Stringent PFI conditions lined up after Mapeley

All future PFI contracts could include clauses to stop private partners putting property holdings in offshore companies. The move by the government follows a report by the House of Commons’ Treasury committee on the transfer of the Inland Revenue’s £220m property portfolio to Bermuda-based Mapeley Steps. The NHS, which has already started to review its PFI policy, is looking at changing its PFI contracts to include clauses to forbid private partners using tax avoidance mechanisms. Clauses added this month by the NHS PFI directorate state that private partners must share any tax savings with the public bodies, but it adds that these savings must be acceptable to the public sector. It is understood that subsequent changes will state that only companies registered for tax in the UK will be accepted as partners on NHS PFI projects. The £400m sale of NHS Estates Inventures to Miller Group/Bank of Scotland last year is already under scrutiny after Estates Gazette revealed that the NAO was investigating it. In a series of parliamentary questions last month, shadow health secretary Tim Loughton asked the health minister why a rival bid that could have netted the Treasury up to £100m more was not chosen and whether confidential information about the bids had been made available to the awarding body (EG 8 February, p29). Mapeley Steps Mapeley – the PFI specialist consortium owned by Fortress Investment Group, Soros Real Estate Partners and Delancey – won the contract to own and manage the IR’s 600 properties in 2001. It emerged last year that properties were transferred by IR to the offshore Mapeley Steps, allowing Mapeley to avoid millions of pounds of stamp duty and capital gains tax. The Treasury committee said the deal was “nothing more than a scam”. The National Audit Office is now investigating the deal. The government is believed to be looking at enforcing the changes across all departments. IR chairman Sir Nicholas Montagu is facing disciplinary action over the Mapeley Steps affair. The Inland Revenue has denied that he would be fired.