Caption: Safeguarding UK green interests?The five new trustees of the Green Purposes Company – James Curran,Trevor Hutchings, Tushita Ranchan,Robin (Lord) Teverson and Peter Young. Pic Credit: Green Purposes Company

The present government has two song sheets. One is that Britain must big up everything we do to become a ” world leader ” after Brexit. The second is that we must do everything we can to cut the deficit – whether it is fresh benefit cuts or selling off anything the government owns as fast as possible..

The two came into conflict recently with the sale of the Green Investment Bank – and the deficit cutters won. The story of the sale of the Green Investment Bank is told in a recent report by the National Audit Office. Unfortunately the detail did not lead to much coverage in mainstream media which is why I am writing about it now. I have written a news story for Tribune magazine.

The deal which has allowed the sale to go ahead to Australian private equity bankers Macquarie for £1.6 billion is at the lower end of the its worth and without waiting for returns from big wind farm projects which are still under construction with public money.The NAO said this could have netted another £63m. This is the same company, by the way, that owns Thames Water, responsible for some of the worst pollution in the River Thames and also locally on the Wendover Arm of the Grand Union Canal (see an earlier blog).

The companies behind the sale did very well. The business department paid out a £1.1m success fee to Bank of America Merrill Lynch and a retainer of nearly £300,000 for completing the sale – part of a bill for £4.5m to sell the bank.

Macquarie picked up the bill for another £5m success fee paid to UBS by the Green Investment Bank itself to handle the sale.

The Department appointed Herbert Smith Freehills (HSF) to act as its legal adviser for the sale. HSF’s fee increased from £1 million to £2.36 million owing to the extended period required to complete the sale, the need for advice on restructuring GIB, the retained assets, the special share arrangements and judicial review which failed to challenge the sale.

Altogether Macquarie paid over £10m of the state bank’s fees to get their hands on the state bank. But what did they get in return?

An article in the This is Money website gives us a clue. It shows the government removed the restriction that the Green Investment Bank should only concentrate on the UK so Macquarie could make money worldwide and ignore the UK if it wanted. Greg Clark, the business secretary, personally signed this concession.

Macquarie of course denies this pointing out that it had invested £38m in a West Yorkshire waste from energy from waste project and insisting it will be a big player in the UK and Europe.

But events since the take over suggest otherwise – and there is no guarantee either that it will continue to focus only on green energy. Greg Clark let the bank get away with a non binding public statement to finance green projects for the next three years and the setting up of a trust – the Green Purposes Company -which could shame the new owners if they fail to keep to their pledge.

The evidence of backsliding comes from the trustees. In theory they have powers to prevent changes to GIB’s green purposes, but this does not extend to control of, or input to, investment decisions.

The five trustees are independently appointed and seem to be sound environmental figures. They include James Curran, former chief executive of the Scottish Environmental Protection Agency, and Lord Teverson, a former Liberal Democrat energy spokesman.But they are not paid to monitor such a big private equity company and a check on the website of the Green Purposes Company does not give much comfort either.

It reveals the first project is in Sweden – with a 300 million Euro investment in what will be Europe’s largest onshore wind farm joint with the US listed company GE which is in financial trouble in the United States.

The second is in a £30m investment in solar power in India – admittedly with a UK solar park company, Lightsource, partly owned by BP. The company is concentrating on green power in the Middle East, Asia and Europe as part of its partnership with BP.

And the third investment will be a 136 million Euro energy from waste scheme in Dublin, jointly run by a New Jersey incineration company, Covanta.

So far the new bank has invested £38m in the UK and over £400m (partly with GE) abroad.

The NAO conclude in their report the future direction of GIB’s investment focus and its relationship with the trustees remain untested. From the first four projects it seems quite clear that the UK will be on the sidelines. The 436 million Euro investments will be great news for Donald Trump’s ” America First ” policy but not such great news for Theresa May.