Document no. 3:7 (2004–2005) The Office of the Auditor General’s study of the sale of Lista Air Base was submitted to the Storting on 18 April 2005. The purpose of the study was to assess whether the disposal of Lista Air Base was undertaken in accordance with the decisions and intentions of the Storting. The assessment comprises commercial aspects, the relationship to Farsund Municipality, the facilitation of business development, and financial assumptions.
In September 2002 the Armed Forces sold Lista Air Base to the company Lista Flypark AS for the sum of NOK 3.5 million. As a deduction from the agreed sales amount a total compensation of NOK 14.4 million was granted for the development of business. This resulted in a net disbursement of NOK 10.9 million by the state.
The study shows that neither a valuation of the entire property nor a public announcement of the intended sale was made prior to the start of the negotiations with Lista Flypark AS in March 2002. The market was neither aware of a revised valuation undertaken in June 2002 fixing the value at NOK 11 million nor of the compensation amount of NOK 14.4 million.
There is no documentation available indicating that the valuation of NOK 11 million was used as a basis for calculating the sales figure. The Office of the Auditor General is of the opinion that documentation proving that the final sales amount of NOK –10.9 million reflects the market value has not been produced and questions whether the sale has been undertaken in accordance with the authorisation granted by the Storting.
The relationship to Farsund Municipality
Transfer to municipal ownership constitutes the single exception granted by the Storting from the precondition that sales should be based on market value. In their negotiations with Farsund Municipality on the transfer of Lista Air Base during 1999 the Norwegian Defence Estates Agency assumed a valuation of NOK 200.7 million. At that time Lista Lufthavn AS had the prior option to buy the entire property which had been valued at NOK 25 million. The study also shows that in 2002 the municipality did not receive the opportunity to assess its interest in the air base in the light of the new preconditions that resulted in a net disbursement by the state of NOK 10.9 million. Against this background the Office of the Auditor General questions whether the cooperation with Farsund Municipality has been maintained in accordance with the Storting’s intentions.
Facilitation of business development
The Office of the Auditor General points out that the Storting’s intention of having “ a development alternative” was to facilitate business development during a ten-year period of readjustment. Neither the purchase agreement with Lista Flypark AS signed in 2002 nor the agreement signed in 1996 to lease large parts of the property to Lista Lufthavn AS seems to have contributed to creating investment in business development during the specified period of readjustment. In light of the foregoing the Office of the Auditor General is of the opinion that the Armed Forces have facilitated business development only to a limited extent in accordance with the preconditions of “the development alternative”.
In Proposition no. 50 (1994-95) to the Storting, it emerges that the costs related to the decommissioning of Lista Air Base had been estimated at approximately NOK 50 million. This includes costs of NOK 18 million for upgrading the drainage facilities in the area. Accounts show that a total of NOK 35.8 million has been spent. Of this sum, a total of NOK 0.4 million has been spent on upgrading drainage facilities. The Office of the Auditor General assumes that the work undertaken coveres the required repairs as foreseen in Proposition no. 50 (1994-95) to the Storting.
Response from the Ministry of Defence
In its response to the Office of the Auditor General, the Ministry of Defence states that this failure to comply with the requirement of making a public announcement pursuant to the Sales Regulations is unfortunate. The Ministry is also dissatisfied with the fact that the Norwegian Defence Estates Agency has deviated in its negotiations with a single buyer from the sales amount determined by the surveyor without producing satisfactory documentation for this decision. Further, the Ministry of Defence regards with concern the fact that the Defence Estates Agency is unable to provide minutes of the negotiations that took place, and furthermore is unable to document formally that the price agreed between the parties reflects the correct market value. The Ministry points out that the Norwegian Defence Estates Agency has initiated an 18-point programme for future quality assurance of procedures for the sale of real estate. The Ministry of Defence will follow up this programme in its management dialogue with the Norwegian Defence Estates Agency.
Delayed public announcement of documents compiled by or for the Office of the Auditor General pursuant to Document 3:7 (2004-2005) has been lifted, cf. the Governmental Audit Act, section 18, subsection 2.