west*wales*news*review

West Wales News Review — analysis with a sustainability slant

Housing Costs to Bankrupt the Population? Compulsory Purchase Regulations Widen Wealth Inequality

Small island, population approaching 70 million. Investors flock to put their money in land. Values soar way beyond the commercially reasonable, to the disadvantage of the economy overall, and here in West Wales, to our important rural economy.

Government does not want to upset the investors. In any case, there is a sizeable crossover between elected representatives and the moneyed class.

Meanwhile, the countryside fills with retired folk, whose demand for homes pushes up property prices beyond the reach of local people on minimal local wages. Surely we need energetic young people moving in with bright ideas for new businesses?  But land is so expensive that it is impossible to provide homes they can afford.

This year I have been carrying out a study for Calon Cymru Network, into the feasibility of a sustainable neighbourhood at Llandovery, in eastern Carmarthenshire. One of the recommendations is to make compulsory purchase cheaper by reducing the amount paid to landowners.

It was only because public authorities could buy land at agricultural value that the new towns – Stevenage, Crawley, Cwmbran, East Kilbride, Harlow, Basildon, Bracknell and many more — were built after the second world war. The new towns, and social housing estates on land also acquired at agricultural value, were important factors in the post-war economic recovery and in social advancement.

That all changed in the 1970s. Top judge Lord Denning ruled, in a landmark case in 1974, that a land vendor had the right to share in the development value of each site, not just to be paid agricultural value. That has led to protracted wranglings, delays, landowners holding out for the whole value uplift, and escalating the shortage of housing which does not pauperise its residents.

Landowners who benefit from the current get-what-you-can regime are unlikely to be enthusiastic about receiving less for their land when public bodies come calling, but change seems essential. Vendors of farmland, to be used for whatever purpose, do not have to pay Capital Gains Tax if they re-invest the proceeds in more land, and this (as well as farmland’s exemption from Inheritance Tax) reinforces their advantages over ordinary tax-paying mortals and speeds their accumulation of wealth. In less than 50 years, land has reverted to its post-Enclosure Acts status as a completely private possession.

Public-spirited philanthropists sometimes donate land for housing or other community uses. The BBC’s Countryfile programme mentioned one on November 12th, Vanora Hereward of Toller Porcorum in Dorset, who left land for affordable homes. But we can’t rely on philanthropists to solve the national housing problem.

No, we need a fairer distribution of the value gain from development, so that public and not-for-profit bodies receive half for the community, leaving half for the vendor. With farmland typically worth between £4,000 and £8,000 an acre in West Wales, and development land costing over one hundred times more, around £750,000 to £1 million per acre, landowners gain hugely from planning permission. Say that as farmland, two acres were worth £12,000. With planning permission, that same land could be £1.5 million to £1.75 million, a windfall of up to £1.49 million to £1.74 million which can be tax-free if reinvested.

If the value uplift were split, the public or community organisation would have a rebate of £745,000 to £870,000, and the vendor would receive the same amount, in addition to the agricultural value of the land. It would be cheaper to build homes, and the vendor would still make a tidy profit. The cost of building each home would fall by about £31,000 to £36,250, at a density of 12 to the acre.

The Welsh Government has probably missed a trick here. The original devolution settlement said nothing about compulsory purchase, so the Welsh Government could have launched its own regime. Now, the Wales Act 2017 says explicitly that compulsory purchase powers are the preserve of the UK Government in Westminster.

And the present government is most unlikely to upset landowners by cutting their potential for profits. The Budget on November 22nd is expected to contain announcements on housing – but if the Chancellor moves to cut the fiscal benefits of landowning, it will be a staggering surprise. Political parties don’t usually set out to alienate their big donors.

Read the report for Calon Cymru Network here. This post is in the author’s personal capacity, and is not connected in any way with Calon Cymru Network.

PDR

 

Advertisements

Punitive Universal Credit Threatens to Obliterate Self Employment

The contempt in which UK government ministers must hold farmers is clear from their crazily punitive Universal Credit.

Take the example of farmers who raise livestock or grow arable crops. They do not have regular income. Yet Universal Credit assumes they do.

The ‘benefit’ replaces Working Tax Credit, Child Tax Credit, Housing Benefit, Jobseeker’s Allowance, Employment and Support Allowance and Income Support. The first three have been relevant to the self-employed, like farmers, builders, painters and decorators and taxi drivers. Self-employment is a major feature of rural West Wales, and tax credits have been vital to households with low and fluctuating income. In Carmarthenshire 11% of all people aged 16 to 74, one in every nine, is self-employed. The figures are higher still in Pembrokeshire (13.5%) and Ceredigion (14.4%).

Universal Credit is due to come to Carmarthenshire in March 2018, and to Pembrokeshire and Ceredigion in May. Self-employed claimants have to submit an online form every month, detailing their net income. The particularly cruel part is the Minimum Income Floor, which assumes that everybody has a work income equivalent to at least 35 hours a week at the National Minimum Wage. That’s £7.50 for people aged 25+, so times 35 is £262.50 a week, £1,137.50 a month. So even if you earn nothing in a month, the government will assume you have earnt £1,137.50.

This applies to every month of the year – no allowances for any days off, or ill.

For farmers who receive income only a few times a year, for builders who are paid on completion of large jobs, for taxi drivers with fluctuating receipts, for small business owners in the seasonal tourism industry, the Minimum Income Floor is a denial of social security, and even more discriminatory because in those months when income does arrive, for example from sale of sheep, cattle, or potatoes, or visits from holidaymakers, claimants will rarely receive any Universal Credit at all because their monthly total will be too high!

Government argues that people with incomes below the Floor should just do more work, or persuade clients to pay them monthly instead of at the end of a contract – but how does that function when, for example, you are taking your sheep or cattle to a market? You don’t know who is going to buy them!

The self-employed do many essential but currently low-income jobs – what is more essential than producing food? – yet the new ‘benefit’ penalises them severely.

The Ulster Farmers’ Union is making a big fuss about the iniquities of Universal Credit, and in December 2016 published ‘Universal Credit in Northern Ireland: Punishing the Self-Employed’ in collaboration with the organisations Rural Support and Advice NI.

The Universal Credit for the Self-Employed “system is utterly blind to claimants with variable or seasonal income”, says the Ulster report. “The over-riding effect of the Minimum Income Floor will be to persecute hard-working, self-employed people for not having a regular income stream.”

Accountants Dodd and Co in Penrith, Cumbria, told Farmers Weekly[1] that they act for about 1,000 farmers, 30% of whom have been claiming tax credits, and who will be punished by Universal Credit.

Some people may propose that if claimants can’t earn an even monthly income, they shouldn’t be self-employed. They’d probably be the first to shout, though, when there are gaps on the supermarket shelves, when they can’t find a builder to repair the roof, or a taxi to take them to the station.

The Resolution Foundation reckoned in October 2016[2] that the median self-employment income was £240 a week, £1,040 a month. That’s an average figure which is less than the current Minimum Income Floor.

And across the UK, 4.547 million people are self-employed.

Someone in government wants to obliterate self-employment, not to mention wreaking havoc across the countryside.

 

[1] ‘Introduction of Universal Credit will punish self-employed’, Farmers Weekly Interactive, February 8 2017.

[2] ‘Typical earnings of the self-employed lower than 20 years ago’, press release October 18 2016.

Risky Deals? Landmark Welsh Hotels Sold Room by Room to Investors

Tenby’s prominent Carmarthen Bay Hotel , looking out to sea from above North Beach, changed hands earlier this year and had its name altered to the Fourcroft Hotel. The Osborne family, after operating the hotel for more than 70 years, sold to Northern Powerhouse Developments for an undisclosed sum.

Tenby’s Fourcroft Hotel, previously the Carmarthen Bay, has a prime location overlooking the sea. Photo: Google

What’s the story? It’s not a traditional purchase, one hospitality firm buying a going concern hotel from another. Northern Powerhouse Developments is very different. It acquires hotels and sells individual rooms to investors on long leases such as 125 years. A sister company like Giant Hospitality Ltd leases each room back for 10 years, typically, and promises to pay specific rental amounts to each investor.

Room-by-room investments are now widely marketed in the UK. A brand called Emerging Developments, for example, advertised investments in the Fourcroft like this:

  • “Operational 40 room hotel in Tenby with sea views
  • Full refurbishment to bring up to stunning 4 star modern standards
  • 23 rooms have sea views
  • Full suite prices from just £60,000 (with the option of just £54,000 total cash input)
  • All rooms to be finished with sumptuous décor and high quality furnishings
  • 10% NET return for 10 years
  • 125% buyback option in year 10 (or the option to extend the 10% for another 5 years, or take a 50/50 room revenue split)
  • 2 weeks free usage in your room each year”

Booking a room at the Fourcroft cost from £101 a night on Trip Adviser in October 2017, but anyone who invested £60,000 in the room would expect £6,000 a year for ten years plus £75,000 buy-back — working out at £13,500 a year. The funding model, based on avoiding bank loans, means there may be no bank interest. This increases the profit potentially available to pay investors.  If the hotel is so brilliant that it can charge top room rates, yes there could be more profit – but top hotels are labour-intensive and have correspondingly higher salary costs.

How safe is this type of sale and leaseback  ‘alternative investment’? It depends on the success of the hotel, but the promised returns require business to be booming. All the time.

The sale of hotel rooms is unregulated, so investors take all the risk.

Northern Powerhouse also acquired, in 2016, Caer Rhun Hall in the Conwy Valley of north Wales, and set about selling the 23 planned bedrooms, and then 42 rooms in an annexe and 6 in a cottage.  The hall was an accountancy school and also a wedding venue. Conwy Borough Council agreed change of use to a country house hotel on August 9 2017. Of course, it would have been tough on investors if the council had refused.

Investors are told in a marketing brochure from Select Portfolio, a firm of agents:  “Offering a choice of single, double/twin and premium accommodation, the hotel delivers an annual rental income of circa 10% net of the purchase price for 10 years, with 2 weeks personal use included each year and units starting from £75,000, ranging up to £180,000.”

Northern Powerhouse is also behind the Afan Valley Adventure Resort at Caerau, Cymmer, north of Maesteg,  and Select Portfolio sells lodges there. The four-bedroom ‘lodge 20’ is £249,000 and ‘lodge 33’, also four bedrooms, is £259,000. That’s a great deal more than a timber lodge would cost from the manufacturers – probably between three and four times more, for a lodge constructed and insulated well enough for year-round occupation.

The concept is a form of crowd funding. Investors’ money pays for building conversion and new development, on the promise of receiving operating income for the next decade or so. But if the hotels and resorts are not popular, there may not be enough income to pay to investors.

This is a sales proposition for Caer Rhun Hall: instead of paying £111,000 for a premium double room (including £1,000 reservation  fee), pay £87,000 and go without income for two years. The target income for the next eight years is £88,000, and then Northern Powerhouse would buy it back for the full purchase price plus 25%, £137,500. In a typical scenario, it is hard to see how one room can generate, reliably, a surplus of £11,000 a year (especially as the investor has the right to use it for up to two weeks a year). And then there’s the commitment to buy it back for 25% more than the purchase price.

Given a  typical hotel occupancy rate of 75%-80%, the room would be occupied for 274 to 292 nights. Trip Adviser on October 23 had a double room – not necessarily an official premium room –at Caer Rhun available for £68, which times 274 is £18,632 and times 292 is £19,856. This is not profit, of course. At 7%, the net profit could be £1,304 to £1,390, at 15% £2,795 to £2,978. Respectable, but not sufficient to pay giddy amounts to investors.

Northern Powerhouse Developments currently has a portfolio of six hotels in England, and seven in Wales. The Wales collection is:

  • Afan Valley Adventure Resort, Caerau, Cymmer
  • Belmont, Llandudno
  • Caer Rhun Hall, Conwy (to be joined by a large annexe, and lodges)
  • Fishguard Bay Hotel, Goodwick
  • Fourcroft Hotel, Tenby (previously the Carmarthen Bay Hotel)
  • Llandudno Bay Hotel, Llandudno
  • The Queens Hotel, Llandudno

The three Llandudno hotels, the Fishguard Bay and the Fourcroft, and Caer Rhun Hall are all trading. The Afan Valley Adventure Resort, and the annexe and lodges at Caer Rhun, are in development.

On its website, Northern Powerhouse Developments explains its funding formula:

“The group is funded utilising a tailored funding mechanism known as sale and lease back. The business operates an op co (operational company) prop co (property company) business model. In its most simplistic form the prop co provides individuals the opportunity to buy a room in the hotel and then rent the hotel room back to the hotel operator. This is an alternative to the residential buy-to-let market.

We sell our properties through a global network of sales agents who offer private and institutional buyers the opportunity to buy individual rooms, multiple rooms or whole developments within a given project.

Our team welcomes enquiries from agents, Financial Advisors, Fund managers, UK and overseas estate agents, wealth coaches or property networks.”

Targeting buy-to-let investors is logical because of ex-Chancellor George Osborne’s fiscal attack on buy-to-let landlords, whom he appeared to blame for removing homes from the reach of first-time buyers. From April 2016 there has been a 3% stamp duty surcharge on properties bought to let out. By 2020 landlords will not be able to count any mortgage interest as a business cost. April 2020 is also the time when all privately rented homes must have an Energy Performance Certificate rating of E or better.

George Osborne’s actions to discourage buy-to-let investment have led to savings looking for investment options. Student accommodation, hotel suites, and rooms in care homes are all now marketed as investment opportunities. In these cases, and unlike whole freehold properties, there is no established resale market.

Northern Powerhouse’s model is a form of fractional investment. Not fractions of rooms, as so disastrously at The Corran, Laugharne, but fractions of hotels. Does Northern Powerhouse Developments have a track record to inspire confidence?

Not yet. The company was incorporated on January 7 2016, and is controlled by Mr Gavin Lee Woodhouse, born in March 1978 and so currently aged 39. He also controls Northern Powerhouse Developments (Holdings) Ltd, incorporated on September 30 2016, and several other companies recently formed, none of which have had time to establish a track record.

Northern Powerhouse Developments Ltd’s first accounts, for January 7 2016 to March 31 2017, are available, and show that the company lost £171,635. In addition, although it is owed £3,717,663 by 13 other companies controlled by Mr Woodhouse, it itself owes £4,663,866 to 11 other companies in the expansive Woodhouse portfolio.

We asked both Northern Powerhouse Developments, and Select Portfolio, a firm in Dorset selling the rooms to the public, about their policies for warning novice investors about the risks involved, but have not received replies.

The team assembled to build the business is large and impressive. The operational board of six, chaired by Gavin Woodhouse,  includes corporate banker Andrew Kitchingman; the former managing director of Center Parcs, Peter Moore OBE; and Richard Lewis, former CEO of Landmark Hotels in Dubai. If all these business heavyweights have confidence in the funding model, why question it? It could be that super-rich international investors will be attracted to the idea of buying up established hotels in not-particularly-fashionable locations (that’s one of Northern Powerhouse’s key concepts) and building activity-focused resorts (there is a tie-up with the Bear Grylls Survival Academy for the Afan resort plans).

But medium-scale investors with tens of thousands of £s in search of reliable returns, and not £ millions, please be very careful.

From Laugharne to the Algarve — Fractional Ownership: Timeshare Misfortune Reborn?

Bill Peters hoped that owning half of an apartment in the Portuguese Algarve would be his route to sun-filled worry-free holidays.

Instead, his purchase has created a labyrinthine quagmire of confusion.

The labyrinth extends far beyond Portugal to England, Guernsey and the British Virgin Islands. Guernsey and the British Virgin Islands (BVI) are both tax havens offering secrecy, and the BVI especially are a popular place for money to be obscured. Details are occasionally leaked, as in the Panama Papers, offering a tantalising glimpse of who keeps assets hidden from tax authorities.

The Panama Papers show that companies involved in Bill Peters’ property purchase are sequestered in the British Virgin Islands, a territory in the Caribbean scoured and scarred by hurricanes Irma and Maria in September 2017.

Bill, who lives on Merseyside, would like to unravel the tortuous web of companies which, he believes, are keeping him in the dark about his property rights, while sending out bills for he knows not what.

In May 2015 he signed a purchase and sale agreement for two quarter shares of Apartment 2A, Block 37, Plot F, Várzea da Luz. The seller was William Hurley of Chillenden, Kent. Bill Peters paid €90,000 and looked forward to holidaying on the Algarve.

What exactly did Bill Peters buy? According to purchase and sale agreement, it was shares 3 and 4 in a company called Isaura Properties Ltd.

Isaura Properties was then registered at 208a Telegraph Road, Heswall, Wirral, but is now at PO Box 5, Willow House, Oldfield Road, Heswall, Wirral. This address, a private house barely visible behind high walls and stout gates in a quiet road, is the home of an accountant called David Leslie Bates. Mr Bates has featured on West Wales News Review before, in an administrative connection with The Corran Resort and Spa, Laugharne: https://westwalesnewsreview.wordpress.com/2017/01/27/sunk-investments-drown-in-carmarthenshire-marsh/. Investors lost £17 million in the venture.

The house in Oldfield Road, Heswall, the unlikely headquarters of a fractional property business empire. Photo: Google

The purchase and sale agreement states that Isaura Properties is the legal owner of Apartment 2A. This company is non-trading and has no assets, according to records at Companies House. The directors are Fractional Secretaries Ltd, David Leslie Bates, Julia Rachel Day, and Lucy Ann Whitfield, all at PO Box 5, Willow House. Previous directors include Nicholas Robert Hannah of La Hougette House, Route des Deslisles, Castel, Guernsey, and three more ‘Fractional’ companies – Fractional Administration Services Ltd, Fractional Administration Solutions Ltd and Fractional Nominees Ltd.

Nicholas Robert Hannah was fined £35,000 by the Guernsey Financial Services Commission in November 2016, and barred from directorships for five years, because he made false statements and was negligent in the management of Guernsey-registered Marlborough Trust Company Ltd. Fellow director Adrian Bradley Howe received the same penalty, and Marlborough Trust Company was fined £100,000. The Marlborough Trust Company is implicated in the 2009 failure of Arch Cru, a group of funds which invested £400 million on behalf of around 20,000 private investors. Marlborough Trust Company was, it appears, ultimately responsible for investment decisions over the assets underlying 23 of the Arch Cru funds held in SPVs – special purpose vehicles – for property, wine, and a company owning other companies which invested in ships.

Carbon credit and wine scams

Marlborough Trust Company appears to operate on the wilder margins of the investment world, and features in a report by the UK Government’s Insolvency Service in November 2015. After investigation by the Insolvency Service, the High Court ordered the liquidation of eight interlinked companies which had been operating scams selling carbon credits called carbon benefit units, and wines. Marlborough Trust Company, and sister company Marlborough Nominees Ltd, were directors of two of the eight companies, Consolidated Carbon Projects Ltd and WK Investments Holdings Ltd, both registered in the British Virgin Islands.

The Insolvency Service reported[1] that “Marlborough Trust Company Ltd based in Guernsey made various representations as to the position of Consolidated Carbon Projects Ltd and WK Investments Holdings Ltd and requested the petitions against these two companies be withdrawn by the Secretary of State“. Who represented Marlborough Trust at the (unsuccessful) petition hearings?

The Insolvency Service said: “David Bates of Marlborough Trust was present at the hearing of the petitions.”

As for Isaura Properties Ltd, this is a company limited by guarantee and has no shareholders. It seems to fit the Oxford Dictionaries’ definition of a shell company, “an inactive company used as a vehicle for various financial manoeuvres or kept dormant for future use in some other capacity”.

So where did Bill Peters’ €90,000 go? William Hurley says he received just over €75,000, but that leaves nearly €15,000 footloose. “William Hurley told me that some went to estate agents in Portugal, Casas do Barlavento at Lagos; some to lawyers; and €2,000 to ‘fractional owner’,” said Bill Peters. Could that have been Fractional Administration Services Ltd, at that time still a director of Isaura Properties? (It is legal for companies to be directors of other companies, but not transparent or, one suspects, conducive to good management.)

Bill Peters made his purchase despite not receiving clear answers from his lawyer in Portugal, Cristina Marcelino, to questions such as “Is there any debt or lien associated with the property?” A lien is a right to keep property belonging to someone else who owes them money, until the debt is paid.

He learnt this year, from Mr David Bates (as a director of Fractional Administration Services Ltd), that there was at least one debt relating to his fractions of the apartment, £945 in administration fees.

Although Bill Peters bought what he thought was a half share in the apartment back in 2015, the details were apparently not transmitted to the Fractional Ownership Consultancy Ltd (FOC), registered on Tortola in the British Virgin Islands. On August 8 2017 FOC sent, from its office in Guernsey, a bill for £1,195 to Mr William Hurley, the previous ‘owner’, as his portion of moneys due to FOC from Isaura Properties Ltd in 2016, 2017 and 2018. Isaura Properties Ltd is the dormant company which is the legal owner of Apartment 2A. The money was to be paid into Barclays Bank in Ellesmere Port, Cheshire.

Why is FOC demanding money for Apartment 2A? The ‘owner’ of another Algarve property received a document from FOC headed Oceanico – Members FAQ, which indicates the answer.

The background of Oceanico Group is that it acquired land in Portugal and other tourist venues to build resorts with a focus on golf. Apartment 2A is part of an Oceanico development. The Portugal-registered group was created in 2006 by Gerry Fagan from Drogheda, Ireland and Simon Burgess from the UK. At the time Simon Burgess, who had been based in Northwich, Cheshire, was serving a five-year disqualification from holding directorships in the UK, running from February 2003 until February 2008, according to the Irish Independent.[2] Oceanico had troubles from the beginning, selling properties and taking in deposits before it had planning permission.[3], [4]

Banking collapse

Oceanico’s irrepressible (some would say irresponsible) optimism was dashed against the rocks of bank failure in 2008. Anglo-Irish Bank, to which Oceanico was heavily indebted, failed and was nationalised by the Irish Government. The Oceanico loans were passed to Ireland’s National Asset Management Agency, which in 2015 instructed prestige estate agents Savills to sell Oceanico’s Portuguese portfolio.

The background of banking collapse makes it more likely that companies with interests in the distressed real estate would seek to recoup losses in any way possible. This brings us back to the FAQ document from the Fractional Ownership Consultancy, which said that it is:

“the owner and operator of the fractional system used by Oceanico. FOC is based in Guernsey,[5] so it has arranged for all the UK work to be carried out by SMD & Co under a contractual arrangement. This is because the UK companies used in the fractional system are required to have a UK registered office, directors and secretaries which SMD provides from its office in Heswall, Wirral.”

The document continued: “SMD & Co is paid for its services by FOC, and FOC recover those costs through the contractual arrangements with Oceanico, and, ultimately, the fractional owners.”

“SMD & Co is owned, controlled and managed by David Bates, a chartered accountant (ICAEW 7600847) and chartered tax adviser (CIOT 135624). David is also a minority shareholder in FOC, having been involved with that business since its commencement.”

So FOC owns the fractional sale system, which employs companies limited by guarantee (without shares or shareholders) as the legal owners of the properties in which fractional interests have been sold. In Bill Peters’ case, this is Isaura Properties Ltd.

For Isaura, the company secretary is Fractional Secretaries Ltd, but SMD Secretaries Ltd is the company secretary for Fractional Secretaries Ltd. These companies are so similar! David Bates is secretary and director of SMD Secretaries Ltd and a director of Fractional Secretaries Ltd. Julia Day and Lucy Whitfield are directors of both.

Several connections between the Fractional Ownership Consultancy and the Marlborough Trust Company (whose motto could well be ‘wing it and pray’) include David Bates – as a shareholder in FOC, and representative of Marlborough Trust petitioning against the compulsory winding up of Consolidated Carbon Projects Ltd and WK Investments Holdings Ltd, for both of which Marlborough Trust Company was a director. Marlborough Trust Company itself, and Nicholas Hannah, are both among former directors of the FOC.

No wonder Bill Peters cannot find out exactly what he owns, who is entitled to charge him, and for what. It appears that he does not have many rights at all. His fractions of Apartment 2A are dispensed by legal owner Isaura Properties Ltd, which wrote for itself Articles and Memorandum of Association greatly in favour of itself, not the fraction holders – who are not directors of the company. The directors on incorporation in 2006 were Fractional Administration Services Ltd and Fractional Nominees Ltd, and the secretary was, as now, Fractional Secretaries Ltd, all at Mr Bates’ Post Office Box address in Heswall.

The directors can suspend or vary the rights of fraction-holding members for multiple reasons including not paying money when it is demanded, and for behaviour which directors think is detrimental to the company or the property. A fraction-holder whose rights are suspended “shall continue to be liable for all the obligations attaching to membership (unless they have been cancelled).”[6]

The company’s ‘founder member’ is important, too. This was Oceanico Stepping Stones Ltd, registered at the Heswall PO Box address. The founder member and all other members have to approve any transfer of ownership, including the price to be paid, and the founder member can veto the sale – so Bill Peters has purchased something he might not be able to resell. And who are the directors of Oceanico Stepping Stones? Fractional Secretaries Ltd, David Bates, Julia Day and Lucy Whitfield.

Beware removal of rights

It is feasible to argue that it is in Oceanico Stepping Stones’ interests, as the powerful founder member, for other members to be confused over the correct procedures for registering their interests, because the founder member can then make a case for removing their rights.  William Hurley’s lawyer in Portugal, Justin Ryan, emailed David Bates on August 30 2017 to say “In my opinion, if the buyers [William Peters] want to register their ownership then they need to deal with you.” Mr Bates did not answer this question but wrote: “I don’t want to upset anyone, but it is not our position to agree who pays the fees. If you have agreed the buyers pay, that is fine, but they do need to be paid otherwise they remain the obligation of Mr Hurley.” So what is the procedure for registering a new member of Isaura Properties? If anyone should know, it is surely the directors of Isaura Properties itself, including David Bates.

Buying a fraction of Isaura Properties has not been, for Bill Peters, a passport to trouble-free holidays. He might have expected his purchase to be protected under the European Union Timeshare Directive, introduced across the EU by February 23 2011 as a response to timeshare misselling scandals. (See, for example this article, ‘Timeshare horrors: fresh hope for 100,000 people locked into costly contracts’, by Kate Palmer, in The Telegraph online, May 30 2015.)

The status of fractional ownership remains a grey area, but buying a right to use an apartment or villa for a portion of every year is much more like timeshare than joint ownership of a property. The Resort Development Association advised back in 2010 that members should behave as if the directive definitely applies to fractional sales. The rules are nothing difficult, principally an obligation for full disclosure in marketing and sales, a ‘cooling off’ period of 14 days after a purchase agreement is signed, and a bar on any money changing hands during the cooling off period.

Bill Peters says: “I was not given information about any debts on the property, or any regular payments due, even though I asked specifically.”

We asked David Bates whether, in his opinion, fractional ownership is covered by the EU timeshare directive, including the requirement for full disclosure. We also asked for his take on advantages and drawbacks of fractional investments. As yet, we have not received a reply.

The fractional saga, which cost investors in The Corran, Laugharne, so many £ millions, appears a tale of mystery enveloped in mist – but buyers can start to penetrate the fog:

  • by searching out and reading all the small print
  • by not signing anything until all their questions have been answered satisfactorily, with documentary proof, and
  • by avoiding solicitors recommended by vendors and choosing one with a high reputation to uphold

Bill Peters relied on a lawyer in Portugal recommended by the estate agents selling the fractions of apartment 2A, but feels he was fobbed off with sparse, incomplete answers.

And he still doesn’t know exactly what it is he bought.

 

[1] ‘8 companies involved in multi million pound international carbon credit and wine investment scam ordered to close’, press release from the Insolvency Service, November 27 2015.

[2] ‘Oceanico defends its director barred in UK’ by Charlie Weston, July 7 2006.

[3] Article by Charlie Weston, as above.

[4] This happened at The Corran too.

[5] But registered in the British Virgin Islands.

[6] Articles and Memorandum or Association section 12.2(e).

Lampeter Church Service for Cancer Care

Jane and Steven Holmes from Ffarmers are keen runners and supporters of the Roy Castle Lung Cancer Foundation. Jane has successfully recovered from lung cancer — which affected her although she did not smoke and made sure she kept fit. In fact, she is a marathon runner and intends to be in the Snowdonia Marathon on October 28th.

“I am organising a church service to be held on Sunday October 22nd, at 2pm in St Peter’s Church, Lampeter,” said Steven. “It’s a bilingual inter-denominational service open to anyone affected by cancer.”

The service is called Pause for Hope after the charity of the same name founded by Professor Raymund Donnelly, whom  Jane and Steven met in 2015, and will be the first to be held in Wales. Local congregations, and Ysgol Bro Pedr, are supporting the event. Young people from the school will be singing and taking part in a poetry competition.

Back after a Break

West Wales News Review will soon be back after a break of several months. The author has been fully occupied with a project titled ‘Affordable Homes and Sustainable Livelihoods in Rural Wales’ with the sub-title ‘Feasibility of a resilient neighbourhood at Llandovery’. The report of the project, commissioned by Calon Cymru Network, will be presented to a public meeting at the Castle Hotel, Llandovery, on Tuesday November 14th at 7pm.

On West Wales News Review there will be more to say about the scandal affecting investors in the Corran Resort, Laugharne. Investors bought fractional shares, or so they thought. Instead of benefiting purchasers, fractional ownership schemes have become an easy way to siphon money from unwary investors. British people buying fractions of properties in other EU countries are likely to find that Brexit will reduce their capacity to obtain redress in cases of fraud.

Also planned, an update on the ‘Wellness Village’ at Llanelli, looking at the prospects for investment by the private sector; the impact of Brexit on Welsh farmers; financial problems in the Wales NHS; and no doubt a great deal more.

It’s worth making the point that at present West Wales News Review is entirely a voluntary effort, with no funding whatsoever. This means that it is dependent on spare time.

 

Common Dreams’ Reign of Idiots

This ‘End of Empire’ essay by Chris Hedges, on the Common Dreams website, is a powerful and very dark piece of work. It’s not about West Wales, or even Wales, but the unstable world we all live in.

All empires end. Trouble is, when a global empire ends, civilisation can collapse with it.

Reprinted from https://www.commondreams.org/views/2017/05/01/reign-idiots

Reign of Idiots

Donald Trump. King of the horrifingly dumb and dangerously greedy

“Trump,” writes Hedges, “embodies the essence of this decayed, intellectually bankrupt and immoral world.”

The idiots take over in the final days of crumbling civilizations. Idiot generals wage endless, unwinnable wars that bankrupt the nation. Idiot economists call for reducing taxes for the rich and cutting social service programs for the poor, and project economic growth on the basis of myth. Idiot industrialists poison the water, the soil and the air, slash jobs and depress wages. Idiot bankers gamble on self-created financial bubbles and impose crippling debt peonage on the citizens. Idiot journalists and public intellectuals pretend despotism is democracy. Idiot intelligence operatives orchestrate the overthrow of foreign governments to create lawless enclaves that give rise to enraged fanatics. Idiot professors, “experts” and “specialists” busy themselves with unintelligible jargon and arcane theory that buttresses the policies of the rulers. Idiot entertainers and producers create lurid spectacles of sex, gore and fantasy.

There is a familiar checklist for extinction. We are ticking off every item on it.

The idiots know only one word—“more.” They are unencumbered by common sense. They hoard wealth and resources until workers cannot make a living and the infrastructure collapses. They live in privileged compounds where they eat chocolate cake and order missile strikes. They see the state as a projection of their vanity. The Roman, Mayan, French, Habsburg, Ottoman, Romanov, Wilhelmine, Pahlavi and Soviet dynasties crumbled because the whims and obsessions of ruling idiots were law.

Donald Trump is the face of our collective idiocy. He is what lies behind the mask of our professed civility and rationality—a sputtering, narcissistic, bloodthirsty megalomaniac. He wields armies and fleets against the wretched of the earth, blithely ignores the catastrophic human misery caused by global warming, pillages on behalf of global oligarchs and at night sits slack-jawed in front of a television set before opening his “beautiful” Twitter account. He is our version of the Roman emperor Nero, who allocated vast state expenditures to attain magical powers, the Chinese emperor Qin Shi Huang, who funded repeated expeditions to a mythical island of immortals to bring back the potion that would give him eternal life, and a decayed Russian royalty that sat around reading tarot cards and attending séances as their nation was decimated by war and revolution brewed in the streets.

This moment in history marks the end of a long, sad tale of greed and murder by the white races. It is inevitable that for the final show we vomited a grotesque figure like Trump. Europeans and Americans have spent five centuries conquering, plundering, exploiting and polluting the earth in the name of human progress. They used their technological superiority to create the most efficient killing machines on the planet, directed against anyone and anything, especially indigenous cultures, that stood in their way. They stole and hoarded the planet’s wealth and resources. They believed that this orgy of blood and gold would never end, and they still believe it. They do not understand that the dark ethic of ceaseless capitalist and imperialist expansion is dooming the exploiters as well as the exploited. But even as we stand on the cusp of extinction we lack the intelligence and imagination to break free from our evolutionary past.

The more the warning signs are palpable—rising temperatures, global financial meltdowns, mass human migrations, endless wars, poisoned ecosystems, rampant corruption among the ruling class—the more we turn to those who chant, either through idiocy or cynicism, the mantra that what worked in the past will work in the future, that progress is inevitable. Factual evidence, since it is an impediment to what we desire, is banished. The taxes of corporations and the rich, who have deindustrialized the country and turned many of our cities into wastelands, are cut, and regulations are slashed to bring back the supposed golden era of the 1950s for white American workers. Public lands are opened up to the oil and gas industry as rising carbon emissions doom our species. Declining crop yields stemming from heat waves and droughts are ignored. War is the principal business of the kleptocratic state.

Walter Benjamin wrote in 1940 amid the rise of European fascism and looming world war:

A Klee painting named Angelus Novus shows an angel looking as though he is about to move away from something he is fixedly contemplating. His eyes are staring, his mouth is open, his wings are spread. This is how one pictures the angel of history. His face is turned towards the past. Where we perceive a chain of events, he sees one single catastrophe, which keeps piling wreckage upon wreckage and hurls it in front of his feet. The angel would like to stay, awaken the dead, and make whole what has been smashed. But a storm is blowing from Paradise; it has got caught in his wings with such violence that the angel can no longer close them. The storm irresistibly propels him into the future to which his back is turned, while the pile of debris before him grows skyward. This storm is what we call progress.

Magical thinking is not limited to the beliefs and practices of pre-modern cultures. It defines the ideology of capitalism. Quotas and projected sales can always be met. Profits can always be raised. Growth is inevitable. The impossible is always possible. Human societies, if they bow before the dictates of the marketplace, will be ushered into capitalist paradise. It is only a question of having the right attitude and the right technique. When capitalism thrives, we are assured, we thrive. The merging of the self with the capitalist collective has robbed us of our agency, creativity, capacity for self-reflection and moral autonomy. We define our worth not by our independence or our character but by the material standards set by capitalism—personal wealth, brands, status and career advancement. We are molded into a compliant and repressed collective. This mass conformity is characteristic of totalitarian and authoritarian states. It is the Disneyfication of America, the land of eternally happy thoughts and positive attitudes. And when magical thinking does not work, we are told, and often accept, that we are the problem. We must have more faith. We must envision what we want. We must try harder. The system is never to blame. We failed it. It did not fail us.

All of our systems of information, from self-help gurus and Hollywood to political monstrosities such as Trump, sell us this snake oil. We blind ourselves to impending collapse. Our retreat into self-delusion is a career opportunity for charlatans who tell us what we want to hear. The magical thinking they espouse is a form of infantilism. It discredits facts and realities that defy the glowing cant of slogans such as “Make America great again.” Reality is banished for relentless and baseless optimism.

Half the country may live in poverty, our civil liberties may be taken from us, militarized police may murder unarmed citizens in the streets and we may run the world’s largest prison system and murderous war machine, but all these truths are studiously ignored. Trump embodies the essence of this decayed, intellectually bankrupt and immoral world. He is its natural expression. He is the king of the idiots. We are his victims.

Fraud Inaction

“Misunderstanding the role of Action Fraud appears to be rife” – inspectors

Fraud appears to be flourishing. Sophisticated criminals know that their chances of conviction are slim, and they are helped by failings in the police service – failings to which Her Majesty’s Inspectorate of Constabulary (HMIC) has tried to draw attention.

The investment minefield that is fractional ‘ownership’ of hotel rooms, student flats and other accommodation came to West Wales News Review’s attention during investigations into the fate of close on £20 million paid to Kayboo Ltd for leases at The Corran Resort and Spa,  Laugharne, Carmarthenshire.

No authority seemed at all interested in investigating the fate of monies, including pension savings, which investors entrusted to Kayboo, a company now in liquidation. Investors looked to Action Fraud, a branch of the City of London Police, but Action Fraud opted for total inaction.

HMIC has sharply criticised Action Fraud. In ‘Real lives, real crimes: A study of digital crime and policing’, published in December 2015, the inspectors write (chapter 9, paragraphs 9.16-9.25):

  • During our study, we found very few police officers and staff who understood either their own roles and responsibilities or those of their force in relation to the investigation of fraud. In particular there was a lack of knowledge, at all ranks, regarding the functions of Action Fraud and the National Fraud Intelligence Bureau.
  • “Consequently, the advice and support which the police should provide to the victims of such crime are poor. For example, on two occasions, in two separate forces, we were told by neighbourhood policing officers that they didn’t understand the process and they would advise victims who reported frauds to call 101.
  • “Misunderstanding the role of Action Fraud appears to be rife.
  • “We conducted a group discussion in one force with call handlers and enquiry desk staff who commented that they would:
    • “refer the victim direct to Action Fraud”;
    • “deploy a police officer to take a crime report from the victim”;
    • “transfer the victim to the criminal investigation department”;
    • “make an appointment for a police community support officer to speak to the victim”; and
    • “transfer the victim to the force economic crime unit”.
  • “This clear lack of understanding among many who come into contact with victims about the right procedure to adopt was consistent across most police forces which helped us in our study, both at tactical and strategic levels.
  • “Yet, all the forces which we visited had a nominated officer, at either detective sergeant or detective inspector level, to receive and manage those cases referred to the force from the National Fraud Intelligence Bureau. He or she was responsible for the case management of the investigations and was fully aware of the way in which fraud cases should be reported to Action Fraud and of the response that could be expected from the bureau. However, it appeared that these officers did not carry sufficient weight to ensure that the remainder of police officers and staff in their forces were equally well informed.
  • “When we spoke to chief officers about National Fraud Intelligence Bureau referrals, they invariably directed us to those specialist middle-ranking officers. In all but one force, there was an absence of strategic leadership and direction, which resulted in a lack of performance management and priority setting in relation to the reporting and investigation of fraud.
  • “The numbers of crimes reported to Action Fraud annually have more than doubled since 2013. Despite this, fewer than 50 percent of forces regularly assess the impact of fraud in their strategic risk assessments. (See: National Fraud Capability Survey”, national police coordinator for economic crime, March 2015, page 10.)
  • “We are aware that the National Police Co-ordinator for Economic Crime wrote to every chief constable in March 2015 highlighting best practice. In his letter, he stressed that the entire process needed to be “owned by an accountable chief officer”. He asked that every force notify him of its nominated chief officer.
  • “By August 2015, he had received only 14 responses out of a possible 43.”

Reporting fraud to Action Fraud is difficult, and pointless if no one investigates. And how can you properly report complex fraud via an online form or a call centre?

One-stop fraud reporting may have appeared a brilliant labour-saving idea, but it doesn’t work.

Who benefits? The fraudsters!

Easter Break

West Wales News Review is taking a break over Easter — back at the end of April

Action Fraud Didn’t Answer the Phone

Investors in The Corran Resort and Spa, Laugharne, have lost almost £20 million due to opaque and unethical business practices, such as buying non-existent property on land the vendor did not own, and they feel their plight is not recognised and is not being investigated.

The Financial Conduct Authority had a look at Kayboo, the former owner of some of the property at the hotel site near Laugharne, but investors tell me they are unaware of any findings. They are in the dark.

I have tried to ask for an investigation myself, but  without success. Dyfed Powys Police seemed a good starting point, but their website has firm instructions to contact Action Fraud.

That’s easier said than done. I wanted to speak to a person who could give me further directions, not complete an online form that might drop into an abyss, and rang 0300 123 2040, the phone number prominently featured on the Action Fraud website. I phoned three times, and each time got a recorded message “we apologise for not being able to answer your call”, followed by swift disconnection.

So I tried online chat, and after six minutes an agent called ‘Shannon’ asked me to state the issue. After a couple of lines of typing, a message flashed up, “Too many characters, try again”. How do you state a complex problem in a Twitter-length message? I split the message in two, and Shannon typed back to say I should ring the telephone number!

Circles, mazes, no way forward. Investors had already told me that Action Fraud didn’t seem concerned.

I’ll try again, but maybe dodgy dealings and fraud are so entrenched in our financial system that there is no realistic hope of rooting them out.

What a sad state of affairs.

PDR

We have reported on The Corran several times, e.g. https://westwalesnewsreview.wordpress.com/2017/03/11/financial-conduct-authority-has-investigated-corran-company/https://westwalesnewsreview.wordpress.com/2017/02/26/beware-opaque-investments/https://westwalesnewsreview.wordpress.com/2017/02/19/corrans-tangled-webintentional-misrepresentation/https://westwalesnewsreview.wordpress.com/2017/01/27/sunk-investments-drown-in-carmarthenshire-marsh/

Post Navigation

%d bloggers like this: