West Wales News Review is taking a break over Easter — back at the end of April
The dangers inherent in upsetting people who are richer and more powerful than you have not been removed from our particular political system.
This week Jacqui Thompson, the Llanwrda blogger who in 2011 was arrested, handcuffed and detained for trying to film part of a public council meeting on her mobile phone, was in court to argue against the immediate forced sale of her family home, owned by her husband, forestry worker Kerry, and herself.
The court appearance was the latest episode in the long-running conflict between Carmarthenshire County Council’s chief executive Mark James, one of the highest paid government officials in Wales, and housewife and (unpaid) community councillor Jacqui.
Mr James secured a publicly funded indemnity to sue Jacqui for libel, specifically for calling him a Pinocchio and for referring to a slush fund. His action was in response to Jacqui’s high-risk decision to sue him for libel, after he had criticised her and her family on another blog, Madaxeman, run by Mr Martin Milan.
A key factor is the elected councillors’ decision to offer an indemnity for Mr James’ libel claim. The Wales Audit Office said this was unlawful, and it is forbidden in The Local Authorities (Indemnities for Members and Officers) (Wales) (Order) 2006 — but apparently allowed under a catch-all clause of Section 111 of the much earlier Local Government Act 1972, which permits authorities to do “anything (whether or not involving expenditure …… ) which is calculated to facilitate or is conducive or incidental to the discharge of any of its functions”. Even rob a bank, perhaps, the wording is so permissive. The council relied on the loophole contained in the 1972 Act, as described in People First’s article below:
The Executive Board meeting which agreed to the indemnity, as reported above, heard that any damages would be paid to the council (paragraph 12, sub-section i).
Mr Justice Tugendhat, at that point soon to retire, awarded Mr James damages. In his opinion — and libel is often all about opinion, about balance of probabilities, not hard evidence — Mr James was all right and Jacqui was all wrong. The judge’s words prompted Jacqui’s insurers to cancel her conditional fee agreement, leaving her personally liable for every £. She cannot pay it all, even if the family’s bungalow (which has an agricultural tie) is sold.
Last week the judge in the County Court, Carmarthen, declined to allow Mr James permission to sell the house immediately. Instead, there is a ten-year stay of execution, and Jacqui has to pay £250 a month towards the damages bill of £25,000 plus interest and fees, a total around £36,000 before the County Court hearing. The total now exceeds that by over £14,000, because the judge added the latest fees to the damages. Even so, it’s not as much as the nearly £22,000 which Mr James’ team wanted.
Mr James was supposed to pay damages over to the council. That was the arrangement when the indemnity was agreed. Yet last week he appeared to have changed his mind. The court heard, through his counsel, that he could “stuff the money in the gutter” if he wanted. That’s not what the Executive Board agreed to!
Elections are coming, on May 4th. The Executive Board will have some changes due to retirements, and perhaps after the vote there will be a completely fresh line-up. Hopefully the new board will remind themselves of paragraph 12, sub-section i.
Especially as residents all over the county are looking at their new Council Tax bills and wincing.
Announcing the closure of the Llangadog recycling centre, operated by All Waste Services, Carmarthenshire County Council’s busy press office stated “Alternative arrangements are being made to provide recycling banks for residents at Llandovery Rugby Club”.
Not alternative at all, according to the rugby club, which has issued a sternly worded statement as follows:
“When CCC [Carmarthenshire County Council] approached the Rugby Club seeking an additional location for recycling skips in the Llandovery area the Club’s Directors asked whether it had anything to do with the future of the service available in Llangadog and we were assured by CCC officers that there was a need for additional facilities in Llandovery and the approach had nothing to do with the facility in Llangadog.
“The Club was willing to accommodate the request as it meant additional facilities for Llandovery and surrounding area.
“The Club was not aware that the Llangadog facility was closing until a press release was issued by CCC. We were not consulted on the wording of the press release issued by CCC which can be interpreted as implying that the new unit at the Rugby Club replaces the Llangadog facility.”
Llandovery Rugby Club’s statement also makes clear that cans, glass and paper will be the only materials recycled there, and urges the county council to “identify, at the earliest opportunity, adequate recycling facilities for the communities around Llandovery”.
The council’s unfortunate press release highlights the dangers of reporting to cast the best possible light upon events.
In this case, the rugby club saw not illumination but a mirage.
Alternative facts? A less polite term may come to mind.
Directors Remain Optimistic
The disappointing financial repercussions of the Scarlets’ super-sized stadium at Trostre, Llanelli, threaten the capability of Scarlets Regional Ltd to continue as a going concern, in the view of auditors Broomfield & Alexander.
The accounts for the year to June 30th 2016 show a pre-tax loss of more than £1.5 million, 50% greater than the previous year’s loss of just over £1 million.
The directors have invested in players, and the Scarlets have played pretty well in the current season. They stand 5th in the Pro 12 at the time of writing, below Leinster, Ospreys, Munster and Ulster – but 5th is not 1st, and there is still a way to go.
Broomfield & Alexander point out that, at the end of June 2016, the company’s net current liabilities exceeded assets by £2.718 million. In their view, this indicated “the existence of a material uncertainty which may cast significant doubt about the company’s ability to continue as a going concern”.
The auditors also question the £9.394 million value of the stadium as reported in the accounts, the implication being that the valuation is too high and may be impossible to realise if Scarlets Regional runs out of money. The stadium, which opened in November 2008, cost £23 million to build.
Despite the Scarlets playing lively rugby, the average gate for Pro 12 home matches in 2015-16 was 7,353, including the 4,000 or so season ticket holders, although the stadium can seat 14,870. The wide expanses of empty seats show that the claim ‘build it and customers will come’, a refrain which has been heard inside Carmarthenshire County Council, is wide of the mark.
The Scarlets owe the county council £2.614 million, which is due for repayment in 2023. Total equity in the rugby company continues to fall and at June 30th 2016 was down to £2.640 million, against £3.826 million a year earlier and £4.169 million the year before that. The county council’s investment on behalf of the people of Carmarthenshire is looking uncertain, despite the fact that a top notch rugby side brings non-financial benefits such as sporting confidence and local pride.
The board of directors, who have dug deep into their pockets to keep the rugby region going, remain optimistic, according to the accounts. Chairman Nigel Short, of Penderyn Distillery, wrote of the board’s determination to “continue to invest in development of talent”, although this had led and could well lead again to the business making a loss.
The directors “have a reasonable expectation that the company has adequate resources to continue in operation for the foreseeable future”, they report in the accounts.
Those resources are likely to include more of their own money. Perhaps a lot more.
Down on the marshes at The Corran Resort and Spa, Laugharne, at the development into which investors – including pension savers — poured over £19 million and lost nearly all of it, the hotel management are advertising multiple job vacancies, for a receptionist, therapists, housekeeping supervisor, spa cleaner, and food and beverage team members.
The recruitment boom comes after the Financial Conduct Authority has investigated former owner Kayboo Ltd.
Keith Stiles, a director of the insolvent Kayboo, bought the hotel through his new company Glendore Real Estate Ltd for £150,000 in a pre-pack deal just before Kayboo went into administration.
The administrators, HBG Corporate, took over on October 18th 2016 but are now seeking creditors’ permission transfer the steaming hot potato to Robert Dymond and Lisa Hogg of Wilson Field Ltd of Sheffield, for a creditors’ voluntary liquidation.
Liquidation has been held up since November, while the Financial Conduct Authority investigated “various matters surrounding the company”. The results of their investigations have not been revealed.
Not that there is much left to liquidate. The administrators say that “For the period 12 November 2016 to 8 March 2017, the Joint Administrators have received £33 of interest into the estate bank account, held for the benefit of the creditors.”
HBG Corporate clocked up £47,975 in fees — £17,000 of which have been paid — and £33,753.31 in disbursements, totalling £81,728.31. Administering a bust company is an expensive business.
Valued public service lost
Yet another blow for the people of north-east Carmarthenshire—Llangadog’s recycling centre is closing on March 31st
The centre, run by All Waste Services, achieved very high recycling rates, between 80% and 85% in 2014, when the county average was 55%. This was above the all-Wales target of 70% by 2025. When operating at its peak the centre provided some 10 jobs for local people. Opening hours were long and there seemed to be a bin for all types of waste, except for potentially hazardous items like asbestos roofing sheets.
Hefin Roberts, head of All Waste Services, said in 2016 that the operating budget was halved in 2013-14, and prices for recycled materials also dived, making it impossible for the centre to break even. He had been subsidising it personally, he said.
Discussions between All Waste Services and the county council have failed to reach an agreement, and on March 10th the council’s press office issued a statement saying from April 1st residents should take black bag and garden waste, electrical items, wood and other bulky items to the Wernddu site near Ammanford.
Wernddu is a dozen miles south west of Llangadog, which itself is 20 or so miles from the outer reaches of its catchment area.
The county council says it hopes to have some recycling bins at Llandovery Rugby Club by April 1st, but these would not accept many of the materials which have been deposited at Llangadog.
Maria Carroll, Labour’s candidate for Cilycwm in county council elections on May 4th, who takes a close interest in recycling services, said:
“It has always been the view of local people, who are dependent on this service, that a long term commitment to the provision of a Recycling Centre in north Carmarthenshire is needed. This did not happen and the [Llangadog] Centre has been subjected to a roller coaster ride of uncertainty and threat of closure. It seems we now find ourselves once more in the position that our Centre, which provides a highly regarded public service, is at risk of closure with little notice and with no public consultation.”
Closure means that fly tipping is likely to increase, with damaging impact on the environment and potentially on the important tourism industry. The loss of jobs is also troubling.
Too many cooks spoil the broth. Too many companies in the mix may damage your investment.
We are in an era of low returns, but people saving and investing for pensions want – need — to generate more than 1% or 2% a year, and The Corran hotel scheme at Laugharne, ostensibly offering leases of hotel rooms, or of fractions of hotel rooms, appeared to offer just what they required.
Rowanmoor Trustees Ltd, trustee of The Rowanmoor Pensions Self-Invested Personal Pension Scheme, approved investments in The Corran for pension clients. One of those clients showed me a copy of his ‘Agreement for Sale of Membership of a Company’. Not ‘for sale of a lease’, note.
The agreement was between the ‘Founder Member’, Kayboo Ltd, the company owning some of the property shown in marketing materials for the scheme, and Rowanmoor Trustees Ltd.
Kayboo “wishes to procure the admission of the Purchaser (the pension client) to membership of the Company…” The ‘Company’ is Hurst House Fractional K Ltd, one of the fractional ownership companies set up to hold the leases. Hurst House is the former name of The Corran.
“The Company has/shall enter into a 999 year lease (“the Term”) granted in accordance with the laws of England and Wales… The Lease entitles the Company to 365 days usage of the Property in each year,” said the agreement.
Further on, the document says “The Company has entered into a lease agreement with the Founder Member.”
Well, that did not apply in most cases because only three leases had been completed when Kayboo and its sister company, hotel management company East Marsh Operational, went into administration in October 2016, four years after the first ‘leases’ were sold to well over 400 investors who paid in some £19.21 million. Around £2.52 million of that was returned to investors – their own capital, not rents from the hotel, according to abbreviated accounts presented to anxious investors in summer 2016.
The complexity of the scheme is clear from the agreement, which describes roles for the ‘Founder Member’ (Kayboo Ltd), the ‘Company’ (in this case Hurst House Fractional K Ltd), the ‘Purchaser’ (the pension client, represented by Rowanmoor Trustees Ltd), and also the ‘Manager’ (East Marsh Operational Company Ltd, supposed to hold a sub-lease from Hurst House Fractional K Ltd).
Rowanmoor Trustees took care to curtail their own liability. The document states that “In the event that the Purchaser is required to provide warranties under the Sub Lease that the liability of Rowanmoor Trustees Ltd shall in all respects be limited to the assets of the Rowanmoor Pensions self invested person pension for the Scheme Member”.
So apart from a risk to its reputation, Rowanmoor Trustees Ltd – Kayboo’s counter party in the agreement – removed liability risk from itself.
Rowanmoor used to market itself as the UK’s largest independent small self-administered scheme provider, but in July 2016 was bought by Embark Group in a private cash transaction. Rowanmoor’s managing director Ian Hammond chose to retire.
A problem for any investor in such an opaque transaction is that no participant will intend to work for nothing. Everyone will seek a slice of the pie, making the advertised returns – varied between sales agents, but around 10% a year for ten years and 12% annually for the next five, and repurchase at 125% of the sale price in years five to 14 and 150% in year 15, even less likely to materialise.
For reasons that are hard to fathom, the administrators – Harbour Business Group – sold The Corran to Glendore Real Estate Ltd, a company of which Keith Stiles, a director of the failed Kayboo, was in January 2017 the sole director. The price? £150,000 – when investors had piled in over £19 million.
The scandal also raises questions about the due diligence – or lack of it – undertaken by pensions providers.
The strange story of some £16.7 million of lost investments in The Corran Resort and Spa, Laugharne, becomes ever more troubling. Investor Ian Dixon discovered that Kayboo, in administration since October 2016, sold 166 fractions of hotel ‘suites’ on land then owned by EHF Hospitality Ltd and which contained no hotel accommodation.
EHF Hospitality’s property at East House Farm is now with Secured Bridging Finance, the mortgagor. Secured Bridging Finance’s Alan Lister contacted West Wales News Review with the following information:
“Our company, Secured Bridging Finance Ltd (via our company’s wholly owned subsidiary company) owns Barns 3, 4, 5, 6, and 7, East House Farm. From time to time Mr Peter Burnett [director of Kayboo Ltd, East Marsh Operational Company Ltd, Pennaf Premier Group Worldwide Ltd and several other companies] enquired about purchasing our barns, but he failed to follow through.
“Our barns appear from the diagram in your article to be included in the fractional ownership scheme. We were not aware that our barns were included.
“While the five barns continue in our company’s ownership we would not have agreed, had we been asked, to their being included in any such scheme.
“We are concerned that our barns – and perhaps our company – may have been intentionally misrepresented as being under the control of the promoters of the scheme.”
EHF Hospitality’s sole current director is Matthew Roberts, who was declared bankrupt in September 2014. Companies House proposes to strike off EHF Hospitality, which has not submitted any accounts since the year to February 28th 2011. Former directors of EHF Hospitality are County West Secretarial Services Ltd (February 4th 2010 to September 23rd 2013) and Paul Manley, of Newquay, Cornwall, for a single day, February 4th 2010.
Paul Manley was, from February 29th 2016 to October 11th 2016, a director of Glendore Real Estate Ltd, which currently owns The Corran, and of the hotel operating company Plustocks Management Ltd (to October 13th). These two companies have replaced Kayboo Ltd, which owned the hotel, and East Marsh Operational Ltd, which ran it. East Marsh Operational Ltd is, like Kayboo, in administration.
Kayboo and East Marsh Operational Company director Keith Stiles remains a director of Glendore Real Estate and of Plustocks Management.
So round and round we go. Round and round.
Ian Dixon also reports that Kayboo sold 133 fractions of suites on land owned by Paul Manley, and that Malthouse Farm, the intended third phase of The Corran’s expansion, was not owned by Kayboo or by Kayboo director Peter Burnett, contrary to a statement made on the application for planning permission (which Carmarthenshire County Council rejected because of flooding and environmental risks, and which was also rejected on appeal).
Investors thought they were buying 999-year leases on land, and property on it, in many cases for their pensions.
But most of them were buying nothing at all.
The depressing story is far from finished.