Hong Kong billionaire give big y2k indemnitygreenspun.com : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread
SA gave Li big Y2K indemnity Dec 1 Mark Skulley
The South Australian Government gave Hong Kong billionaire Mr Li Ka-shing's interests a Y2K indemnity of up to $170 million as part of its biggest energy privatisation, the State Parliament has been told.
According to Auditor-General Mr Ken McPherson, the indemnity given to Mr Li's consortium was between $140 million and $160 million more than the maximum Y2K indemnity sought by other bidders.
Mr McPherson's report on the $3.5 billion sale of ETSA Power and ETSA Utilities said the indemnity was given to Mr Li's Cheung Kong Infrastructure and Hong Kong Electric even though the State's maximum potential exposure had been estimated at no more than $10 million.
Although the forecast Y2K problems did not strike the SA electricity businesses, they were a key issue for the rival bidders and their bankers during the sale process which was agreed in mid-December 1999.
The ETSA businesses were privatised by means of a long-term lease, a method adopted by the Olsen government to win parliamentary approval for the sale.
But Mr McPherson reported that a Cabinet minute dated December 12 from Treasurer Mr Rob Lucas did not say the lease over the ETSA businesses was for 200 years.
He said the minute did not address the term of the lease, even though there was a "public perception that the lease would be for a period of about 100 years".
On Tuesday, Mr McPherson released a separate report which gave a wide-ranging critique of the engagement of the Government's advisers for the overall $5.3 billion energy sell-off.
He has, however, previously reported that the sales were in the upper limit of the estimated total valuation of its energy assets.
Mr Lucas has robustly defended the privatisation process and results, while conceding the Government will overhaul guidelines for appointing consultants.
The energy sell-off was conducted as overseas interest in Australian utilities was generally on the wane and Mr Lucas said most risk had been transferred to the private sector and State debt slashed to just $3 billion.
"We say the proof of the pudding is in the eating and this has been an outstanding result," he said.
The criticism of the energy sell-offs comes as the Government edges closer to winning parliamentary approval to privatise the State's ports and its TAB.
Legislation to privatise the ports was being debated in the Upper House last night and was expected to be passed, but the TAB legislation was not expected to be considered until next week.
A move to sell the Lotteries Commission was resoundingly defeated in the Lower House during the week.
-- Martin Thompson (firstname.lastname@example.org), November 30, 2000