Hotel deal 'beyond power of Isle of Man government'
- 17 June 2014
- From the section Isle Of Man / Ellan Vannin
A multi-million pound deal to bail out the Sefton hotel group in the Isle of Man was made "outside of government powers", according to legal experts.
Independent lawyer Richard Moules, brought in to investigate, said while the two loans were legal, they were "ultra vires".
The conclusion of a report has led to calls for the island's economic development minister to step down.
John Shimmin's resignation has been refused by Chief Minister Allan Bell.
Mr Bell said: "Mr Shimmin has very honourably tendered his resignation to me this morning, but I have decided not to accept it.
"It is clear to me he acted in good faith in the best interests of the island's economy and its people. He acted honestly to protect jobs and business."
The Sefton Group PLC is a Manx company, which owns the Sefton and the Palace Hotel Casino on Douglas promenade, along with the Sefton Express hotel near Ronaldsway airport. The group employees about 300 people.
The £4.5m rescue package for the Sefton Group included a £1.3m loan, plus £3.2m to buy land in Douglas earmarked for development.
It was scrutinised after being criticised by Tynwald members for being "unfair" and "biased".
It is thought the group was facing debts of about £1.7m - much of which was owed to a range of island businesses.
Mr Shimmin said public money was never put at risk.
He added: "This was one of the most difficult decisions I have ever made in my 17-year political career, we believed we had the legal vires to do what we did.
"There is an inference that this has cost the tax-payer money but much of the money has already been paid back in full. The rest is in the process of being paid back."
At the time of the bail-out, the Manx government said the funds had been granted under the Enterprise Act, which provided the group with a loan of £1.3m repayable after five years.
When details of the arrangements were made public, politicians objected on the grounds that it put other hotel owners at a commercial disadvantage.
The issue was then handed over to the Tynwald's Economic Policy Review Committee, which subsequently sought independent legal advice from the UK.
The issue will be raised once again next month in Tynwald after the Council of Ministers has formally responded.