The Hong Kong billionaire Li Ka-Shing’s offshore-controlled family companies could have channelled as much as £630m in the past three years out of the UK electricity distribution network blamed for the Christmas blackouts.
The Independent’s inquiries show that the Li family empire’s Bermuda, British Virgin Islands and Hong Kong companies pulled out £130m and £135m in dividends from UK Power Networks Holdings in 2011 and 2012 respectively. Analysts said there was nothing to suggest they would not be taking out a similar amount last year.
Meanwhile, they have made a loan to UKPN of £774m at an interest rate of nearly 10 per cent – thought to be costing £77m a year in interest repayments.
The accounts show how the Li businesses, and UKPN’s £1.7m-a-year chief executive Basil Scarsella, have been making massive profits from the company they bought in October 2010. For the last two months of that takeover year alone, Mr Scarsella was paid £300,000.
Accountants said the dividend payments and loans would be extremely tax-effective for the Li family empire. A UKPN spokesman declined to comment on the company’s finances but said it paid in full all UK taxes owed.
Earlier this week, The Independent revealed how UKPN made an underlying profit of nearly £1bn in 2012, while cutting staff numbers.
A spokesman for the GMB union said much of the engineering work that used to be done in-house is now subcontracted out with a resulting loss of local expertise. The spokesman said: “What was a very robust system has been run down to the point where people are waiting five or six days to get reconnected. Basically the people who knew the lines, the substations, the transformers have gone so they are bringing in outsiders relying on maps.”
UKPN responded that all redundancies were “from back office, not … engineering roles.”
The Li family empire is not alone among the power-lines monopolies funnelling millions of pounds overseas from Britain’s energy infrastructure. SP Transmission, owned by Spain’s Iberdrola, paid £73m in dividends to its parent company over the past two years, while Western Power Distribution paid £169m in dividends up to its US parent, PPL, between 2011 and 2012.
Neither is UKPN alone in having paid way below the standard UK corporate tax rate of more than 20 per cent. Northern Powergrid Holdings’ accounts say its “effective tax rate” in 2012 was just 7.1 per cent.
Much of the UKPN cable-fixing work has been contracted out to the engineering firm Balfour Beatty and a specialised utilities servicing business called Freedom, the GMB said. Freedom forms the bulk of a business called EnServe which is owned by the private equity firm Cinven and chaired by Sir Roy Gardner, former boss of British Gas-owner Centrica.
The company bosses are likely to be closely quizzed on these and other issues when they appear before MPs on the Energy Select Committee in the coming weeks.