Strategy & Operations » Leadership & Management » Interview: Falkland Islands Government ex-FD and CEO Keith Padgett

LAMENTING THAT Financial Director’s budget won’t accommodate a flight to Port Stanley, I ask Keith Padgett, chief executive of the Falkland Islands Government (FIG) since his promotion from director of finance in March, to paint me a picture of what he sees from his office window: “I can see the bay that is Stanley Harbour; on the other side the rolling hills and mountains beyond it. Straight in front of me is a flagpole with the Union Jack on it.”

Google Maps adds some more: there’s the 1982 Memorial Wood, the Falklands Brasserie, the Victory Bar. Two blocks over is Victory Green. Zoom out of the port inhabited by most of the Islands’ 2,478 residents and suddenly there’s just wilderness – nothing but long, lonely highways crossing vast tracts of land, where half a million sheep graze and where no trees have ever grown.

“It’s a place you either like straightaway, or you don’t. There’s no half measures here,” says Padgett. “Everybody knows who you are; everybody knows what I do. If I go to my local pub, I end up talking about government stuff in some way.”

Padgett arrived in the Falkland Islands in 2001 as its treasurer, fax machine in hand, advised of its perilously slow dialup internet. A Barnsley boy and local government finance careerist, he married in Port Stanley (the Islands’ governor, who acts as the Queen’s representative, gave the bride away), and little more than a decade on, Padgett has the future of his wedding guests in his hands. As for the internet connection, it remains one of their biggest problems, he admits.

Big opportunities

Its biggest opportunity is the quest for oil. As Argentina reignites the Falklands sovereignty debate, Padgett is studying the effect a major oil find could have on the economy, environment and way of life so cherished by locals.

Five exploration companies drilling around the Islands are hoping to find between 8.3 billion and 60 billion barrels of oil, three times what remains of the UK’s North Sea claim. A report published in February by analysts Edison Investment Research suggested FIG could see a $180bn (£116bn) windfall in tax royalties from oil. That compares with its current main source of income, fishing for Illex squid, which brings in $23m annually, demonstrating the pressure under which Padgett currently finds himself.

“I’ve commissioned a study – I call it the ‘ringmaster’ study – and what I want from it is for someone to come and tell us what kind of circus we might have down here,” says Padgett. “There’s going to be rapid expansion of the population and the amount of money in the economy, so it will affect us in all sorts of ways, and we need to be prepared for that.”

The expansion has already started. Padgett reported a million-pound budget surplus last December on the back of drilling income (as well as a bumper Illex squid crop). When the budget was prepared, there weren’t even concrete plans to drill. In the next financial year, Padgett expects another surplus, again from drilling revenues.

While he has received assurances from the industry that onshore effects will be limited by keeping floating extraction platforms and storage kettles, he will spend on readying the Islands to provide a support industry to rigs and vessels. But the tension between the potential for historic economic development and preserving a way of life is palpable.

“We need to spend on dock and port facilities, and short-term accommodation – and we’ll have to look at our immigration policies,” he says.

All this upheaval could change the Falkland Islands to a very different place by the end of his tenure, but Padgett expects the status quo to remain. “People down here are very conscious that they don’t want oil to change the place significantly. That is going to be a difficult challenge. We are not going to allow a free-for-all – it will not just be a case of grabbing every drop as quickly as possible,” he insists.

Having climbed from treasurer to deputy financial secretary and then to financial secretary proper, in 2008 Padgett felt ready for the CEO job and applied. He lost out to Tim Thorogood, but four years later had built the networks to demonstrate his non-financial skill.

“Although I was in charge of treasury, I was spending a lot of time in policy advice in all kinds of areas – running all kinds of things – and other service managers were looking to me for advice. So I had became a sort of de facto CEO some years ago,” he explains. “Everybody knew me and I knew them. I knew what the Islands needed.”

Village green feel

A place where the entire machinery of government is run by 550 people is going to have the village green feel. Padgett and the other members of the Legislative Assembly take on several portfolios at once; the director of education doubles as director of health.

“This place is different in that people expect me, as chief executive, to get involved in all kinds of things you’d employ a specialist to do in a UK organisation,” Padgett admits. “We’re an island that is very resourceful. One body does everything central government, county councils and parish councils do. Everybody turns their hand to all sorts of things, and that applies all the way through our society right up to the top levels of government. It makes life a lot more complicated.”

With the Argentine sovereignty row – which analysts Edison say is the single “proverbial spanner in the works” for FIGs’ oil ambitions – looming large, Padgett could expect a change to his daily life. He is “absolutely positive” that Argentina will increase the pressure, but says it makes little impact on his work.

“It’s frustrating and it’s annoying – we have shortages of things because of political interruptions – but they aren’t things we can’t live without,” he says. “Argentina has reneged on almost every agreement we had with them anyway, so there’s little else that they can actually do. We’re not particularly concerned and our major partners in the oil industry are also not too fussed.”

Padgett even thinks that Argentine president Cristina Kirchner’s provocations on the sovereignty of the Falkland Islands are helpful. “The amount of rhetoric Cristina produces gives us a world stage to say our piece. Before that, we had a difficult task getting anyone interested in the Falklands side of the argument,” he concludes. ?