سکوت حیاتی: هنگامی که PFI و سرمایه مالی با مسئولیت پذیری مواجه می شوند
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Publisher : Elsevier - Science Direct (الزویر - ساینس دایرکت)
Journal : Critical Perspectives on Accounting, Volume 21, Issue 1, January 2010, Pages 1–13
During recent years, a wide spectrum of research has questioned whether public services/infrastructure procurement through private finance, as exemplified by the UK Private Finance Initiative (PFI), meets minimum standards of democratic accountability. While broadly agreeing with some of these arguments, this paper suggests that this debate is flawed on two grounds. Firstly, PFI is not about effective procurement, or even about a pragmatic choice of procurement mechanisms which can potentially compromise public involvement and input; rather it is about a process where the state creates new profit opportunities at a time when the international financial system is increasingly lacking in safe investment opportunities. Secondly, because of its primary function as investment opportunity, PFI, by its very nature, prioritises the risk-return criteria of private finance over the needs of the public sector client and its stakeholders. Using two case studies of recent PFI projects, the paper illustrates some of the mechanisms through which finance capital exercises control over the PFI procurement process. The paper concludes that recent proposals aimed at “reforming” or “democratising” PFI fail to recognise the objective constraints which this type of state-finance capital nexus imposes on political process.
Over the past 20 years, there has been a global trend towards the private sector financing of infrastructure projects (Benito et al., 2008 and Merna and Njiru, 1998). This process has been particularly pronounced in the UK, where by 2004 the Private Finance Initiative (PFI) accounted for as much as 13.5% of total public investment (HM Treasury, 2003). Although PFI originated during the Conservative rule, it only became prominent during New Labour's administration which, since its election in 1997, consistently emphasised its commitment to PFI based procurement (DETR, 1998, HM Treasury, 1999 and HM Treasury, 2003). New Labour's commitment to PFI has entailed a broad acceptance of the central role played by financial institutions in the procurement of public facilities. Accordingly, a Treasury publication notes that: Typically, third party credit providers are more risk-averse than equity providers and provide the majority of the funding. The PFI approach and process thus leads banks and other financial institutions who lend to PFI projects to play an important role in ensuring that proper due diligence is performed, all important risks are identified and properly addressed and allocated to appropriate parties. They will seek to have robust and rigorous contractual undertakings from private sector participants in PFI schemes and this is one of the reasons the PFI process delivers projects on time and to budget. (HM Treasury, 2003, p. 40) This emphasis on the use of private finance has been paralleled by largely unrelated government agendas, for example the Best Value regime, which have sought to encourage formal accountability procedures in the public sector bodies by introducing increasing layers of monitoring mechanisms such as performance indicators, audits, efficiency targets, annual reports, etc. Paradoxically, the accountability dimension of PFI procurement has, until recently, been peripheral to the mainstream of PFI research. This can be attributed, in part, to the UK debate on PFI being highly politicised (Harding et al., 2000) with supporters emphasising that private capital was making available infrastructure and services which would have otherwise not have been affordable (Debande, 2002 and Stone, 2001) and critics stressing the “faulty economics” of PFI (Broadbent et al., 2003, Broadbent et al., 2006, Froud and Shaoul, 2001, Ruane, 2000 and Shaoul, 2005) and its negative impact on the quality of service delivery (Dunnigan and Pollock, 2003, Glaister, 1999 and Mayston, 1999). This paper focuses on what could be called second-generation objections to PFI which centre primarily on the governance and accountability implications of this form of procurement. Our main argument is that the way PFIs are planned, structured and financed in order to meet private sector expectations together with statutory requirements for risk transfer challenges both public sector-based and accounting-based concepts of accountability. In other words, the PFI process neither meets broad stakeholder perspectives on accountability which are based on “dialogue with relevant interest groups affected by a particular policy to reach compromise and meet expectations” (Demirag and Khadaroo, 2007, p. 5; see also, Collier, 2005, Day and Klein, 1987 and Gray et al., 1997), nor fully complies with more narrow ‘professional’ criteria of private sector stewardship, whereby full information about the actions of the accountee are provided (Gray et al., 1996). While relying on different concepts of accountability, second-generation accountability criticisms have tended to emphasise three main issues; namely, problems associated with the complexity of PFI transactions, the monetarisation of public services provision and its long-term impact on the state as service provider. Focusing on the complexity of the financial arrangements underpinning PFI, a study sponsored by the UK trade union UNISON and written by Gosling (2004) noted that: The character of PFI schemes hides their reality from public gaze. Despite the use of public money, there is a veil of secrecy and a failure of accountability cloaking PFI and PPP contracts. This has been repeatedly commented upon the House of Commons’ Select committees and others. This makes it extremely urgent to determine whether Value For Money has been achieved … In addition to the opacity of the original PFI and PPP contract, we now have the additional obstacle to transparency and accountability of the secondary market. Investors are not only operating outside the limelight of publicity, they also see no reason why the public should be informed. (Gosling, 2004, p. 11) Gosling's analysis is intuitively appealing. PFI finance is opaque not only because of the complexity of PFI contracts, but also PFI investors are relational block investors who have little accountability even to financial markets and their ultimate investors. Yet there is also a problem with this argument. While the financial complexity of the PFI procurement process can hamper democratic oversight, the critics of PFI have typically failed to demonstrate that pre-PFI procurement in the UK was markedly more open. Perhaps more compelling, therefore, are critiques of PFI which focus its far-reaching impact on the state-market relationship in public service provision. Investigating the impact of the contractual commitments typical of PFI contracts on the ability of the public sector to deliver services, Froud (2003) has argued that PFI procurement is not compatible with traditional assumptions about the appropriate role of the public sector (see also Broadbent and Laughlin, 2003). Rather than exploring the issues of accountability in PFI directly, Froud has centred her analysis on the question as to how the contractual management of risks in PFI projects impacts on the ability of the state to respond flexibly to the needs of the public. In this context, Froud argues that the contractual treatment of risk in PFI undermines the traditional role of the government as risk bearer of last resort: Under PFI, risk is seen as the chance of incurring increased costs and is managed by the application of an approach based on inter-firm contract relations such that, in principle, risks are distributed to those best able to bear them. … There is little explicit recognition in this that government as a contracting party has particular characteristics that make it different from firms or individuals in terms of responsibilities, interests and modes of operation … This has practical appeal, as it is clearly simpler to employ a technicist approach to consider the risks from and to a particular public sector business unit or project, than to evaluate the issue of risk and uncertainty at the level of a public service. But it denies the traditional nature of government in taking responsibility for planning, organising and monitoring public service provision and responding to internal and external change. (Froud, 2003, p. 585) Froud's analysis complicates the issues of PFI as accountability-limiting procurement approach. Implicitly Froud proposes that PFIs are not lacking in accountability because criteria such as Value For Money (VFM) are too ambiguous to protect stakeholders, but rather because the rigid contractual framework, which underpins PFI schemes and ensures their attractiveness to private capital, will make it difficult for the state to meet its role as service provider of last resort. Relying on a structurally more rigorous analysis of the post-modern capitalist state, Kerr (1998) has argued that the rhetoric of PFI on improving efficiency and public services has come to mask the active depoliticisation of state-sponsored service provision. According to Kerr this depolitisation is part of an effort of the state to subjugate the service provision labour proves to the rule of money: In this way, the PFI marks a fundamental transformation of traditional public sector procurement methods, one in which the traditional and clear distinction between public and private activities and spaces is becoming obscured. … This means that the public sector is now forced to think more objectively about the services it requires and also has to develop techniques to evaluate the complex private sector bids which have to be shown to provide Value For Money and transfer of risk. The private sector also had to come to grips with new organisational forms and methods of appraisal. … In this way then, the PFI is attempting to transform the “public” service provision labour process in, at least, two ways. Firstly, through the requirement to define and monetarise risk and to quantify future life-cycle costs and future service needs, the PFI is attempting to force greater objectification and “marketisation” into the provision of “public” services. Secondly, through displacing the service provision labour process from the public to the private sector, the PFI is attempting to subordinate that labour process more effectively to the rule of money. (Kerr, 1998, p. 19) Kerr's suggestion that PFI acts as an instrument for the objectification of services and the marketisation of labour has concrete accountability implications. If PFI forces the public and private sectors to apply market-based approaches to decisions on service provision, then PFI is likely to foster processes which have the potential of undermining socially conscious labour practices which have evolved in the public sector. This in turn can lead to a situation where public expectations of fairness and social justice are no longer met. While the de-flexibilisation and marketisation arguments of Froud and Kerr serve to highlight the adverse effect of this type of private capital involvement on domestic governance, they ignore what is arguably a more fundamental issue, which is the fundamentally finance capital-driven agenda which underpins the PFI process. PFI, at its root, is neither about eroding the distinction between public and private, nor is it about the state shunting traditional responsibilities in an effort to alter its overall political economy. PFI is perhaps best defined as a deliberate strategic process initiated by politicians faced with a democratic mandate to deliver services, and powerful institutions and organisations able to impose capital-rationing through limits to the tax base and to articulate the demands of powerful corporate interests. As such, it is part and parcel of the PFI agenda to create new profit opportunities for finance capital, irrespective of the negative effects which the creation of these profit opportunities will have on other stakeholders, including consumers of public services and public sector employees. If de-flexibilisation and marketisation are amongst the outcomes of PFI, then this is a by-product of a much broader international economic agenda, but not the raison d’etre for the adoption of this agenda itself; after all, if de-flexibilisation and marketisation were of primary political importance, they could be fostered by the state more effectively, without the initial direct involvement of private capital, via legislative intervention, such as mandatory contracting out requirements and/or the privatisation of a broad range of public services. Linked to the profit-opportunity generating nature of PFI are certain processsual characteristics of PFI, chief amongst which is the dominance of finance-sector driven risk-return criteria of finance capital which takes precedence over the needs of the users of public services. These risk-return criteria are usually taken to imply that the private sector is “better at taking risks”. This is not so. Risk-return is a utility driven economic model, predicting that rational decision makers minimise risk and maximise returns. While it is likely that the private sector actors involved in PFI deals are very good at this, this does not imply that the risk exposure of the public sector is effectively minimised. What can be demonstrated, however, is that, on the micro-level of processual decision-making, financial service providers exercise significant influence on the financial structure of PFI transactions, the risk allocation between PFI partners and other operational parameters. Although their influence is not necessarily concerned with the on-or off- balance sheet treatment of particular PFI transaction, the risk allocation patterns imposed or influenced by the financiers can result in on-balance-sheet treatment as demonstrated by case study A, an outcome which for political and economic reasons is undesirable for the public sector client. In other words, rather than lacking accountability on account of an inadequate involvement of stakeholders or on account of a reduced role of the state authorities in decision making, PFI systematically undermines accountable decision-making by subjecting key investment and procurement decisions to the risk-return criteria by financiers. The following section of this paper expands and elaborates on this basic argument. It briefly maps out the contemporary role of PFI as a profit-opportunity generating mechanism. Section two elaborates on the implications of finance capital involvement on institutional decision-making and discusses some of the key PFI risks which typically enter the risk-return calculations of financiers. Sections three and four each present a case study of a recent PFI project with a special focus on the hidden deal-shaping role of financial institutions1. Section five concludes by highlighting the inherent contradictions which arise from the desire to deliver “modern” public services while creating new profit opportunities for private finance.
نتیجه گیری انگلیسی
Despite the differences between the two schemes, the approaches of the financial institutions to the “financial management” of these projects were broadly similar. The key consideration of the financiers was that, under PFI procurement, their risks were allied with the risks of the borrower, the SPV. Therefore, a series of actions were taken to ensure that an “acceptable” approach to risk management had been taken. In this context, the banks scrutinised the contractual risk allocation while attempting to ensure that all important risks were passed through the SPV to the parties that had definite control over them. Meanwhile, the capital providers themselves largely steered clear of substantial risk taking. Very few residual risks were allowed to remain with the SPV and even for those risks, the financiers required strong evidence, particularly in terms of past experience, skills and resources. For the financiers, the “proper” allocation of crucial commercial risks was a key criterion for determining the “financeability” of the particular transaction. Most risks were investigated on the basis of the full contractual documentation, including the main project agreement and the supplementing sub-contracts. Once the main project risks were mitigated, the residual risks were then assessed in detail in the course of the due diligence. In case of the first project, the risk assessment process conducted by the financial services providers led to the allocation of demand risk to the client, which ultimately made it impossible for the project to be treated off-balance-sheet. In case of the second project, concern by the financial services providers led to the introduction of construction bonds and other guarantees, which arguably increased the cost of the project to the public sector. Past research has attributed comparatively little importance to the role played by financial institutions in PFI procurement. This omission is problematic for several reasons. Firstly, any study which underplays the role played by financial institutions in PFI procurement is likely to ignore the genuine material considerations which make and break PFI deals. PFI's, viewed from an economic perspective, do not stand in a financial vacuum. Rather, their scope and feasibility is intrinsically linked to the expectations of those operating more or less collectively within financial markets. As such, the feasibility of conducting PFIs in general depends on those market conditions which, at a given time, favour the financing of PFIs, but will not necessarily do so in the future. Secondly, decision making on PFI projects is hardly a political process in the traditional sense. Rather, when due attention is paid to the role of financiers in PFI, it is a process which is conditioned primarily by the expectations and requirements of individual suppliers of finance capital. These expectations take precedence over other considerations, including the public sector's quest for innovative or high quality services. In this sense, the relevance of research into PFI risk management arises not from its descriptive value, but rather from the fact that the views of the financial sector companies on the riskiness of projects and appropriate measures for risk mitigation concretely constrain the range of possibilities available to individual PFI projects. As principal players in PFI projects, senior debt providers determine to large degree what presents a commercially acceptable project. As such, they can dictate which measures other PFI participants must undertake in order to gain their approval. The application of these approval criteria is implicit to the PFI procurement process. In other words, financial service providers do not upfront prescribe how others must structure a project in order to ensure participation in a project and the availability of finance. However, where these requirements are not met, finance will ultimately not be available. With regard to the issue of accountability in PFI projects, it must therefore be understood that the prerequisite of obtaining capital from the private sector will inevitably limit levels of openness and discussion on crucial financial and project parameters. Financial services providers rarely disclose the details of their financial models or their risk assessment procedures. What is relevant to them are not minute project details but rather questions about the allocation, mitigation and retention of key risks; and very few of these details are subject to public scrutiny. PFI procurement, at least in theory, is premised on the assumption that mutual gains will arise from the partnership of public and private sector organisations (HM Treasury, 2003). Against this rhetoric of PFI, as well as the assumption that there are readily available recipes for introducing accountability into PFI, stands the simple fact that these deals can only be concluded if the risk-return criteria set by the financiers are met. As the UK enters a second decade of PFI procurement, it is perhaps appropriate that we reflect more carefully, not only on its social and economic costs, but also on its increasingly obvious negative political implications. Today, PFI procurement in the UK, and elsewhere, carries the possibility of establishing a new legacy of anti-democratic public sector governance which has the very real potential of undermining what little is left of the democratic aspirations of post neo-liberal societies.