic e ................................................................... 53 11.2 C ertification ............................................................................................. 53 11.3 G r a n t s ............................................................................................................ 54 11.4 C h e c k s by DTI.................................................................................. 55 11.5 O t h e r C o u r s e s ........................................................................................... 55 11.6 Opportunities to w ork in the film in d u str y.......................... 56 12. COMPANY MATTERS 12.1 A n n ual R e t u r n s ....................................................................................... 57 12.2 Sto n eg ate pr o per ty L t d ...................................................................... 59 12.3 C o n c l u s io n ................................................................................................... 59 13. OTHER MATTERS 13.1 D ish o n o u red ch eque C la im ............................................................... 60 13.2 The In so lv en cy C l a im ........................................................................... 62 13.3 E v a lu a tio n of G ra n t A pplications............................................. 62 14. CONCLUSIONS.............................................................................................. 63 15. REPORTING PROCEDURE........................................................................ 64 16. SUMMARY OF RECOMMENDATIONS....................................................... 65 5 APPENDICES AND EVIDENCE The documents referred to throughout this Report have reference numbers. The reference to appendices give the appendix number (eg A3) and a page number, where necessary (eg A3/p47). The appendices are listed below and included in this Report. The references to documents contained in the Evidence file contain an Evidence number (eg E4) and a page number, where necessary (eg E4/p32). Those documents are listed below and are available for inspection in the Tynwald Library, APPENDICES (attached to this Report) 1 Letter from Mr J D Q Cannan MHK dated 30th October 2002 2. Transcripts of Oral Evidence 3. Hansard Report of Keys Questions on 22nd June 1999 and 25th June 2002 4. Legislation regarding DTI grants 5. Standard Terms and Conditions relating to grants 6. Island Film Studios Limited Business Proposal and Appraisal Report by Ernst & Young. 7. Offer Letter to Island Film Studios Ltd & Treasury concurrence letter 8. Documentation re tender process for construction contract 9. Letter from Harding Lewis, Accountants 10. Invoice for editing equipment from Violet Systems Ltd and Equipment Schedule 11. Income from hire of editing equipment 12. Documentation regarding the valuation and ownership of the editing equipment 13. Grant claim in respect of purchase of buildings 14. Craft and Technician Training Scheme (Manufacturing, Construction and Service Industries) 1995 15. A chart showing the relationship between the various companies in the Lough House Group 16. Documentation re the Dishonoured Cheque Claim 17. Timeline EVIDENCE (available for