Supplementary memorandum from Permanent
Under Secretary of State, Foreign and Commonwealth Office
THE FCO GLOBAL
ESTATE
I am writing to follow up my appearance before
the Public Accounts Committee on 1 March with points on which
I undertook to send you further information.
Accounting treatment of asset sales (Questions
83-86)
Mr Curry asked about the accounting principle
used for asset sales, and whether we convert foreign exchange
receipts from sales into Sterling and repatriate proceeds, or
whether they are re-invested and used locally. The answer depends
on three factors: the size of the sales proceeds; which local
currency is involved, and the local banking regulations in that
country. Two examples demonstrate this:
— Madrid—the largest of the sales
last year where most of the Euros realised were sent back to the
UK. Some were retained locally, to offset the need to spot purchase
further Euros to fund the post;
— Singapore—a proposed sale here
will result in Singapore dollars being received but there
are local restrictions on conversion of large sums to Sterling.
So this might result in a "staggered" conversion into
Sterling.
This treatment is separate from the way in which
the accounting for sales proceeds works. That is all to do with
the rate at which the initial receipt in local currency is converted
to Sterling (which will be the prevailing corporate rate at the
date of receipt). The later handling of the foreign currency,
and its potential conversion into Sterling will result in currency
fluctuations handled through the gain/loss on foreign exchange
accounts (and not fixed assets).
CSR target for asset sales (Questions 97-98)
Mr Bacon asked about the three year CSR target
for asset sales. The Treasury target for asset sales for the current CSR
period is £54 million. Net receipts for years one and two
were £15.5 million and £59.5 million respectively.
Receipts this financial year, to the end of Q3, are £5.6
million. We are confident of reaching an internal target of £8
million for this financial year. We therefore expect to have generated
£83 million in capital over the three years of the current
CSR period.
Buildings in Italy (Questions 26-27)
Mr Bacon also asked about our representation
to UN bodies in Italy, and whether the situation there was similar
to Brussels, where the UK delegation shares space in the NATO
building alongside other delegations. It is not quite the same.
As I said on 1 March, we do not have a separate building in Italy
for our mission to the UN bodies (FAO, WFP and IFAD) there. The
UN operates out of its own building, with no delegation space
in it. We have, however, made economies in that the DFID representation
to the UN agencies based in Rome moved into the Embassy building
on 1 March, having previously rented office space in the centre
of Rome. As well as providing better value for money this makes
better use of the Embassy as a platform for "one team"
working.
Buildings occupied since 1950 (Question 66)
Mr Mitchell asked which properties we are in
now which we also occupied in 1950. The table below shows those
properties we have owned since 1950 and their acquisition date.
Post
| Type of property | Year of acquisition
|
Addis Ababa | Compound (incl offices, residence and staff accommodation)
| 1904 |
| Alexandria | Compound (incl office & residence)
| 1909 |
| Ankara | Office, residence and compound
| 1926 & 1946 (compound) |
| Athens | Residence and office
| 1936 & 1950 |
| Baghdad | Office and compound
| 1921 & 1931 |
| Bahrain | Office, residence and compound
| 1900 |
| Bangkok | Compound (incl office & residence)
| 1922 |
| Belgrade | Office and staff flat
| 1925 |
| Berne | Office and staff flats
| 1918 |
| Bilbao | Church | 1927
|
| Brussels | Residence | 1947
|
| Bucharest | Compound, offices and church
| 1908-1912 |
| Buenos Aires | Office, club, residence & staff flat
| 1938-1945 |
| Cairo | Compound (incl office & staff flat)
| 1916 |
| Canberra | Staff accommodation
| 1945 |
| Cape Town | Residence | 1937
|
| Dakar | Compound (incl office & residence)
| 1904 |
| Damascus | Undeveloped site
| 1947 |
| Dubai | Compound (incl office, residence, staff accommodation and amenities)
| 1950 |
| Helsinki | Residence, house & garage
| 1925 |
| Ho Chi Minh City | Office |
1928 |
| Karachi | Compound (incl office, residence and staff accommodation)
| 1950 |
| Kuwait | Compound (incl office & residence)
| 1931 |
| La Paz | Residence | 1950
|
| Luanda | Compound (incl office, residence and staff accommodation)
| 1921 |
| Mexico City | Office | 1910
|
| Montevideo | Residence and garden
| 1923 & 1946 |
| Moscow | Residence and staff accommodation
| 1929 & 1942 |
| New York | Residence | 1945
|
| Oslo | Compound (incl residence & staff accommodation)
| 1906 |
| Ottawa | Residence and staff accommodation
| 1930 |
| Panama City | Residence |
1921 |
| Paris | Residence | 1815
|
| Paris | Office | 1947
|
| Prague | Office and residence
| 1926 |
| Pretoria | Compound (including office)
| 1938 |
| Rangoon | Compound (incl office, residence and staff accommodation)
| 1948 |
| Riga | Compound | 1930
|
| Shiraz | Compound | 1928
|
| Sofia | Residence & garage
| 1910 & 1913 |
| Stockholm | Residence | 1913
|
| Tehran | Compound (incl offices, residence, garage, staff amenities and accommodation)
| 1932-1934 |
| Tel Aviv | Office and residence
| 1949 |
| Tokyo | Staff amenity | 1934
|
| Tunis | Residence | 1914
|
| Vienna | Office and residence
| 1938 |
| Washington | Residence |
1920s |
| Washington | Office | 1946
|
| |
|
Damascus (Questions 15-20)
Mr Bacon also asked about the cost overruns on our new Embassy
project in Damascus. The FCO Estates Committee is considering
the best way forward with the project and I will write to
you again shortly once we have taken a decision and the additional
costs involved are known more precisely.
Madrid (Questions 21-24)
Mr Bacon asked me to send you a note on the flood in our
Embassy in Madrid and what the FCO's financial liability might
be. We have not yet received any claims from the landlord or other
tenants in the building (Torre Espacio). We have appointed a loss
adjuster and procured independent professional engineering
advice from the British property and construction consultants
Ridge (who visited the Embassy in February). Ridge are about to
let us have their findings. We will inform the committee of any
liability once all claims have been assessed and settlement reached.
We will be defending our position robustly to minimise the FCO's
exposure through our local loss adjuster.
Estates Strategy
Finally, we are finalising our new estates strategy document,
and I will send you a copy shortly.
I am sending a copy of this letter to the Chairman of the
Foreign Affairs committee.
15 March 2010
| 
