UK Treasury accused of conflict of interest over fracking company
Green groups have accused the British Treasury of allowing the appearance of a conflict of interest over its examination of an energy company at the forefront of fracking in the UK.
Third Energy’s financial health is being looked at by a Treasury body, the Infrastructure and Projects Authority (IPA), which will determine whether the government gives the firm a green light.
But Third Energy’s newest director, Conservative party peer and donor Jitesh Gadhia, is also a non-executive director at another Treasury body, UK Government Investments. One of UKGI’s roles is to provide advice to the government on dealing with financially distressed businesses.
Rose Dickinson, a Friends of the Earth campaigner, said: “This seems a conflict of interest. Not only that, it looks fairly shambolic. It’s things like this that make the industry hard for people to trust. It’s another reason why government should say no to fracking – it’s not wanted, and it is bad for the environment.”
Third Energy, which is backed by Barclays, is in the spotlight because it is poised to be the first company to frack in Britain for seven years. It intends to frack at a site in North Yorkshire, but is waiting for consent from the business secretary, Greg Clark.
Last month Clark said the company had passed the technical tests needed but scolded it for having overdue accounts. The minister asked the IPA to assess Third’s financial resilience and ability to fund clean-up costs.
Following Clark’s intervention, Third Energy published its accounts, which were four months overdue. They revealed that Third Energy UK Gas made a £3.4 million (US$4.8 million) loss for 2016, slightly down on the £3.85 million loss in 2015.
But the financial health of the firm is opaque, as its ultimate parent company, Third Energy Holdings, is based in the Cayman Islands. The accounts show that the parent company is owed £44.7 million.
Gadhia’s career has spanned the banks Barings, Barclays, and ABN Amro, and the private equity group Blackstone. He was awarded a peerage by David Cameron in 2016, and appointed a director at Third Energy last month.
The government said: “The Infrastructure and Projects Authority and UK Government Investments are two completely separate bodies with separate governance structures. There is no basis to suggest there is a conflict of interest here.”
Third Energy said: “As a member of the House of Lords, Lord Gadhia has registered all his business interests, including Third Energy. There is complete transparency and no question of any conflicts of interest.”
A group of local people opposed to Third Energy’s plans have set up an anti-fracking camp in the North Yorkshire village of Kirby Misperton. The group, which started in December 2016, hope to prevent Third Energy from injecting high-pressure liquid into shale rock in the area to extract fossil fuels.