Getting murkier by the minute…

A point seemingly lost on the BBC in the last couple of days is by far the main reason that the Prescott-Anschutz connection is getting so much attention is that the more we look into things, the more we find things that just don’t appear to add up.

On July 1 it was revealed that Prescott had visited the ranch Philip Anschutz, the ‘owner’ of the Millenium Dome, who is bidding for the UK’s first super casino to be located there. Prescott stated that the visit was during a nine-day official trip to the US and he was discussing a film about former Hull MP William Wilberforce.

On July 4, Prescott wrote to the Tories stating that he met Phil Anschutz seven times over three years but denied discussing either the sale of the Dome or casino licences. He also told Shadow Culture Minister, Hugo Swire, in the same letter that he had no reason to register his stay as his visit to the US was entirely on official business and the cost was entirely covered by public funds.

On July 5, Prescott entered the visit in the Register of Members Interests, still claiming that he didn’t really have to as it was an official visit. On the same day, a spokesperson for Prescott told PinkNews.co.uk:

“The Deputy Prime Minister has to deal with people that come within his remit. His remit was to meet Mr Anshutz to discuss the regeneration of the Greenwich Peninsula and nothing else.”

Thiis spokesperson confirmed that the pair met for dinner and discussed William Wilberforce, the anti-slavery MP who previously represented Mr Prescott’s Hull constituency.

And, of course, yesterday also saw the Newsnight report I covered in earlier posts.

What I want to come back to here is the statement to Pink News that Prescott’s remit was to meet with Phil Anschutz to discuss the regeneration of the Greenwich Peninsula and nothing else.

This particular regeneration project, which includes the Dome, was subject to scrutiny by the National Audit Office who published this report on the subject in January 2005.

And one learns from the report is that, overall, the full project is beign undertaken by a company called Meridian Delta, who are the head lessee for the area. which includes the Dome and the Dome Waterfront.

Meridian Delta is a joint venture between Australian developers, Lend Lease, who were the firm behind the Bluewater retail development and Quintain Estates and Development PLC in which Lend Lease owns 51% of Meridan Delta and Quintain own 49%.

Anschutz does not appear to have a direct stake in Meridian Delta, in fact he has only two direct interests in the overall regeneration of the Greenwich Peninsula, through his company AEG. One is the Millennium dome itself, in which he will construct a new 17-20,000 seat arena which will serve as a concert venue and as the venue for a number of Olympic events, including Basketball. The other is in the hotel development, which is part of the overall project, which AEG is permitted to develop but not directly run – they have partner on board already to run the hotel once its built.

The hotel, as you might guess, is where, if AEG’s bid for the licence is successful, the super casino will be situated, as per similar developments in places Las Vegas.

Anschutz does not, by the way, own the Dome, as has been widely reported – what he has a minimum 58 year lease with English Partnership for use of the Dome site for an Arena.

So we have Prescott’s spokesperson telling Pink News that his remit was to discuss ONLY the Greenwich Peninsula development – in which Anschutz’s sole interest lies in the two things, the Dome and the casino/hotel, that Prescott denies discussing with him.

Interestingly the NAO has this to say in relation to some of financial aspects of the project…

In any property scheme of such size, duration and complexity, development partners are inevitably exposed to major uncertainties, some of which would tend to reduce their projected returns while others may offer unexpected upsides. In this scheme the main upsides for English Partnerships are:

A payment for the hotel site next to the Dome which will be at least £3.5 million (index linked to retail price indices from September 2004), together with other payments should a casino be opened. There is no specific planning permission for a casino on the site, and any proposal would be subject to changes in legislation and also to the usual licensing and other approvals that may be required.

A share in future profits from both the Dome Arena and Waterfront. The legal agreement for the profit sharing arrangement for the Waterfront is still being finalised, though English Partnerships told us that the commercial terms have now been agreed with the Consortium. The extent to which these will generate additional returns to the taxpayer is uncertain, so English Partnerships did not assume these returns in evaluating the deal.

Increased profits from real growth in sale prices, particularly on residential units. At present the financial model assumes real annual price growth of three per cent, but if London house prices rise more quickly than this, or if the Greenwich Peninsula “takes off” as a fashionable new location, the partners will earn higher profits.

It’s interesting to note that NAO is able to be very explicit as to the likely income from the hotel (minimum £3.5 million) but says only that there will be ‘other payments’ if AEG gets the casino licence it wants.
English Partnerships, in case you don’t know, is Meridian Delta’s landlord and partner in the whole deal, the basis of which is nicely summarised by the NAO in assessing the project’s downside risks, as follows:

The agreement allows Meridian Delta Ltd to defer development, using a force majeure clause which includes unfavourable market conditions. Deferment to avoid a slump in the property market might be useful to English Partnerships in financial terms, but it may not accord with Government’s objectives to develop the Greenwich Peninsula without undue delay. In circumstances of persistent failure to deliver development, English Partnerships could seek to trigger their rights in the agreement to bring in a new development partner, but would have to consider that this may result in receiving lower financial returns due to a potential surplus of accommodation being built but remaining empty.

The second area of risk is that English Partnerships derive most of their profits later in the life of the agreement than does Meridian Delta Ltd, as opposed to minimum land value which they receive first. Meridian Delta Ltd takes 60 per cent of the joint venture’s profits in the first 5 years, tapering down to 25 per cent after 11 years. Although there are arguments for deferment of English Partnerships’ profits, (See Figure 17) [in full report], it will be essential for English Partnerships to continue to devote sufficient resources and expertise to actively monitoring and managing their interest in the joint venture over the next 20 years.

English Partnerships is a non-departmental body, which is made up to two legally seperate entities set up under separate statutes, the Commission for New Towns and the Urban Regeneration Agency. It is currently funded by the newly created Department for Communities and Local Government (minister: Ruth Kelly), however from May 2002 until 5 May 2006, it was funded by and fell under the aegis of…

… the Office of the Deputy Prime Minister.

As far as Prescott’s contention that the entire deal for the Dome was concluded by his predecessor – Charlie Falconer – this is true… sort of…

The way with works is like this – the tenders for this project, which was the government’s second stab at finding something to do with the Dome, went out on May 2001,  Meridian Delta were given preferred tender status in December 2001 and a conditional deal signed in May 2002.

This deal did not become unconditional, however, until May 2004 – some two years after the project came under OPDM through English Partnerships

Knowing all that one still has to come back to the fact that Phil Anschutz’s only interests in this whole project are the Dome, itself, and the hotel – which is where he wants to put a casino – so what else, apart from use of the arena in the Dome for the Olympics, did he have to talk about with Anschutz that required seven meetings?

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