Welsh Affairs

Part of Business of the House – in the House of Commons at 4:09 pm on 5 March 2015.

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Photo of Madeleine Moon Madeleine Moon Labour, Bridgend 4:09, 5 March 2015

The Parc Slip Margam open cast coal site spreads across the Bridgend, Ogmore and Aberavon constituencies. The majority of the site lies within Neath Port Talbot council area, which tends to take the lead in negotiations with a company called Celtic Energy. That company exploited the site for many years, but the major settlement affected by the open cast site is in the Bridgend county borough area, and the largest community is in my constituency of Bridgend.

The mine is a mile and a half scar on the valley floor running from Cefn Cribwr to Cynffig hill, and it includes a huge deep void that is filling with water. The site is a blight on the environment, and it poses a risk to local children who unfortunately use it for motor cycle scrambling, or swim in the fetid water in the void. Local residents live in fear of water cascading into their homes and polluting local rivers. The site urgently needs restoration, and for local people the questions are simple: who has responsibility for restoration? How can they be made to accept that responsibility? Where will the almost £60 million needed for the work come from? If any budding script writers out there want a plot with twists and turns, a tale of Government failure, of political failure at national and local level, or of financial greed, dodgy practices and legal failure, this is the story for them. If Erin Brockovich has nothing to do, I invite her to come to south Wales and try her hand at Parc Slip.

Coaling at Parc Slip goes back to before 1985 and the British Coal Corporation. Between 1985 and 1994 applications to extend the open cast were made, refused and overturned at public inquiry, with permission always bringing with it responsibilities to restore the site. The Coal Authority Act 1994 privatised the coal industry, and a company that later became Celtic Energy bought the freehold for a number of sites in south Wales, including Parc Slip. In his ruling in Cardiff on 18 February, Mr Justice Hickinbottom stated that all those arrangements required Celtic to restore the land to countryside and agricultural use once mining was complete.

Mr Will Watson, chief executive officer of Celtic Energy, and until March 2010 the corporate director of environmental services at Neath Port Talbot council, claimed in an e-mail to me:

“The situation has been exacerbated…by the decision in 1994 made by the Government of the day to take a larger cash receipt for the sale of the company in return for a 10-year bond free period. Had escrow funds been put away for example at today’s level of around £10 million per year for the years 1994 to 2004, then the fund would now stand at around £155 million (assuming it was invested to simply cover inflation)…Since the UK Government had the £100 million in 1994 (worth around £178 million with inflation today) it seems reasonable to me to ask the UK Government to contribute to a solution at Margam.”

There needs to be a clear answer to this from the Government. Mr Justice Hickinbottom said that responsibility lies with Celtic, but Celtic claims that it lies with the Government. Which is it? My constituents need to know. Does Her Majesty’s Treasury have any responsibility at all for the restoration of part of this site because of the nature of the sale in 1994? Yes or no? We need an answer.

When mining at Parc Slip finished in 2008, further planning permission to continue mining was denied and it was time for Celtic to fulfil obligations to restore Parc Slip. Mr Justice Hickinbottom describes how, around this time, some of Celtic Energy’s directors and executives came up with a plan called “the big picture”. They arranged the creation of a series of companies and parent companies in the British Virgin Islands. The ultimate owners and financial beneficiaries of those companies were the men themselves, and it was arranged to sell to one of them—Oak Regeneration—the land and the attached responsibilities for restoration.

After the sale, many of the provisions for restoration that Celtic Energy had held in its accounts—around £135 million—were released by the auditors. The six members involved in planning the transaction were then awarded large bonuses. The sale to Oak must have seemed strange to the auditors and non-executive members of Celtic Energy’s board. The group, however, had paid a fee of £10,000 for legal advice from Stephen Davies, QC, who advised that it would not be a successful way of transferring the restoration responsibilities to another company. A further fee of £250,000 for further advice from Mr Davies resulted in advice that the sale would in fact be a successful way of transferring restoration responsibilities. Mr Davies’s statement was used to show Celtic’s auditors that the provisional restoration funds could be released, which they were. The fund was reduced to £67 million, and Celtic now claims that the money did not really exist. Mr Watson claims that the figures are “provisional” for liabilities on the balance sheet and do not represent any assets in any form—cash or otherwise.

During the course of the Serious Fraud Office investigation, it was not clear whether the transactions had been effective in transferring liabilities, and so the accounts were amended to put back the provisions until the matter was resolved. The company will revisit the position once more. My constituents need to know this:

is that sound accountancy practice? Can there be millions of pounds in accounts that are liabilities on a balance sheet but do not represent assets in any form—cash or otherwise? Or is the money there and capable of being pursued to provide the restoration at Parc Slip?

I have made a number of references to Mr Justice Hickinbottom’s judgment in a case brought by the Serious Fraud Office against the people who benefited financially from this asset transfer scheme: three solicitors at company called M&A—Eric Evans, David Alan Whiteley and Francis Bodman; Stephen Davies, QC; Richard Walters, the managing director of Celtic; and Leighton Humphries, the financial director of Celtic. The SFO claimed that the responsibilities for restoration had not been transferred to Oak. However, half way through the case, the argument was changed to say that the responsibilities had in fact been transferred and that the problem was that the local authority would not be able to secure restoration from Oak, which had zero assets. Mr Justice Hickinbottom decided that this later change was not illegal. The first was never pressed or explored, and in his ruling the judge quoted one of the defendants who had called the asset transfer “just good business”.

The case against Celtic and its legal henchmen has not been tried. The SFO case collapsed because of the legal judgment by Mr Justice Hickinbottom that

“a dishonest agreement is not actionable as a crime at common law unless a proprietary right or interest of the victim is actually or potentially injured.”

The victims were deemed to be the Minerals Planning Authority and the Coal Authority, which he felt had no such proprietary rights or interests. Adding insult to injury, the lawyers and Celtic are to have their legal fees paid by the Government. To say that the taxpayer has been completely ripped off by this company is an understatement.

The legislation privatising coal failed to protect the taxpayers of Cynffig Hill; the Coal Authority and the planning laws failed to protect them; and the best legal minds at the SFO failed to protect them. Where are they to go now? The mineral planning officers appear to have five options. The first is to do nothing, which is totally unacceptable. The second is enforcement, but they have been told by Celtic that if they do that, there will be further legal difficulties. Celtic would put itself into receivership and disappear. The third is exploration of alternative restoration with coal extraction, which is totally unacceptable to the people of Bridgend. Then there is exploration of alternative restoration with no coal extraction, and finally there has been a suggestion of using an existing £5.7 million escrow account to do a restoration lite. This is a desperate situation.

I secured a debate on this on 29 January when the Minister of State, Department of Energy and Climate Change, who is also the Minister for Business and Enterprise, Matthew Hancock, assured me that he would meet me to discuss the issue. I had hoped we would be able to debate where the discussions had taken us. The clock is ticking. We have three weeks until Dissolution and my meeting has not taken place.

In his ruling, Mr Justice Hickinbottom said:

“conduct that some may regard as morally reprehensible is not open to be set aside, let alone be the possible subject of criminal sanctions, because Parliament has determined that those sanctions should not apply in those circumstances”.

Parliament has the legislative competence and moral responsibility to deal with this mess. I hope that today we can agree that one of the first priorities of whoever sits on the Government Benches in May will be to work with the Welsh Assembly Government, the Minerals Planning Authority, the Coal Authority, Natural Resources Wales and any other relevant statutory body to send a clear message to Celtic that it must face its responsibilities and that we will pursue it. Even if legislative reform is needed, it must face its responsibilities.

Communities should expect, as victims of incompetence and chicanery, to have the full support of this House to resolve this situation. I urge the Minister to give a sense of hope that we will unite to tackle the problem by calling a meeting of Government, the Welsh Assembly, local authorities and others to begin to thrash out a way forward, and to make a commitment that we will work together to seek a resolution to this appalling situation.