Logfiller debacle – it’s actually much worse

Thursday 17 November 2016

It's been revealed that the amount of taxpayers' money lost in a failed loan to a software development company is actually way more than has so far been reported.

In the States yesterday, the Assistant Minister responsible for the Innovation Fund, Senator Philip Ozouf, said that the media had got the original figure wrong at £400,000, and the actual amount, including interest, was £673,000 - 67% higher than was originally reported. He defended the loss, saying some recipients of loans from the Innovation Fund just won't be successful: "Some acorns will fail, some will bloom beautifully, but some will fail."

A few weeks ago it emerged that Logfiller had gone into liquidation. They were loaned the money from the Innovation Fund last year to support the development of, “...a sophisticated computer software solution that measures user experience of application and system use." They said that if successful, the product would create “a significant number of full time jobs in the Island."

But earlier this year it appeared that the company had left the Island, and it seems that no "sophisticated computer software solution" has ever emerged.

The Comptroller and Auditor General is currently putting a report together on the loan. 

In the States, Senator Ozouf said: “I want to be as open as I can. One of the difficulties has been the Logfiller loan – and the difficulties there - clearly happened as a result of a leak. The figure that has been used in the public domain is incorrect, I can say that. It is not £400,000, it is £500,000 for that and that’s in the States accounts. It is out in the public domain. It is £500,000, plus rolled up interest, so it is about £673,000.

“We are going to see more write-offs. I am looking at every single one of those loans and there are no more loans being issued.  

“All the Innovation Fund has done cannot be criticised and I have seen cartoons of me being on Logfillers (logs) but we need to be very clear about the responsibilities of politicians and the responsibilities of the professionals.

“Whose responsibility is it? I can say there is follow-up (checks) made now.”

Deputy Geoff Southern asked why Senator Ozouf found himself in a “delicate” position and were there other loans which have also failed.

Senator Ozouf said: “When you are dealing with an innovation fund, there will be failures. That failure is not necessarily something wrong. It shouldn’t be criticised because innovation is difficult, it is risky. Some acorns will fail, some will bloom beautifully, but some will fail. There should be no surprise about that. This assembly was under no illusions that there would be failures.

“Will I resign? Will I hold responsibility for a failure? My responsibility is to make sure the matters are dealt with properly.”

Deputy Southern asked: “I didn’t get an answer to my question, how much and to whom?”       

Senator Ozouf replied: “They are all businesses in a difficult situation. They were all businesses who would not have got financed by the banks in the time they were lent money.

“The total amount of capital outstanding is £2.12million. Logfiller has been written off. There were six loans and we are reviewing the progress of them. We don’t celebrate failure. We love doing it sometimes and we shouldn’t.

“There has been huge success in businesses being set up by Locate Jersey, Jersey Finance and Digital Jersey. I walk around and see businesses on a day to day basis and they are doing world-beating work for Jersey.”

Deputy Russell Labey asked: “The Minister has graciously accepted responsibility. Where does his fault feature on the time line?”

Senator Ozouf said: “I have signed Ministerial decisions on advice, not because we want to put £1,000 on the three-miler at Newmarket, but because we acted on advice. Is that advice right and has it been followed through, that is the crucial question and we will see that answered in the Comptroller and Auditor General’s report, which I have full confidence in.”