Friday, July 23, 2010

Political uproar in UK over Sheffield Forgemasters’ loan

Sheffield forgemastersFinancial Times reports PM David Cameron and Deputy Nick Clegg wrongly accused firm’s directors of being unwilling to raise capital for the firm.

Big donor to Conservative Party, who owns a competing steel mill, is revealed to have written a letter to Cameron calling for end to the loan.

The now cancelled [L]80 million loan that the UK government decided not to issue to Sheffied Forgemasters for a nuclear pressure vessel manufacturing center was a victim of political lobbying by a competitor steel mill. The Financial Times reports in a series of articles that Andrew Cook, a major donor to the Conservative Party, wrote a letter to the government that the loan was “unnecessary and illegal.”

Also, the Financial Times reports that Prime Minister David Cameron misled parliament saying that the major shareholders of Forgemasters killed the loan themselves by refusing to issue shares that would dilute their holdings. Correspondence between the government and the company, reported by the Financial Times, shows that the opposite was true.

Government knew Forgemasters was willing to issue new stock

The government had made the case for cancelling the strategic investment that it was not an affordable loan, but later added the now false statement that the firm’s major stockholders were unwilling to see it issue new shares to fund development of the manufacturing center.

However, the Financial Times reported July 19 that Forgemasters CEO Graham Honeyman wrote a letter to Nick Clegg, Deputy Prime Minister, that he was willing to dilute his holdings to raise the cash. The newspaper further revealed that Clegg acknowledged receiving the letter and writing one back to Honeyman that he understood the firm’s position. Clegg also said he was not changing the government’s decision to cancel the loan.

Rival steel company complained about loan

The Financial Times reported July 22 that documents it now has reveal a Conservative Party donor lobbied the highest levels of the UK government to cancel the Sheffied Forgemasters loan. The newspaper revealed that Andrew Cook, who has paid for airline travel for now PM David Cameron when he was a candidate, wrote a letter in which he threatened to withhold future campaign contributions unless the government shelved the Sheffield project.

The newpaper reported that Cook donated [L]500,000 to the Conservative Party and [L]54,000 in airline travel to Cameron. Cook’s company produces casting for the oil and gas industry among other products, but does not list any work on its web site for nuclear energy utilities.

Government denies allegations

The BBC reported July 22 that the government has denied that Cameron made the decision to cancel the loan based on the letter from Cook. However, Labour members of parliament plan to schedule a special debate to determine whether the PM mis-led them on the issue.

Energy Secretary Chris Huhne has come under withering criticism that he allowed his anti-nuclear views to influence the government’s decision. The BBC reported that Huhne has stuck by the Liberal line that the loan is “unaffordable,” but he has not yet commented on the latest allegations that the PM of the coalition government was less than forthcoming about the reasons for the decision to cancel the loan.

If the loan had gone through, it would have positioned the UK to compete head-to-head with Japan Steel Works in the manufacturing of reactor pressure vessels. The UK plans to build new reactors at 10 sites to prevent expected brownouts in the next decade as the original fleet of plants, built in the 50s and 60s, reaches the end of their service life. Failure to proceed with the loan will delay construction of nuclear power stations in the UK.

Prior coverage on this blog

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1 comment:

Rod Adams said...

Dan - great reporting. Are you sure you are just a blogger?

It looks like it is time for another smoking gun article. Not only is a Cook a rival steel maker, but his company is part of the establishment fossil fuel industry through its production of components for that industry that probably have little to no utility in the nuclear business.

Time for some more research. Thanks for the interesting start.