HL Deb 14 February 1963 vol 246 cc1071-6

3.40 p.m.


My Lords, with your Lordships' permission I will now reply to the Question put to me earlier by the noble Earl, Lord Listowel. I will repeat the exact words used by my right honourable friend in reply to a similar Question in another place.

"The House will recollect that in 1958, owing to changes in our naval deployment, it was decided that the Admiralty Dockyard at Malta should be converted and operated as a commercial ship-repairing yard. A long lease was granted to a new Company, Bailey (Malta), Limited, formed for this purpose by C. H. Bailey Limited, of Newport, Monmouthshire. Under agreements with the Company, Her Majesty's Government have undertaken to make loans up to a total of £7¼ million to help meet the cost of the conversion and equipment of the Yard and to provide working capital. Up to date about £3 million have been advanced.

"In 1960, certain financial transactions of the Company caused concern and an investigation was carried out by Sir Richard Yeabsley, Accountant Adviser to the Board of Trade. In the light of his Report, my predecessor required the Company to appoint two independent Directors nominated by him, Sir Richard Yeabsley and Mr. Hanning Phillips. At the same time, a third independent Director, Mr. Lawrence Robson, nominated by the Company, was also appointed. These three Directors all resigned in April, 1962.

"Thereupon my predecessor appointed Mr. J. R. Muirie, a Partner of Peat, Marwick, Mitchell and Company, Chartered Accountants, to inspect the Company's accounts.

"Last August, Mr. Muirie submitted his report, which is now available in the Vote Office. The facts revealed in the report convinced me that the Company had in a number of respects not been conducting its business in a proper manner. I accordingly called upon the Company to remedy the matters complained of within 30 days, as provided for in the Financial Agreement with Her Majesty's Government.

"Since the Company took no steps to put things right, I decided to adopt a procedure provided for in the Agreement for the replacement of certain Directors. However, the Company issued a writ, which among other things questioned my right to take this course. In view of this action by the Company it would obviously have been improper for me to seek to replace the Directors who were conducting the litigation against the Government. Having therefore felt obliged to abandon this course, I sought redress under another clause of the Agreement which provides that when breaches of the Agreement are not remedied by the Company the Government is entitled to claim repayment of the loans advanced. I caused a writ to be issued for this purpose on January 17.

"In view of the situation revealed by the Muirie Report it was obviously not possible to continue to advance further public money to the Company or to enter into contracts with it for Admiralty repairs. It was equally impossible to allow the Dockyard, which is one of Malta's most important sources of employment, to be brought to a standstill, pending the settlement of the litigation, which will probably take many months.

"The Prime Minister of Malta and I discussed the whole situation when he was over here in December and we have since then kept in close touch. As a result, we agreed that some way must be urgently found of putting the Dockyard under a new and trusted management, to whom loan payments could be resumed and with whom Admiralty contracts could be placed.

"I discussed the matter with the Chairman and Managing Director of the Company, Group Captain Bailey and Mr. Christopher Bailey, to see whether the necessary change of management could be effected by agreement. However, despite protracted talks it proved impossible to secure their consent to any arrangement which I would have felt able to justify to the House.

"In the absence of any agreed solution, the Prime Minister of Malta, after discussions with me, has decided to introduce to-day in the Malta Legislature, a Bill to set up a Council of Administration to whom most of the functions of the Board of the Company will be temporarily transferred, pending the settlement of the issue, either by negotiation or by the Courts. This action has my full support. The Bill also provides that any powers conferred on the Council of Administration which are found not to be necessary for the discharge of their responsibilities can be transferred back to the Board of Directors.

"The members of the Council of Administration will be appointed by the Prime Minister of Malta after consultation with the Colonial Secretary.

"Subject to the passage of the Bill, Sir Eric Millbourn, who has great experience in shipping matters and port administration and is port adviser to the Minister of Transport, will be appointed Chairman of the Council. The other members will include Sir Nicholas Cayzer, Chairman of the British and Commonwealth Shipping Company, Mr. Guy Densem the senior partner in Deloitte, Plender, Griffiths and Company, Chartered Accountants, and Lord Melchett, a Director of M. Samuel and Company, Merchant Bankers. The Prime Minister of Malta and I wish to express our thanks to these gentlemen for agreeing, without remuneration, to serve on this Council and to give Malta the benefit of their wide business experience. I understand that they may consider appointing a leading firm of ship repairers to act as Managing Agents.

"These arrangements will enable us to make further loan payments to finance the conversion of the Dockyard and to resume Admiralty orders. Subject to a satisfactory contract, the First Lord proposes in the near future to send H.M.S. 'Troubridge' to Malta for a major refit. This should provide employment for several hundred men for over a year.

"Her Majesty's Government and the Government of Malta have from the start been extremely reluctant to intervene. We have, however, felt it our duty to do so in order to ensure the proper use of public money and to protect the interests of the many thousands of Maltese people whose livelihood is directly or indirectly dependent upon the Dockyard."


My Lords, I am sure we are all very grateful to the noble Marquess for his statement. He will appreciate that it will cause very great concern, because the maintenance of employment in the Dockyard is, as he says, vital to the economy and the social life of Malta, as any noble Lord who has been there well knows. May I ask whether the noble Marquess can give us any assurance that when existing Admiralty contracts have been completed the dockyard will not come to a standstill before a new firm has taken over from Bailey's? That seems to me to be a point of cardinal importance. Apart from that, I only wish to say that we will study with very great care his statement and the Report of the Accountant, which is now in the Vote Office, and we may wish to raise the matter again in your Lordships' House.


My Lords, I think it is generally accepted, that one of the guiding principles in everything we have done was as far as possible to ensure a high rate of employment in Malta. In so far as the noble Earl's question is concerned, I cannot tell him that we can guarantee any particular volume of Admiralty work, but I think I should make it quite clear that it is our hope that, through the conversion of this dockyard—which temporarily, of course, has been delayed, as we were not in a position to continue to advance funds—there will be a steady increase in merchant shipping. This, we hope, will be one of the principal means of maintaining a high level of manpower. There has so far, I am happy to say, been no indication that it will be necessary to reduce the manpower. With the conversion proceeding as fast as it will be able to do, I sincerely hope that the amount of merchant shipping this yard will be able to handle will help to maintain a high level of employment. I hope that that answers the noble Earl's question.


My Lords, would the noble Marquess confirm that the Council of Administration will, in fact, carry on the daily work of this port until such time as some new firm takes over?


That is roughly the position, my Lords. It is their hope that a firm of managing agents—that is to say, a firm experienced in the work of ship repairing—may come in to do this work. But I want to make it quite clear that the firm of Bailey (Malta), Limited, remains in existence, with the powers of the directors temporarily assumed by the Council of Administration.


My Lords, may I ask the noble Marquess a question, because I do not know whether I have correctly understood his original Answer? Who is going to find the finance which will be required in the meantime, for working capital and so on?


My Lords, the object of this operation is to enable Her Majesty's Government to continue in the financing of the conversion of the dockyard. So far, we have advanced something over £3 million, and our undertaking was to advance £7¼ million. Now, under the arrangements which we hope will come into effect after this Bill is passed in Malta, it will be possible for us to continue to advance these large sums of money.


My Lords, may I ask the noble Marquess whether, in view of this extraordinary statement this afternoon, and anticipating the Report that we shall study, and in view of the statement that it would appear that there have been some irregularities in the operation of this company as well as possible court action between Her Majesty's Government and the home company, Parliament will be denied the opportunity of discussing this Report and this statement in the near future?


My Lords, any possibility of Parliamentary discussion should, I think, be considered through the usual channels and after perusal of the Report.