Q11 Chairman: Did you inform them about your intention to hold these properties offshore?
Mr Hopkins: We did.
Q12 Chairman: At what stage?
Mr Hopkins: November 2000.
Q13 Chairman: How close to the beginning of the process was this?
Mr Hopkins: It was in between preferred bidder and close of contract.
Q14 Chairman: Was it always your intention from the beginning of this process to hold these properties offshore?
Mr Hopkins: Yes, it was.
Q15 Chairman: As far as you were concerned, at the beginning of the process you simply were not asked by the departments so it is down to them, is it?
Mr Hopkins: We followed all the guidelines of the bidding process and -
Q16 Chairman: Given that your shareholders were based offshore, the departments should have realised from the beginning that it was natural for you to hold these properties offshore. Is that a fair question, Mr Varney? You were just grotesquely naïve, were you not?
Mr Varney: I think it is easy to be very clear after the event.
Q17 Chairman: What do you mean it is clear after the event? You do a deal with a company whose shareholders are largely based offshore. This results in massive, bad publicity for the Revenue and then you tell us that we should be wise after the event.
Mr Varney: You asked me whether it was possible to foresee that. I always think that, with the benefit of hindsight, it is clear that it should have been foreseen.
Q18 Chairman: Why do we need the benefit of hindsight to foresee it? Was it not clear at the time? Do you not have some of the brightest brains in this business?
Mr Varney: I think even with the brightest brains it is my experience often that you find events afterwards trip you up. This is one of them.
Q19 Chairman: They did what to trip you up?
Mr Varney: I think what happened was the concentration was on getting the estate into a shape where a PFI deal could be undertaken with all the lessons learned from the DWP experience. One of the lessons that was not learned was obviously the possibility of a tax shelter.
Q20 Chairman: What was this argument about tripping you up? I do not understand that.
Mr Varney: As you rightly said, after the event that was the feature of the deal which most people have concentrated on.